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[2012] ZALCJHB 75
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National Union of Mineworkers and Others v DB Contracting North CC (JS 463/10) [2012] ZALCJHB 75; (2013) 34 ILJ 971 (LC) (3 August 2012)
REPUBLIC OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA
.
JUDGMENT
Reportable
Case no: JS 463/10
In the matter between:
NATIONAL UNION OF MINEWORKERS
….............................................................
First
Applicant
SIPHO JOSEPH NKABINDE and 105
OTHERS
…................................
Second
to further Applicants
and
D B CONTRACTING NORTH CC
…...........................................................................
Respondent
Heard:
12 and 15 March 2012
Delivered:
03 August 2012
Summary: The respondent, as the employer party, bears
the onus to prove that the dismissal of the second to further
applicants for
operational requirements was substantively and
procedurally fair. The respondent cannot dismiss its employees under
the guise of
operational requirements when the real reason for the
dismissal is to use the services of those same employees as
employees; of
labour brokers. Dismissing employees for operational
requirements before the time agreed by the consulting parties for the
employee
party to respond on the employer party's offer of the rate
of remuneration renders the dismissal procedurally unfair.
JUDGMENT
LALLIE, J: i
ntroduction
[1] The respondent dismissed the
second to further applicants, whose names are listed in table A, on 4
December 2009 allegedly for
operational requirements. The applicants
seek an order that the dismissal of the second to further applicants
was both substantially
and procedurally unfair. They seek
reinstatement, alternatively compensation equivalent to remuneration
that second to further
applicants would have earned over a period of
12 months.
Factual background
[2] A collective agreement binding on
both parties was reached at the National Bargaining Council for the
Electrical Industry of
South Africa (the bargaining council) on 13
March 2009. One of the salient clauses of the collective agreement
was that the remuneration
of assistant electricians was raised to an
hourly rate of R16.98. At the time the collective agreement was
concluded, the second
to further applicants were remunerated at an
hourly rate of R11.55.
[3] The first applicant approached
the respondent and demanded that it implement the remuneration clause
of the collective agreement.
The respondent refused and after holding
discussions with the first applicant on the issue the respondent
issued the applicant
with a notice to attend a consultation in terms
of section 189(1) of the Labour Relation Act (the LRA).
1
In paragraph 1 of the notice, the
respondent expresses its intention to advise the first applicant of
the need to commence retrenchment
consultation due its financial
problems. This notice was followed by consultation meetings which
culminated in the dismissal of
the second to further applicants on 4
December 2009. As it is the applicants' case that their dismissal was
substantively and procedurally
unfair, I will firstly consider the
issue of the substantive fairness of the dismissal.
Substantive fairness
[4] Regarding the substantive
fairness of the second to further applicants' dismissal, Mr. Magagula
(Magagula), the respondent's
only witness, testified that because the
respondent has no BEE status, it conducts business as sub-contractor
for J and J Cable
Jointing. The respondent's main business was to dig
trenches, lay cables, back filling and cleaning. Magagula explained
that when
J and J Cable Jointing lost a contract it had with Eskom on
30 November 2008, the respondent ran into financial difficulties.
According
to Magagula, the respondent's financial position was
exacerbated by the first applicant's insistence that the second to
further
applicants be remunerated at an hourly rate of R16.68, the
rate prescribed in the collective agreement. He further testified
that
the second to further applicants were not even eligible to be
remunerated at the hourly rate of R1G.68 because they were not
electrician
assistants, but labourers. The respondent's proposal to
grade the jobs of the second to further applicants as labourers and
retain
their rate of remuneration at R11.55 per hour instead of
elevating them to electrician assistants was rejected by the first
applicant.
The upshot of the refusal was that the respondent could
not afford to retain the second to further applicants and it
retrenchment
them.
[5] Mr. Bengequla (Bengequla), an
official of the applicant who represented the second to further
applicants during the retrenchment
process, denied that the loss of
the Eskom contract necessitated the retrenchment of the second to
further applicants. He testified
that after the loss of the Eskom
contract, the respondent secured a contract from Ekurhuleni
Municipality. He added that the respondent
secured other contracts
but chose to use employees of labour brokers. According to Bengequla,
the number of labour brokers' employees
who got employed by the
respondent exceeded the number of retrenched employees.
[6] The chronology of events which
culminated in the second to further applicants dismissal is that on
30 November 2008 the respondent
lost the Eskom contract. Two weeks
later J and J Cable Jointing secured a less lucrative contract from
the Ekurhuleni Municipality.
In March 2009, the demand to raise the
hourly rate of remuneration of the second to further applicant of
R16.89 was made. On
30 July 2009, the respondent issued the first
applicant with a notice to consult in terms of section 189(1) of the
LRA. In the
notice, the respondent states that the need to commence
consultation was due to financial problems.
[7] In paragraph 4 of the notice, the respondent states
that salary increments were due on 1 February 2009 in terms of the
collective
agreement. It refers to the Eskom contract which was lost
in November 2008 and to its reliance on subcontractors from
municipalities.
The respondent further states that, at that stage,
it had no active contracts. Dealing with alternatives to
retrenchment the
respondent proposes that employees will work for J
and J Cable Jointing through labour brokers. In the same notice, a
further
proposal is that after retrenchment the respondent intends
to employ through labour broker services.
[8] The respondent offered no
plausible explanation for the loss of the Telkom contract in
November 2008 which led the respondent
to issue a notice of its
intention to retrench on 30 July 2009. Magagula testified that from
30 November 2008, the respondent
carried the second to further
applicants. While he conceded that J and J Cable Jointing got the
Ekurhuleni Municipality contract
two weeks after the termination of
the Eskom contract, he explained that it was less lucrative.
[9] The cause of the respondent's
financial difficulties and the alternatives to retrenchment proposed
by the respondent paint
a different picture for the real reasons for
retrenchment from the one the respondent attempted to paint. When
the evidence of
the reasons for retrenchment is considered in its
totality it proves that when the respondent could not pay the
increment prescribed
in the collective agreement, instead of
engaging the first applicant in finding a solution which could keep
the respondent in
business and protect the jobs of all its
employees, it
opted
for dismissing employees. Under cross-examination, Magagula
testified that had the applicant not insisted on its members
being
remunerated at the rate prescribed in the collective agreement, the
respondent would have afforded to keep them in employment.
For
reasons I will provide when dealing with the procedural fairness of
the second to further applicants' retrenchment, I have
accepted that
there was an agreement between the respondent and the first
applicant that Bengequla would inform the respondent
at a meeting
scheduled for 4 December 2009 whether the second to further
applicants would accept the hourly rate of R11.55 and
forfeit the
increment as an alternative to retrenchment. The respondent
dismissed the second to further applicants before the
scheduled
meeting could be held and denied Bengequla the opportunity to convey
the second to further applicants' acceptance of
the hourly rate of
R11.55 which the respondent could afford. Magagula conceded that
when the second to further applicants were
dismissed on 4 December
2009 the respondent could afford to keep them in its employ at the
remuneration rate of R11.55 an hour.
The respondent can therefore
not rely on its inability to remunerate the second to further
applicants at the rate prescribed
in the collective agreement as a
reason for dismissal. That reason had fallen away at the time the
dismissal letters were issued
and the respondent has itself to blame
for depriving itself of that piece of crucial information.
[10] One of the causes of the
respondent's financial difficulties as stated in the retrenchment
notice was that the respondent
had no active contracts at the time
the notice was issued on 30 July 2009. One is forced to wonder how
the respondent managed
to keep the second to further applicants in
its employ from 30 July 2009 to 4 December 2009 without active
contracts. As it is
common cause that some employees of the
respondent were not retrenched, they continued working despite the
non-existence of active
contracts. The respondent either did not
need active contracts to provide work for its employees or it in
fact had active contracts.
The absence of active contracts therefore
did not cause the respondent financial difficulties. The real reason
for the second
to further applicants' retrenchment was that the
respondent wanted to get rid of them asemployees and use employees
of labour
brokers. This is
clear
from paragraph 5.2
of the notice of retrenchment which reads as follows:
'After retrenchment the close
corporation intends to employ through labour broker services.'
[11] Section 213 of the Labour
Relations Act 66 of 1995 (the LRA) defines operational requirements
as 'requirement based on the
economic, technological, structural or
similar needs of an employer'. No evidence was led by the respondent
to prove that the
second to further applicants were dismissed for
the respondent's operational requirements. Dismissing employees
solely to use
those same employees as employees of a labour broker
falls outside the realm of operational requirements. In
SAA
v Bogopa and Others,
2
it was held that an employer should
not use its power to dismiss for operational requirements to rid
itself of employees for alleged
poor work performance. The court
further found that it is wrong in principle to dismiss employees
under the guise of operational
requirements when the true reason for
the dismissal is misconduct. In the present matter, therefore, the
respondent cannot be
allowed to dismiss the second to further
applicants under the guise of operational requirements when the true
reason is to rid
itself of its own employees only to create space
for employees of labour brokers. No reasons were advanced by the
respondent
for its willingness to prefer the services of the second
to further applicants when rendered by them as employees of labour
brokers
instead of using the services of their own employees.
[12] In the circumstances, I find
that the respondent has not proved on a balance of probabilities
that the reason for the second
to further applicants' dismissal was
for operational reasons. The substantive fairness of the dismissal
was not proved. In the
circumstances I find the dismissal of the
second to further applicants for operational reasons substantive
unfair.
Procedural fairness:
[13] The respondent bears the onus
to prove the procedural fairness of the dismissal of the second to
further applicants for operational
requirements. Section 189 of the
LRA enjoins an employer contemplating dismissing employees for
operational requirements to consult,
inter
alia,
with a
registered trade union whose members are likely to be affected by
the proposed dismissal. The consultation is required
to be a
meaningful joint consensus seeking process.
[14] it is common cause that the
respondent issued the first applicant with a notice in terms of
section 189(1) of the LRA on
30 July 2009, inviting it to consult on
retrenchment as it was encountering financial difficulties. The
first consultation meeting
was held on 13 August 2009. The parties
consulted on the respondent's financial position, amounts of money
due to the second
to further applicants in terms of the collective
agreement, use of labour brokers, audited financial statements,
measures to
avoid retrenchment, appointment of a facilitator
proposed agreement to be provided by the first applicant. The second
consultation
meeting was held on 13 November 2009. Amongst the
issues that the parties reached consensus on was that the date of
the termination
of the services of the second to further applicants
was changed from 13 October 2009 to 4 December 2009. The parties
could not
reach consensus on the rate of remuneration as the first
applicant insisted that its members be remunerated at the new rate
prescribed
in the collective agreement, but the respondent proposed
the rentention of the old rate which it could afford. Under
cross-examination,
Magagula conceded that, at the consultation
meeting of 13 November 2009. the consulting parties agreed that
Bengequla would present
to the second to further applicants the
respondent's offer that the rate of remuneration should remain
unchanged and if an agreement
was not reached on that issue, their
contracts of employment would be terminated.
[15] Bengequla testified that the
respondent reneged on the agreement that the would communicate the
second to further applicants'
response on the offer of the rate of
remuneration to the respondent on 4 December 2009 by issuing the
dismissal letters before
he could communicate their response.
Magagula denied and testified that the respondent was informed by
the attorneys who were
assisting it at the time that Bengequla had
told them before 4 December 2009 that the second to further
applicants had declined
the respondent's offer to keep the
remuneration rate unchanged. The respondent did not call the
attorney who conveyed Bengequla's
purported response on the
remuneration rate and provided no explanation for such omission.
Bengequla led clear evidence on the
issue which was not challenged
under cross-examination. His evidence was generally consistent and
he did not waiver under cross-examination.
The same cannot be said
about Magagula who contradicted himself. For these reasons I
accepted Bengequla's version that he did
not tell the respondent,
either
directly
or through its
attorneys, that its offer had been declined by the second to further
applicants.
[16] Magagula attempted to justify
the respondent's conduct of issuing dismissal letters prematurely by
accusing the first applicant
of causing delays during the
consultation process by raising issues provided for in the
collective agreement. He, however, conceded
under cross-examination
that the issues raised by the applicants were relevant. Further
concessions made by Magagula regarding
delays in the finalisation of
the retrenchment process were that the applicant attended all the
consultation meetings, the respondent
never complained about delays
caused by the first applicant and that the respondent delayed in
appointing a facilitator. Magagula
conceded under cross-examination
that had the respondent received the information that the second to
further applicants
had
\ accepted its
offer to keep the remuneration rate unchanged, the reason for the
retrenchment would have fallen away and the second
to further
applicants would not have been retrenched. He further conceded that
the respondent did not apply LIFO in selecting
employees for
retrenchment, but retained those employees who accepted the
respondent's offer to keep the rate of remuneration
unchanged.
[17] The applicants' version and the
concession made on behalf of the respondent reflect that the
respondent failed in its duty
to engage with the first applicant in
a
meaningful joint
consensus-seeking process, because although the parties reached
consensus that Bengequla would communicate the
second to further
applicants' response to the respondent on 4 December 2009, the
respondent reneged on that agreement and dismissed
the second to
further applicants before giving Bengequla an opportunity to convey
their response, The respondent's premature
and unfair conduct
rendered
the second to
further applicants' dismissal for operational reasons both
substantive and procedurally unfair. The gravity of the
substantive
unfairness of the second and further applicants' dismissal on its
own justifies an order of their reinstatement.
[18]
I
found no reason both in law and in fairness for costs not to follow
the result.
Orde
r
[19] In the premises, the following order is made:
1. The dismissal of the second to further applicants
whose names are listed in table A for operational reasons was
substantively
and procedurally unfair;
2. The respondent is ordered to reinstate the second to
further applicants;
3. The respondent is ordered to pay the first
applicants' costs.
LALLIE, J
Judge of the Labour Court
Appearances:
For the Applicant:
Advocate Zondo
Instructed by:
Fingure
Phukubje inc. Attorneys
For the Respondents: Mr. Mothobi of
D B Contracting North CC
1
Act
66 of 1995.
2
[2007]
11 BLLR 1065
(LAC) at para 61