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[2013] ZALCJHB 116
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Mogwere and Others v Decor Wallpaper Company (Pty) Ltd (JS619/11) [2013] ZALCJHB 116 (10 June 2013)
REPUBLIC OF SOUTH
AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not reportable
Case no: JS619/11
In the matter between:
TSHIAMO KENNETH
MOGWERE
...............................................................
First
applicant
HLAKUDI LEVY MOGANO
.....................................................................
Second
applicant
DEBORAH KHOPANA
................................................................................
Third
Applicant
XOLISWA EUNICE
SIMELANE
...............................................................
Fourth
Applicant
SMART MORAPEDI
.....................................................................................
Fifth
Applicant
and
DÉCOR WALLPAPER
COMPANY (PTY) LTD
................................................
Respondent
Heard:
28 to 29
February 2013 and 18 March 2013
judgment:
10
June
2013
Summary: Retrenchment
on the basis of operational requirements. Retrenchment substantively
and procedurally fair.
JUDGMENT
AC BASSON, J
Introduction
[1] This matter concerned
the alleged unfair dismissal on the basis of operational requirements
of the first applicant (Mr Tshiamo
Kenneth Mogwere), the second
applicant (Mr Hlakudi Levy Mogano) and the third applicant (Ms
Deborah Kgopana). Although there were
initially five applicants, the
fourth applicant (Ms Xoliswa Eunice Simelane) and the fifth applicant
(Mr Smart Morapedi) were not
present in Court and were therefore not
before the Court.
[2] The three applicants
were dismissed by the respondent (Décor Wallpaper Company
(Pty) Ltd) on 8 July 2011 for operational
requirements. Both the
substantive and procedural fairness of the dismissal were placed in
dispute. The three applicants represented
themselves.
[3] It was not in dispute
that the three applicants were employed by the respondent: Mogwere
was employed as a store assistant in
2004, Mogano was employed as a
store assistant in 1983 and Kgopana was employed as a shop assistant
in 1981.
Relevant facts
[4] It appears from the
evidence that the respondent delivered a memorandum to various
employees on 28 June 2011 to attend individual
meetings with
management on 29 June 2011. The meetings were held with all three
applicants individually. During the meetings the
respondent delivered
retrenchment notices in terms of section 189(3) of the Labour
Relations Act
1
(“LRA”) to
various employees. Each letter was personalised and addressed the
employment position of each individual
applicant. Letters of
termination were handed to the three applicants on 8 July 2011.
[5] In the section 189(3)
notice,
the
employees are informed of the reasons for the proposed dismissals on
the basis of operational requirements. In respect of the
first and
second applicants,
it
is stated that the respondent, due to financial reasons,
no longer needed the
services of three employees to pick orders. As will become apparent
herein below, the first and second applicants
were employed in the
Warehouse Department. Kgopana was informed that her position had
become redundant as her functions could be
taken over by the current
bookkeeper. Because she did not have any other skills than Data
Capture and Processing,
she
could not be utilised in any other capacity within the respondent.
[6] Ms Leonie Connolly
(“Connolly”), the General Manager of the respondent,
explained that she is part of the senior
management team and that she
heads up the Sales Division and all its functions. She is also in
charge of all marketing projects,
annual sales targets and does
general managerial duties pertaining to staff and the turnover of the
company. She referred the Court
to two organograms: one before the
retrenchment and one after the retrenchment. The pre-retrenchment
organogram shows that Kgopana
was employed as a Data Capture Clerk in
Finance and that Mogano and Mogwere were employed in the Warehouse
department under Mr
Jeff Moodley (the Warehouse Manager). The
organogram post the retrenchment shows a slimmed down company. Under
the Warehouse Department
is now listed only one name namely that of
Moodley (the Warehouse Manager). Under finance (where Kgopano used to
work) are now
only listed Ms Aletta Martin – the Bookkepper, Ms
Winnie Kai – the Credit Controller and Ms Eunice Simelane –
the Tea and Cleaning Lady. Simelane is identified as a “part
time” employee.
[7] Connolly explained
that the respondent’s sole function is to import and sell wall
paper. All three employees worked for
Décor Wallpaper Company.
Another company – Décor Interior Contracts (Pty) Ltd
operates from the same premises
and the organogram features all the
employees of both companies.
[8] Connolly further
explained with reference to the section 189(3) notice that although
the year (2011) started off with great
optimism, the respondent
experienced the effects of the recession since June 2011. She
explained that prior to the World Cup in
2010, the respondent had a
lot of work especially during the time hotels were refurbishing in
preparation for the World Cup. When
the World Cup ended in 2010 the
work in the construction industry almost dried up.
[9] The respondent had
various meetings and discussions on managerial level and by the end
of November 2010, it realised that the
respondent’s sales
figures had dramatically went down compared to the same period in
2009. Sales dropped from about 1.7 million
in 2009 to about R
900 000.00 in 2010 which constitutes an almost 44% from the
previous year. What made matters worse was
the fact that November
used to be the respondents best month in respect of sales.
[10] The respondent
started to introduce cost saving measures already in 2010 and the
respondent looked at reducing spending on
fuel, telephone, teas and
cleaning. On 9 December 2010 the respondent wrote a letter to all
employees thanking them for their hard
work. The letter also reminded
employees that expenditure had to be kept in check. On 31 March 2011
a further letter was sent to
employees in which they were again
reminded that expenditure had to be watched carefully.
[11] The respondent then
realised that more dramatic measures had to be taken. One of the
measures was to place employees who were
due to retire on early
retirement. Two drivers were placed on early retirement. A further
measure was to offer the three sales
representatives commission based
remuneration instead of a fixed salary. When the three sales
representatives turned down the offer,
they were retrenched and
replaced by independent contractors who worked on commission only.
Their names do not appear on the organogram
post-retrenchment.
[12] Present at the
individual meetings on 6 July 2011 were Mr Graham (the General
Manager), Mr Fakir, Mr Anton Lombard (the respondent’s
attorney) and Ms Connolly. Connolly, Mr Fakir (the Financial Manager)
and Lombard confirmed the correctness of the minutes.
[13] I have already
pointed out that the third respondent - Kgopana was employed in
Finance Department as a Data Capture Clerk.
In respect of Kgopana,
Connolly testified that the respondent looked at the various
functions in the different departments. She
testified that it was the
view of the respondent that the Bookkeeper (Ms Martin) was able to
absorb the functions of the Data Capture
Clerk (the position held by
Kgopana) but that it was not possible the other way round. She
testified that a discussion was held
with Kgopana on 29 June when the
notice was handed over and that she was asked to come forward with
any ideas. She was notified
to come to a further meeting on 6 July.
The minutes of the meeting show that it was explained to Kgopana that
her functions had
become redundant. She was asked for any
alternatives. She proposed short time and unpaid leave. Both these
alternatives were not
feasible. The meeting also discussed a possible
transfer but Kgopana conceded that she did not have the necessary
skills to work
in any other department. When no further options could
be explored the meeting was adjourned.
[14] An individual
meeting was also held with the first respondent, Mogwere. When he
entered the meeting he complained about the
presence of Lombard (the
attorney for the respondent). Lombard left the meeting. Connolly,
Fakir and Graham were present. Connolly
testified that Mogwere simply
requested his blue card and severance pay and that he informed the
meeting that he had been dismissed.
It was explained to him that he
was not dismissed. He refused to listen to them and said that he
would go to the CCMA. The discussion
ended when he walked out of the
room. She also confirmed the minutes of the meeting as a true
reflection of what had transpired.
The referral form to the CCMA was
introduced into evidence. In the CCMA referral, Mogwere stated that
he was already dismissed
on 7 July 2011 which is consistent with the
evidence of Connolly that Mogwere left the meeting and that his
departing words were
that he was going to the CCMA.
[15] Connelly explained
that they also had a meeting with the second applicant - Mogano.
Mogano stated to the meeting that he had
read the notice but that he
did not understand it. The notice was explained to him. Mogano stated
that he could do the job of Moodley
(the Warehouse Manager). The
Managing Director explained to Mogano that he could not do Moodley’s
job and explained to him
that he was previously appointed as a
warehouse manager and was removed from the position due to his
inefficiency. Mogano then
said that the respondent did not meet with
the staff because they were Black. The Managing Director took great
exception to that
because all but three employees of the respondent
were Black. Various alternatives were also discussed with Mogano. In
respect
of Moodley, Connolly explained that Moodley had 15 years’
of experience in warehouse management at the time he joined the
respondent. He also has a Diploma in Warehouse Management. The Court
was also referred to a document containing a list of the
representations that were made by Mogano. The document also records
why these representations were rejected by the respondent. The
document is dated 8 July 2011.The document was handed to Mogano on
the later date. Mogano received severance amounting to R52 587.99.
[16] Connolly explained
that the final decision to retrench was taken after the meetings and
after management went through the alternatives.
She explained that
because the first and second applicants were aggressive, the
respondent did not require of them to work until
8 August 2011.
[17] Connolly explained
that the sales representatives were retrenched and replaced by
independent contractors working on commission
only. She also
explained that at the time the respondent had two drivers. The one
driver retired in March 2011. The other driver
(Rommel) retired in
November 2011. Rommel was subsequently reappointed as a driver.
Evaluation
[18]
I
am satisfied that the respondent had a valid economic rationale to
retrench. The evidence before the Court was clear namely that
the
respondent had experienced an almost 37% drop in income and that the
financial future of the company at the time looked bleak.
It is clear
from the evidence that before the section 189(3) notice was issued
that the respondent had already taken cost saving
measures but that
that was not sufficient. It is further clear from the evidence and
especially if regard is had to the pre-retrenchment
organogram as
opposed to the post-retrenchment organogram that the respondent not
only targeted these three applicants but that
others were also
affected. The undisputed evidence also was that the three salaried
sales representatives were retrenched and replaced
by independent
contractors who worked on commission basis only. Two employees were
also placed on early retirement. I am also satisfied
that the
applicant had engaged in meaningful consultations
2
with all three applicants
and that a sound economic rationale existed for their retrenchment. I
am also satisfied that the selection
of the three applicants for
retrenchment was fair. In respect of the third applicant,
I am satisfied that her
retrenchment was substantively and procedurally fair. If regard is
had to her duties and the department
in which she worked,
it is clear that she was
unable to do the functions of Winnie Kay who performed the full
debtors’ functions. I am also satisfied
that the respondent had
explored all alternatives with her and that no alternative position
was available. In respect of Mogwere
and Mogano,
I
am equally satisfied that their retrenchments were substantively and
procedurally fair. Neither of them could fulfil the position
of the
Warehouse Manager as none of them possessed the qualifications and
skills that Moodley had. In this regard,
Fakir
(the respondent’s Financial Manager) also confirmed that
Moodley possess skills that the first and second applicants
did not
have. Moodley’s duties entail recording of stock and movements
in the Warehouse, administration work as far as receipting
of stock
is confirmed and that he also assisted during stock takings. I am
also satisfied despite the protestations of Mogano that
they were
properly consulted on alternatives.
[19] In the event,
I am of the view that the
dismissal of the three applicants on the basis of operational
requirements was substantively and procedurally
fair. I have decided,
in light of
considerations of fairness,
not
to make an adverse cost order against the applicants.
[20]
In
the event,
the
following order is made:
The dismissal of the
first, second and third applicant was substantively and
procedurally fair.
There is no order as to
costs.
_____________________
AC BASSON, J
Judge of the Labour Court
APPEARANCES
For the Applicants:
Applicants appeared in person.
For the Respondent:
Advocate S Strydom
Instructed by: Anton
Lombard Attorneys
1
Act
66 of 1995.
2
In
Johnson and Johnson (Pty) Ltd v Chemical Workers Industrial Union
(1999) 20 I
LJ
89 (LAC), it was held that: ‘[25] It is
convenient to set s 189 out in full:
'(1) When an employer
contemplates dismissing one or more employees for reasons based on
the employer's operational requirements,
the employer must consult -
(a) any person whom the
employer is required to consult in terms of a collective agreement;
(b) if there is no
collective agreement that requires consultation, a workplace forum
if the employees likely to be affected by
the proposed dismissals
are employed in a workplace in respect of which there is a workplace
forum;
(c) if there is no
workplace forum in the workplace in which the employees likely to be
affected by the proposed dismissals are
employed, any registered
trade union whose members are likely to be affected by the proposed
dismissals;
(d) if there is no such
trade union, the employees likely to be affected by the proposed
dismissals or their representatives nominated
for that purpose.
(2) The consulting
parties must attempt to reach consensus on -
(a) appropriate measures
-
(i) to avoid the
dismissals;
(ii) to minimise the
number of dismissals;
(iii) to change the
timing of the dismissals; and
(iv) to mitigate the
adverse effect of the dismissals;
(b) the method for
selecting the employees to be dismissed; and
(c) the severance pay
for dismissed employees.
(3) The employer must
disclose in writing to the other consulting party all relevant
information, including, but not limited to
-
(a) the reasons for the
proposed dismissals;
(b) the alternatives
that the employer considered before proposing the dismissals, and
the reasons for rejecting those alternatives;
(c) the number of
employees likely to be affected and the job categories in which they
are employed;
(d) the proposed method
for selecting which employees to dismiss;
(e) the time when, or
period during which, the dismissals are likely to take effect;
(f) the severance pay
proposed;
(g) any assistance that
the employer proposes to offer to the employees likely to be
dismissed; and
(h) the possibility of
the future re-employment of the employees who are dismissed.
(4) The provisions of
section 16 apply, read with changes required by the context, to the
disclosure of information in terms of
subsection (3).
(5) The employer must
allow the other consulting party an opportunity during consultation
to make representations about any matter
on which they are
consulting.
(6) The employer must
consider and respond to the representations made by the other
consulting party and, if the employer does
not agree with them, the
employer must state the reasons for disagreeing.
(7) The employer must
select the employees to be dismissed according to selection criteria
-
(a) that have been
agreed to by the consulting parties; or
(b) if no criteria have
been agreed, criteria that are fair and objective.'
[26]
The section places some primary obligations on an employer in order
to ensure that an employee is not unfairly dismissed.
The employer
must initiate the consultation process when it contemplates
dismissals for operational reasons (s 189(1); cf
FAWU
and another v National Sorghum Breweries
[1997]
11 BLLR 1410
(LC) at 1420F-1421B,
(1998)
19 ILJ 613 (LC)
at 623C-I). It must also disclose relevant
information to the other consulting party (s 189(3)); it must allow
the other consulting
party an opportunity during consultation to
make representations about any matter on which they are consulting
(s 189(5)); it
must consider those representations and, if it does
not agree with them, it must give its reasons (s 189(6)).
[27] But all these
primary formal obligations of an employer are geared to a specific
purpose, namely to attempt to reach consensus
on the objects listed
in s 189(2). The ultimate purpose of s 189 is thus to
achieve a
joint consensus seeking process
. In this manner the section
implicitly recognizes the employer's right to dismiss for
operational reasons, but then only if a
fair process aimed at
achieving consensus has failed. This is also apparent from s 189(7)
which provides that the employer must
select the employees to be
dismissed on criteria either agreed to, or if that is not possible,
on criteria that are fair and
objective.
[28] The achievement of
a joint consensus seeking process may be foiled by either one of the
consulting parties. The employer
may obviously frustrate it by not
fulfilling its obligations under s 189(1), (3), (5), (6) and (7).
The other consulting party
may do it by refusing to take part in any
of the stages of the consultation process, or by deliberately
delaying the whole process
(cf
NEHAWU v University of Fort Hare
[1997] 8 BLLR 1054
(LC);
UPUSA and others v Grinaker Duraset
[1998] 2 BLLR 190
(LC) at 204D;
Fowlds v SA Housing Trust Ltd and
another
case no J561/98 (LC) at para [11]). It may also appear
that any one of the parties simply went through the entire formal
process
with no intention of ever genuinely reaching agreement on
the issues discussed. These different possibilities depend on the
facts
of each particular case.’