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[2015] ZALCJHB 225
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National Union of Mineworkers and Others v Lonerock Construction (Pty) Ltd (JS 298/12) [2015] ZALCJHB 225 (29 July 2015)
THE
LABOUR COURT OF SOUTH AFRICA,
IN
JOHANNESBURG
Case
No: JS 298/12
DATE:
29 JULY 2015
Not
Reportable
In
the matter between:
National
Union of
Mineworkers
.....................................................................................
First
Applicant
ORLANDO
MAWAE and 17
OTHERS
..................................................
Second
to further Applicants
And
LONEROCK
CONSTRUCTION (Pty)
Ltd
........................................................................
Respondent
Delivered:
29 July 2015
Summary:
(S 189 - unfair retrenchment – genuine operational need –
bona fide consultation over retrenchments except
in respect of
selection of applicants for retrenchment – Failure to prove
selection criteria were fair and objective but
extent of unfairness
indeterminate – compensation awarded)
Judgment
LAGRANGE,
J
Nature
of the Dispute
[1]
This matter concerns an alleged
substantively and procedurally unfair retrenchment of 18 employees of
the respondent. Two of the
applicants, applicants 12 and 17, being Mr
R Rakgoropo and Mr IE Selepe had withdrawn from the matter by the
time it came to trial.
A question mark was also raised about whether
the 13
th
applicant, Mr MS Nkhumeleni was still a party to the matter, but he
had reportedly been re-employed had subsequently absconded.
The
individual applicants are part of a group of employees retrenched in
December 2011 following an initial retrenchment of three
operators
the previous month. The respondent is a civil engineering and
construction company specialising amongst other things
in roadworks,
infrastructure and bulk earthworks. In 2011 the respondent’s
business was adversely affected by the economic
downturn as a result
of which it lost a number of private clients and became very
dependent on government contracts.
[2]
There was no dispute about the fairness of
the retrenchment of the three operators which was concluded after
five consultative meetings
between the union and the respondent.
Essentially, the disagreement between the parties concerns whether or
not the retrenchment
process which ended with the retrenchment of the
three operators was part of an ongoing process or was concluded when
they were
retrenched, and whether the respondent should have
consulted a fresh over the subsequent retrenchments in December. The
applicants
also challenge the substantive fairness of the
retrenchments. The individual applicants seek maximum compensation as
relief.
[3]
The employer had also belatedly challenged
the union’s right to represent the applicants 10, 11,12,13,17
and 18 namely Mr
M I Mokaiwa and Mr R Munkuli, Mr R Rakgopopo, Mr M S
Nkhumeleni, Mr I E Selepe and Mr S K Morwa because it contended
that
they are not union members. Even when the pre-trial minute was
concluded, this challenge was not stated in anything more than a
general challenge of the union’s right to represent the
applicants and the respondent’s answering statement did not
dispute the union’s assertion that all the individual
applicants were its members. In the end this point fell away when the
respondent withdrew its objection to the union’s mandate.
[4]
It was also recorded by the parties in the
pre-trial minute that the second, third and fifth applicants, being
Mr A S Mawae, Mr
T Majola and Mr R Tewukeni, were permanent employees
and the remaining individual applicants were employed on a limited
duration
contracts. However at the start of proceedings it was
contended by the applicant’s counsel,
Ms
Nkutha
, that apart from the fact that
the pre-trial minute may not have reflected the classification of the
applicants correctly, it was
not a material issue because in terms of
the applicable bargaining Council agreement all employees with 18
months service were
deemed permanent. In fact, for the purposes of
the retrenchment, all the individual applicants were treated as
permanent employees
and those on limited duration contracts were also
paid severance pay.
Outline
of events
[5]
The timeline of events leading to the
December retrenchments is summarised below.
[6]
On 11 August 2011, the respondent
held a consultation meeting with the union which dealt with possible
retrenchment in broad terms
and in particular focused on the
difficulties the respondent was having in obtaining contracts it had
tendered for. There was a
general discussion about alternative
solutions and the union requested details of employees who might be
affected by any anticipated
retrenchment.
[7]
The minutes of a subsequent meeting of the
executive committee of the respondent on 23 August 2011 record that
the consultation
process with NUM had started and that “…
It was agreed that the retrenchment process will take place in two
phases.
The first phase will be at the end of September 2011 and the
second phase will follow soon thereafter.” The minutes also
identified “employees likely to be affected by the proposed
dismissals” in these terms:
“
·
administrative employees at head office;
·
Foremen;
·
labourers;
·
those who may prefer to take cuts in salary/wages;
·
loss of overtime;
·
voluntary retrenchment.”
[8]
The minute of the Exco meeting also records
that it was anticipated at the second consultation meeting with NUM
that a training
layoff scheme would be discussed with them and a
final list of employees to be dismissed would be given to the union.
[9]
A second consultation meeting took place
with the union on 26 August 2011. At that meeting, the respondent
confirmed that drivers
and operators would not be affected and that
management was trying to avoid retrenchment and had implemented a
moratorium on overtime
as a cost saving measure.
[10]
On 13 September 2011 a third consultation
meeting took place which was facilitated by one Adv L Pienaar
(‘Pienaar’)
from a labour consultancy known as the Legal
Laboratory. At that meeting a final list was not provided as
anticipated but the respondent
reported that it provisionally
anticipated approximately 50 permanent employees and all limited
duration contract (‘LDC’)
employees would be affected. Mr
I Khazi (‘Khazi’), a union official said that in the
absence of identifying the specific
individuals, the union could not
say that the group of 50 employees necessarily included in the
applicants, though he agreed that
applicants whose 18 month contracts
were due to end shortly would have been amongst those that the
company would have tried to
redeploy in its efforts to prevent
retrenchment.
[11]
The possibility of a CCMA facilitated
process under the auspices of section 189 A of the Labour Relations
Act, 66 of 1995 (‘the
LRA’) was also discussed in this
meeting discussed with this option being left with the union to
revert to the respondent
about. The respondent proposed as an
alternative to retrenchment that there should be a moratorium on the
permanent appointment
of LDC employees who qualified for permanent
employment based on their length of service. It also undertook as far
as possible
that such employees would not be affected by the
retrenchment, but if they were they would be treated as if they were
permanent
employees and not on the basis that their LDC terms had
simply come to an end.
[12]
The fourth consultation meeting took place
on 26
th
of October 2011. At that meeting the discussion focused almost
exclusively on three operators who had been identified for
retrenchment
and the union accepted that the retrenchment of two of
them was justified. The minute records in conclusion that: “The
situation
has now changed but it appears that these may be the only
three positions which are faced with the possible retrenchment.”
There was also an indication that this was due to alternatives to
retrenchment being adopted. The union concluded its representations
with a request to management to indicate when the layoff process
would end as they wanted to meet with the members for them to
take a
decision whether they would opt for retrenchment or would continue
with layoffs. It had been contended by Ms B Visagie (‘Visagie’),
the HR manager, that the reference to only three positions being
affected was a reference to permanent employees and not to LDC
employees, but Khazi pointed out that this is not what was conveyed
by the minute of the meeting. Furthermore, when the union asked
about
the continued layoff process they did so in the context that it
appeared that drivers and operators were still being affected
by
short time even though the company was saying that the retrenchment
was concluded.
[13]
A further meeting took place on 7 November
2011, which simply dealt with a follow up on the two operators who
had been selected
for retrenchment. Van der Walt agreed that between
this meeting and the retrenchments which took place in December there
were no
discussions held between management and the union.
[14]
However, on 9 December another meeting was
convened at which the union was advised of further possible
retrenchments at the head
office. The union representatives expressed
the view that they would have to arrange a further meeting with the
employees because
they were under the impression that the
retrenchment process had already been concluded. They also raised
their concern that there
had been no communication from management
since the last retrenchment phase in November. Management said that
the efforts to avoid
retrenchment were ongoing and they had never
said that the process had been concluded and despite their efforts it
appeared that
retrenchments were inevitable. They requested
additional time to discuss the matter before “the Company takes
a final decision.”
The company representative at the meeting,
Visagie agreed that the matter would be dealt with in a subsequent
meeting scheduled
for the following week.
[15]
At the follow-up meeting on 12 December
Visagie confirmed that the affected departments where the workshop
and health and safety
sections which would be downsized. She further
identified seven safety officers and 10 Workshop employees who would
be affected.
The meeting ended on the basis that the union
representatives requested a postponement until 14 January 2012, but
this could not
be confirmed because the request had to be tabled at
the respondent’s Exco on 14 December. Visagie undertook to
revert to
them with feedback on management’s decision.
[16]
The next development was that on 14
December retrenchment notices dated 12 December were issued to the
individual applicants.
[17]
The applicants do not take issue with the
events preceding the retrenchment of the two operators most of which
appear to be common
cause. Essentially the dispute concerns what
happened thereafter which led to the retrenchment of the applicants.
Matters
arising from the evidence
[18]
Mr J G Van der Walt (‘Van der Walt’),
the former chief operating officer and current chief executive
officer of the
company and Visagie gave evidence for the respondent.
Khazi and Mr M I Mokaiwa testified for the applicants.
[19]
Van der Walt commenced the respondent’s
evidence. He explained that prior to the slump in 2008 and 2009 the
company had been
largely reliant on private sector contractors
engaged in road and other urban infrastructure projects, particularly
for the city
of Johannesburg. When that work started to dry up they
were fortunate enough to get sub contracts with companies engaged in
World
Cup infrastructure projects. The company employed approximately
600 staff in 2011 and prior to that year its monthly turnover was
something in the region of R40 million. This dropped to between R 25
million and R 37 million during the course of the year. By
January
and February 2012 turnover had dropped to the region of R10 million
per month. Staff levels eventually dropped to 300 at
one stage
corresponding with the decline in work.
[20]
An added difficulty with tendering for
government work is that the waiting time for approval of tenders
could be in the region of
four months and the lowest tenderer did not
always get the work even though the firm had tried to put in tenders
at lower and lower
prices. A further complication experienced by the
company was the local labour force requirements of various
infrastructural contracts
which required the company to recruit a
large component of the labour force in the district where the work
was being performed.
This meant that the company could no longer use
all its own staff on projects and it was necessary to shrink of the
company to
adjust to its new role as a management company rather than
a construction company, which is what it was before. This
necessitated
the restructuring of the head office and led to the
closure of the administration department. The company had effectively
become
a small company compared to what it was previously. The
company’s fortunes had only started to recover a little by
2014.
[21]
In the months before December 2011 the
company attempted to avoid retrenchments by adopting measures like
placing staff on short
time (layoffs). They also attempted to tender
more cheaply, but in the long run there was a limit to how low they
could tender.
Some other companies which adopted the same strategy
were forced out of business.
[22]
A consultation meeting was held with the
union on 11 August 2011 in which Management canvassed the
difficulties it was having in
securing future contracts in view of
the moratorium placed on tenders which meant that employment in the
forthcoming months might
be jeopardised. Both parties placed on the
table suggested alternatives to avoid retrenchment which included
retraining staff to
be laid off, reviewing the number of staff to be
retrenched and minimising working hours. Severance pay and
re-employment opportunities
were also discussed. The company
emphasised that without any contracts it would be in no position to
keep employees on because
there would be no funding to remunerate
them. Under cross-examination, Van der Walt conceded that this
initial consultation meeting
had not been preceded by a notice
inviting the union to consultations and setting out the details
stipulated in section 189 (3)
of the LRA. He also agreed that at that
stage, the company did not provide the union with a list of affected
employees and advised
the union that at that stage it was not
intending to retrench drivers and operators. The only conclusion of
that meeting was that
retrenchment might take place. Visagie
emphasised that none of the applicants were drivers and operators and
by implication it
should have been clear at the meeting on 11 August
that they might be amongst those affected by the retrenchment. The
union also
presented certain alternative proposals and the company
responded to these in the meeting. In her evidence, Visagie gave an
explanation
why the company was not able to adopt the proposals
except for one relating to a number of employees on the layoff at any
one time.
The union requested three lists containing the names of
employees with skills, those the company would like to retain and
those
who were to be retrenched, but nothing was provided that stage.
[23]
A letter dated 17 and August 2011 addressed
to salaried personnel and administrative wage earners was issued by
the company. It
was a matter of dispute whether this was received by
wage earners such as the applicants. Khazi claimed that the ordinary
wage
earners had not received it. The letter warned the recipients
that retrenchments would become inevitable if the company did not
obtain four to five new contracts soon that would allow it to
maintain its current level of activity and expressed deep regret
that
the company found itself in the current situation.
[24]
Van der Walt also testified that at the
Exco meeting held on 23 August it was decided that the retrenchment
process would be effective
immediately and that the retrenchment
process will take place in two phases the first of which to be
completed at the end of September
and the second phase to follow
“soon thereafter“. Khazi testified that his understanding
was that there was a two phase
retrenchment process and that is what
happened. The meeting also envisaged the closing down of certain
administrative departments
at head office as part of the procedure.
Other issues the meeting decided concerned a four-week notice period
of the retrenchment,
the application of LIFO as a selection
principle, the attempt to retain employees falling within the skills
development program
and the non-viability of a salary cut as an
option because it would not save costs. The meeting also discussed
how to operationalise
the union’s proposal at the last meeting
to make use of the training layoff scheme facilitated by the CCMA. In
that meeting
the clear intention of issuing the union with a final
list of all employees “to be dismissed” was also
recorded. However,
Visagie testified that the company avoided drawing
up a list because senior management was trying to find work at other
sites all
the time to keep people busy.
[25]
At the next consultation meeting on 26
August, the meeting commenced with a review of the status of current
and anticipated contracts
presented by Van der Walt. It was further
emphasised that management was constantly searching for new smaller
jobs despite the
moratoriums on larger projects associated with
government tenders in an effort to sustain and the company and to
secure employment.
Van der Walt had explained earlier that at that
stage drivers and operators of equipment would not be affected and
the retrenchment
process for the labourers/wage employees had not
been confirmed because management was able to continue to assign
employees work
in the current projects of the company. As far as
possible the company was seeking to use them to complete current jobs
and to
start on any new small drops that might materialise. Under
cross-examination, Visagie also reaffirmed that at that juncture the
company could not identify members of the general labour force who
might be affected and could only say that at that stage no
retrenchment was envisaged. In relation to salaried employees six
engaged at the office had been identified for retrenchment as
well as
nine Foreman and shift supervisors. The meeting concluded on the
basis that retrenchment consultations would take place
weekly until
further notice. Once again, the union raised the question of the
company providing it with a final name list of the
labourers who
would be affected and indicated that they have their own list to
compare with companies list. However, they were
advised that no final
list was available because the company was still trying to find
alternative employment for labourers within
the existing projects.
Khazi testified that the meeting was not “very conclusive”
because as in the previous meeting
management conveyed that it was
doing everything in its power to which retrenchments. They understood
the process was still at
an early stage and that management had not
yet identified those categories of employees who would be retrenched.
[26]
Although a meeting was scheduled for 8
September 2013, the next meeting took place on 13 September. At that
meeting Van der Walt
once again gave a detailed breakdown of the
status of current contracts. He confirmed that office retrenchments
were complete and
that overheads had been cut and turnover halved as
a measure to sustain the company until the end of 2013. It was
reported that
currently there were no contracts available in the
private sector and that even if possibilities might arise from new
Toll road
projects, retrenchment remained a current reality. Pienaar
presented a flowchart of the steps to be followed when retrenchment
occurred and explained the process in some detail. An opportunity was
given for clarification and questions. The union asked for
a list of
labourers who might be affected but was told that there was no final
list because the company was still finding employment
for labourers
was in the existing projects. The prospect of following a
facilitation process under section 189A was also discussed.
When the
union asked how many people were earmarked for retrenchment the
company’s response was that approximately 50 permanent
employees and all limited duration contract workers would be affected
but the number could increase or decrease. Visagie reiterated
that at
that stage the company could not come up with a list of specific
names for the reasons previously mentioned. The union
requested lists
of LDC employees who had become permanent and lists of current
employees employed on the same contract irrespective
of their length
of service. Visagie agreed that this meeting might be considered to
be the commencement of the formal consultation
process. As with the
previous meetings, the union was under the impression that the
process was still unfolding as management was
trying to get new work
to keep people employed. Khazi agreed that because they had good
relations with the company they did not
see the need to follow the
facilitation envisaged in section 189A.
[27]
It was also at this meeting that the
company canvassed the proposal that there should be a six month
moratorium on confirming the
permanent status of LDC employees with
18 months service. Although the minutes did not reflect that this was
agreed to by the union,
Van der Walt conceded that it was correct
that the union had acceded to this, but she would not agree that the
minutes were necessarily
inaccurate because it would normally happen
that the union would have to consult with its members before
reverting on a proposal
like this. Khazi confirmed that the union had
agreed to the moratorium on permanent employment at the meeting and
it had not responded
to a subsequent letter from the respondent
seeking confirmation that are of because an agreement had already
been reached. Under
cross-examination, Khazi said that if they had
not agreed to the moratorium then the union would have complained to
management
if the respondent had implemented it notwithstanding the
lack of agreement.
[28]
On 19 September 2011 the company sent a
letter to the union which dealt with two issues: whether the parties
should proceed to consult
under a section 189A facilitation process
or simply continue dealing with the matter at plant level without
assistance from the
CCMA and a proposed six-month moratorium on the
permanent employment of LDC employees who would normally qualify for
permanent
employment status. In addressing the first issue, the
company expressed its difficulties in being able to populate a list
of employees
who might be affected by retrenchment because it was
still hopeful of avoiding or minimising the number of affected
employees.
Visagie said that she believed management was finding it
very difficult to make a decision to retrench anyone. The company
proposed
that the parties should continue with discussions at plant
level because the company could not foresee whether the number of
retrenchments
would exceed the threshold for invoking facilitation
under section 189A and also could not carry the wages of employees
for a period
of 60 days if they were not engaged in gainful work.
Khazi testified that it was important for the union to obtain a list
of names
of those likely to be retrenched together with their skills
in order to identify possible alternative positions for such people,
but at the time management said it was doing everything in its power
to ensure that nobody was retrenched the union accepted that
a list
was not necessary at that juncture. However, Khazi believed that the
letter clearly gave the impression that a full consultation
process
would still take place before any retrenchments occurred. He agreed
that at that stage the retrenchment process had not
been concluded is
and was an ongoing one. However, he did not accept that because the
company had stated that operators and drivers
would not be affected
this implied that those affected would necessarily include the
applicants because they were part of the remainder
of the workforce.
At that stage the union was simply confronted with an overview of
what was happening in the company and was not
dealing with the
specific reasons for the retrenchment of a specific number of
persons.
[29]
Unlike the previous meetings, the next
meeting on 26 October was only attended by Visagie. According to the
minutes she recapitulated
what had transpired in the previous
meetings “to ensure that everyone has the same understanding of
the process thus far.”
A discussion then focused on three
machine operators who had been identified for retrenchment. Van der
Walt explained that in the
course of operators working short time
these three individuals had been identified as candidates for
retrenchment but were not
part of the broader exercise. The
individuals were operators of plant that was redundant and, up to
that point, the company had
been able to use them on other machinery
while such work was available. Two of the machines were rollers which
were not used any
more and the other was a recycling machine which
was too small for the kind of work the company was doing. Van der
Walt’s
evidence was that these retrenchment discussions took
place apart from the prior discussions which had taken place in the
earlier
meetings. Khazi said that the discussions at that meeting and
the proposals made by the union had focused exclusively on the three
affected operators.
[30]
In management’s conclusion of the
meeting it was recorded that “…so far, the retrenchments
process amongst the
labour force was never actually implemented"
(
sic
),
owing to the application of alternatives to retrenchment. It was also
recorded that “(t)he situation has now changed, thus,
it
appears that these may be the only three positions which are faced
with a possible retrenchment.“ The three positions
in question
obviously relate to the three operators discussed above. Van der Walt
could not explain why there had been an impression
that a phase of
the retrenchments had been completed at that point, nor could he
understand why it was stated that the situation
had changed given the
actual state of the company’s turnover and workload at the
time. Visagie also testified that management
had never announced the
end of the retrenchment process so there could not have been a belief
that it had ended with the retrenchment
of the three operators.
Consequently, the union could not claim that the applicants had been
given false hope in this regard. Nevertheless,
Khazi claimed that the
union understood that the retrenchment of the three operators
concluded the entire retrenchment process.
As far as the union was
concerned the retrenchment of the applicants constituted a second
phase of retrenchments. The first phase
had been concluded with the
retrenchment of the two operators.
[31]
It was also not true that only two
operators were retrenched at that time because nine other persons in
site supervision posts were
also retrenched then, as well as
administrative staff. It was correct that there were no further
retrenchments after the operators
were retrenched until the
retrenchment of the 17 individual applicants in December 2011.
However, Van der Walt emphasised under
cross-examination that over
the whole period from August until December 2011, approximately 160
people left the company and not
just the individual applicants.
Between December 2011 and January 2012, the size of the workforce
further decreased from approximately
625 to 440. A number of these
were LDC employees whose contracts had come to an end
[32]
Van der Walt conceded that a certain amount
of overtime had continued in the workshop despite the union’s
proposal but overtime
should be cut. That had been an unavoidable
necessity because machinery would only frequently be brought in for
repair overnight
so that it could be used on a site the following
day. If the repairs were not done overnight then operators would be
standing idle
the following day. He denied that the operators were
all fully occupied all the time: there were occasions when they would
be at
the workshop but engaged in non-productive work such as
cleaning the workshop floor. Khazi testified that there were sites
where
overtime was being worked, though this claim was only put in
the most general terms to Van der Walt.
[33]
Van der Walt referred to a handwritten
letter from the shop stewards addressed to Visagie dated 2 December
2011. The letter proposed
a meeting on 6 December 2011 to discuss
four items, only two of which are relevant to this matter. The
relevant items were stated
as:
“…
2)
Lay-offs – Just an alternative to retrenchment – jobs are
limited.
3)
Retrenchments/Termination of Temp employment contracts…”
Khazi testified
that the main reason for requesting a meeting was that one of the
union members had been given a letter notifying
her of the
termination of her LDC contract, which was contrary to the agreement
reached with the company that any employees with
18 months or more
service with the company would not have their contracts simply
terminated but would be retrenched after following
a section 189
process. They were also surprised to hear of this because they
understood that the retrenchment process had in fact
been concluded.
[34]
The request had been prompted by a notice of termination received by
a union member on a limited duration
contract who had received a
notice of termination on 30 November 2011. Visagie responded on 7
December proposing a meeting two
days later on 9 December. According
to Van der Walt, the termination notices, which had been erroneously
issued to the LDC employees,
were withdrawn and retrenchment notices
issued in their place.
[35]
A meeting as requested by the union did take place on 9 December. It
was attended only by two shop stewards,
Mr S Subere and Kazi, and
Visagie for management. In that meeting there was discussion about
further possible head office retrenchments.
The union representatives
said they needed to arrange another meeting with members because they
were under the impression that
the process was concluded. They also
complained that there had been no communication from management since
the “last retrenchment
phase” which took place in
November 2011. Visagie is recorded as replying that the company had
made them aware of the ongoing
attempts to avoid retrenchment and the
process was not yet concluded. The meeting then went on to deal with
the three operators
identified for retrenchment and with a list of
workshop and office personnel who had also been identified for
retrenchment on 7
December 2011. It was clear that the union
representatives accepted the two operators who had been identified
for retrenchment.
Visagie testified that it was at this meeting that
the list of the applicants’ names identifying them as employees
to be
retrenched was given to the union, but later she retracted this
claim saying that she could not be absolutely certain it was issued
at that meeting. The table containing the names in fact confirms the
retrenchment as having been determined on either 7 or 8 December,
the
day before the meeting. Van der Walt conceded that she had been told
by management to consult the union over the list of those
identified
for retrenchments, but could not say when she intended to do this and
she agreed that it was the union and not the company
which had called
for the meeting on 9 December. Van der Walt could not explain why it
was not sensible to postpone the process
given the issues which
needed to be discussed and did not have any discussion with Visagie
about the merits of the union’s
request to delay the
retrenchment, though she did express a view that the union’s
request could have been viewed as a delaying
tactic.
[36]
Although it was not reflected in the minute of the meeting, Khazi
claimed that the union had directly challenged
the company to follow
the normal section 189 process before it retrenched any of those
identified in the meeting for retrenchment
and that Visagie confirmed
that the effective date of the retrenchments would be 14 December
2011. He also claimed that Visagie
had agreed to respond to their
concerns by SMS after speaking to Van der Walt. It must be said that
Visagie was not expressly confronted
with this version during her
cross-examination. Khazi also commented that it was apparent from the
list of applicants received,
on which it was stated that
retrenchments were confirmed on 7 or 8 December, that management had
already made up its mind to retrench
the applicants at that stage.
Visagie had undertaken to raise the matter at the Exco meeting
scheduled for 14 December 2011 but
she never came back to them.
[37]
A further meeting was convened on 12 December. Again Visagie was the
only management representative present
and the union official was
also absent. The minutes of the meeting follow the topics identified
for discussion by the union in
the handwritten letter. In relation to
lay-offs it was recorded that workers were complaining about it and
Visagie reiterated that
it was the only viable alternative to retain
all employees. The union is also recorded as complaining about the
termination of
the service of employees with continuous service of 18
months in the Health and Safety department. Visagie reported that
they had
been paid severance pay as if they had been permanent
employees and they could not be accommodated as Health and Safety
representatives
because of the limited projects available. The names
of employees identified for retrenchment in the workshop and Health
and Safety
departments were noted in the minute of the meeting.
Visagie agreed that the rectification of the severance payments to
retrenched
LDC employees did not rectify the lack of consultation
once the union had been notified of the persons identified and that
the
company had not followed the same process of consultation in
relation to the individual applicants which they had followed in the
case of the operators. She also agreed that the company had already
decided that 14 December would be the date of the retrenchment
and
accordingly there was nothing that she would need to revert back to
the union on despite what the minute stated.
[38]
The concluding passages of the minute read as follows:
“
4.2
The union members confirmed that they understand that the company at
the end of the day, has to follow a process. They added
that they
also had to have their own process to follow.
4.3
Ms Visagie informed him that she will give them feedback on
management’s decision.”
Visagie
said she understood the shop stewards response to have meant that the
company should go ahead with the retrenchment and
they would do what
they needed to do. Visagie’s memory of whether or not the
matter was referred to the executive management
after this meeting
was vague. All she could recall was that she had referred the matter
to Van der Walt and he had made the decision
to continue with the
process.
[39]
Despite all the explicit references to phases of retrenchment, Van
der Walt said he was surprised that the
process was viewed as a
phased one because in fact it was a continuous one in which the first
people retrenched worker departmental
heads, contract managers and
site foreman, but when it came to the general labour force a formal
list was not provided to the union
because the timing of the
retrenchments was contingent on the variable availability of work
which made it difficult to predict
in advance who would not be
needed. As he expressed it:
“
So
during the month of November, the three people, that was operators
and drivers, materialised out of group and they took the time
to try
and justify but why are they now all of a sudden on the list and I
think the labour force, which was ultimately being affected
all the
16 or 17 people was almost forgotten in the process going forward but
the fact that the retrenchment was a reality was
real thing never
thought that there was a process that is now finished.
...
During
this very same process, in excess of 100 LDC people lost their jobs,
which came to a normal event, so you must now go and
compile a list
where there is other 100 people involved, where a site gets closed
where people get switched between sites and foremen.
So it becomes
very difficult to create a list and I think that is why ultimately
there was only a list of 15 or 17 people part
of a group of 400 or
500 people because of the people that were on LDCs completed their
tasks at the same time and we could terminate
their employment and
save some of our permanent people.”
Van der Walt was
also unclear about what might have constituted a first phase of
retrenchments except in the sense that the first
batch of
retrenchments involved salaried staff and site supervisors, but the
retrenchment process itself was a continuous one.
The retrenchment of
the first group did not signal the end of the retrenchment exercise.
However, under the latter part of her
cross-examination, Van der Walt
agreed that a completed phase of retrenchment would entail
consultation on the affected employees
as well, which is what
occurred in the case of the three operators.
[40]
Van der Walt conceded that a list of the individual applicants had
not been provided to the union beforehand
and that until they had
received the erroneous termination letters the union would not have
been aware that they might be affected.
He also agreed that there was
never any consultation with the union on the individual applicants
who were finally identified by
the company for retrenchment and it
was only at the meeting held on 9 December that their names were
mentioned for the first time
as candidates for retrenchment.
Initially, Van der Walt did not agree that this was the first
occasion that further retrenchments
were discussed because it was
part of an ongoing process and only the identities of those affected
had not been dealt with. However,
towards the end of her cross
examination she agreed that this was the first occasion since the
last retrenchments had taken place
that the union was informed of
further retrenchments. In a similar vein, Visagie denied that the
failure to disclose the identity
of those ultimately retrenched
prevented meaningful consultation over retrenchments as alleged by
the applicants: this was because
everyone was potentially affected by
the retrenchments. She herself had only started with the company
shortly before the retrenchment
process began in August 2011 and she
also received a letter warning her of the possibility of
retrenchment. Van der Walt also insisted
that it had been known that
the retrenchments would take place in 2011 so the timing was not an
indeterminate issue. Van der Walt
could not comment on whether the
union was consulted about the criteria used to identify those
selected for retrenchment either.
Van der Walt said that the request
to postpone matters to January 2012 was seen as a delaying tactic by
the union and the company
did not want to send people away on leave
only to face retrenchment on their return-it was better that they
left at the end of
the year with money in the knowledge that they
would have to look for new work in the New Year than to return in the
New Year without
money and only learn of their retrenchment then. He
conceded that the decision on the timing was purely the company’s
decision
and was imposed without consultation but it was the correct
decision even if the company had been wrong in not consulting about
the list. Khazi rejected Van der Walt’s rationale for deciding
the termination date unilaterally and pointed out that the
applicants
should have been treated as adults and given time to prepare for the
retrenchment, the timing of which should have been
discussed with
them. The alleged consultations on issues set out in the retrenchment
notices issued to the applicants did not take
place and no
opportunity had been provided for consultation because management had
refused to postpone the retrenchments. Khazi
also denied that it had
been agreed that retrenchments would probably take place during the
months of October, November and December
2011 as reflected in the
termination letters to the applicants.
[41]
Visagie reluctantly conceded that by giving the union the list only
three days prior to the retrenchment
hampered its ability to
effectively consult over the persons selected for retrenchment.
Nevertheless, she said it was incorrect
to characterise the
retrenchments of the applicants as having arisen because the
situation had changed because nothing had changed
since August 2011.
The deterioration in the turnover spoke for itself.
[42]
In relation to the question of the union’s mandate to represent
all the applicants, Van der Walt confirmed
that the respondent was
disputing the union’s role in representing all of them, some of
whom were not members, but conceded
that during the consultation
process the union had represented all of them. Visagie said that at
the time of the consultations
she did not concern herself whether or
not the union was consulting only on behalf of its members or on
behalf of nonmembers as
well. Effectively it seems it was a nonissue
at that stage. Khazi testified that the union would normally hold
meetings with all
the employees at the compound where some of the
applicant near the respondent’s head office, which would be
attended by union
and non-union members. When the individual
applicants were dismissed, a meeting was convened with all of those
who appear on the
list provided by the respondent and a mandate was
obtained for the union to pursue a case on their behalf. When
challenged on the
letter written by Mr Rakgoropo, in which he
withdrew as a party from the matter and denied that he had authorised
the union to
proceed on his behalf, Khazi testified that he
understood that this letter had been written at a time when the
company had offered
to reemploy Rakgoropo as a safety officer, but
did not dispute the proposition put to him under cross-examination
that the letter
had been written after Rakgoropo’s
re-employment. The union had no difficulty with him withdrawing at
that point but when
the case was initiated he was happy to be
represented by it. However, despite vigorously contesting the issue,
on the last day
of the trial proceedings the respondent finally
abandoned its objection to the union’s mandate.
[43]
When Visagie was asked to confirm the assertion in the pre-trial
minute by the company that it had applied
the LIFO principle as a
selection criterion, she gave a circuitous answer which did not
clarify why this assertion was made or
whether in fact it was
applied. Later under cross-examination she also agreed that the
selection criteria for choosing the individual
applicants had not
been an issue on which the union had been consulted. Khazi said that
the union expected that when retrenchments
ultimately took place the
union would engage the company on the reasons therefore, discuss
alternatives to avoid retrenchment and
other issues such as how such
employees could be assisted, when retrenchments should take place and
selection criteria. It was
put to him that at the time of their
retrenchment many of the applicants were not actively engaged at the
company, but Khazi was
adamant that they were all engaged on other
sites or in the workshop. No contrary evidence was presented by the
respondent in this
regard, though the persistence of layoffs was
common cause. Khazi readily conceded that retrenchments were a
definite possibility
if other means of addressing the company’s
situation were not successful. He further agreed that there had been
consultation
over the reasons for the need for retrenchment and over
alternatives to retrenchment starting in August 2011.
Evaluation
Substantive
Fairness
[44]
The applicants dispute the need for
retrenchment on the basis that the operators had been retrenched and
there were no additional
costs imposed on the respondent and because
they had been assured that there would be no further retrenchments.
The respondent
set out a dire picture of the decline in turnover that
occurred in 2011, which was not arrested in 2012 either. The
applicants
did not dispute the respondent’s efforts to retain
employees as long as it could and accepted that the respondent was
acting
in good faith in attempting to preserve the employment and
that its reluctance to provide a list of proposed retrenchees at an
earlier stage in the discussions over retrenchment was not a devious
strategy on its part but a result of a sincere unwillingness
to take
the final step prematurely. This was also evidenced by its
willingness to implement layoffs even though this proved unpopular
over time. By December 2011 the point had been reached where the
union was clearly suggesting that the time had come to reconsider
whether or not layoffs were a viable alternative to retrenchment on a
prolonged basis. It stands to reason that if layoffs were
still in
effect, that there was insufficient work to keep the remaining
workforce busy after the previous batches of retrenchments.
There was
no reason to believe anything had improved by the beginning of
December. Moreover, the union did not pursue its claim
that the
company had effectively curtailed its costs sufficiently in
cross-examining either of the management witnesses. In general
terms,
I believe that the respondent did establish a genuine operational
need for retrenchment.
[45]
However, what was less clear is whether the
individual applicants selected for retrenchment were selected in
accordance with objective
and fair selection criteria. The respondent
claimed it had applied LIFO as a selection criteria but provided
nothing substantive
by way of evidence to verify this claim. On the
other hand, the union gave little indication of why it believed the
actual selection
process had been unfair. On the evidence the most
that can be said is that the method of selection was indeterminate
and consequently
the respondent failed to establish that it did apply
fair and objective criteria. However, this is not a case where the
court is
in a position to assess how far the respondent might have
strayed from an acceptable method of selection in the absence of more
extensive interrogation of this issue during cross-examination.
Procedural
fairness
[46]
The crux of the applicant’s case
relates primarily to the lack of further consultation over the
retrenchment of the applicants
once the respondent had identified
them for retrenchment. Much was made of the issue about whether or
not the retrenchment of the
two operators constituted the end of the
retrenchment process initiated in August or whether it simply
represented one stage in
the process. There is little value in
getting into a semantic analysis of what constituted a phase of the
retrenchments. The real
issue is whether or not in relation to the
individual applicants the consultation process was satisfactory and
fair.
[47]
It is evident from the respondent’s
economic circumstances that no new contracts came online to replace
those which were ending
in 2011. As previously mentioned, the
situation in early 2012 proved even worse. It is true that at the
meeting of 26 October 2011
that management gave an impression that
they had managed to avoid retrenchments amongst the general labour
force thus far and that
it indicated that the operators might be the
last persons who would be retrenched. This was also consistent with
the respondent’s
earlier statements that it would only
retrenched operators and drivers as a last resort. On the other hand,
layoffs persisted during
the month of November and neither the union
for the shop stewards questioned the need for continued layoffs
during that month,
which could only mean that they were aware that
things had not returned to normal. It was only when the erroneous
termination notices
were issued to the LDC members that the union
also raised the issue of the prolonged layoffs which members were
enduring.
[48]
When it became apparent as a result of the
meeting on 9 December 2011 that indeed the applicants’ were
facing imminent retrenchment,
the main complaint made by the union at
the time concerned the lack of an opportunity to consult over the
particular circumstances
of the individuals affected by this latest
round of retrenchments. The haste with which the company sought to
proceed with the
individual applicants retrenchments contrasted
starkly with the deliberations held with the union over the
retrenchment of a few
operators. Even if the general imperative to
retrench could not be avoided, the union and the applicants were
entitled to proper
consultations over the selection process, which
would also have included a discussion over the reason for ultimately
identifying
that number of employees for retrenchment and
entertaining any proposals for alternative methods of selection and
the like.
[49]
It
was suggested by the applicants that what transpired was on a par
with
NUMSA
and others v Precious Metal Chains (Pty) Ltd
.
[1]
However, in that case there
was an interval of six months between the meeting with the affected
employees and their retrenchment
and the employees had not been
represented by a union at the time of the initial meeting but were
union members by the time they
were retrenched. There was also no
suggestion in that case that retrenchments might take place in a
series of phases, nor were
there extended consultation meetings
between the first meeting and the ultimate retrenchments. There was
also no evidence that
management kept saying it was still engaged in
ongoing efforts to avoid retrenchment, which would have indicated
that the issue
of retrenchment was not yet finalised. In that
instance there was much less reason for the company to have presumed
a continuity
of the retrenchment process between the first meeting
and the time of the retrenchments. Nevertheless, it is evident that
the company
witnesses were unable to explain why it had not engaged
the union on the timing and selection of the individual applicants
even
if the circumstances giving rise to the need to retrench had not
changed. Retrenchment consultations were not concluded in respect
of
the applicants and the respondent was not entitled to short circuit
the final phase of the consultation process even if it believed
it
made more sense to bring matters to a head by the year end than to
address it in the new year.
[50]
In the circumstances I am satisfied that
the second to further applicants’ retrenchment was procedurally
unfair in that they
were deprived of an adequate opportunity to
consult over the timing of the retrenchments and the selection
process.
Relief
[51]
In considering the amount of compensation
payable to the individual respondents I am mindful of the fact that
the company had done
what it could to extend employment for as long
as practically possible. However, that did not entitle it to act
abruptly and unilaterally
when the point had been reached where it
could not prolong the employment of all the remaining workforce
indefinitely. It ought
to have taken the union and the applicants
into its confidence at an earlier stage and it should not have been
for the union to
have initiated the meeting in which the respondent’s
intentions only became plain at what was already an advanced stage of
the company’s own decision-making process. It was also
disingenuous for Visagie to have represented to the union that its
submissions would be considered and the company would revert to it
before taking any final step. There is also the matter of the
lack of
evidence of the application of fair and objective selection criteria,
but also no yardstick to measure to what extent the
respondent did
fall short on this substantive issue.
[52]
Taking all factors into account I believe
that three months’ wages is sufficient compensation for the
procedural inadequacies
and the lack of demonstrably fair selection
criteria being applied. As the respondent abandoned the objection to
the union’s
mandate to act on behalf of the individual
applicants, except in relation to the twelfth applicant, Mr R
Rakgopopo, there is no
basis for assuming that any of the remaining
individuals abandoned their claim of unfair dismissal, even if they
subsequently were
re-employed by the company. Consequently, they
should all obtain relief except Mr Rakgopopo.
[53]
On the issue of costs, I believe the
procedural merits of the applicants’ case, which constituted
the greater part of the
matter, were demonstrably good even though it
only related to part of the consultation process. It should not have
been necessary
to pursue this case to trial on that issue and it is
just and equitable they be paid their costs.
Order
[54]
The respondent failed to prove it had
selected the individual applicants for retrenchment on a fair and
objective basis and to that
extent their dismissals were
substantively unfair.
[55]
The respondent failed to consult over the
timing and selection of the individual applicants and their
retrenchment was procedurally
unfair.
[56]
The respondent must pay the second to
eighteenth applicants, excluding the twelfth applicant, compensation
equivalent to three months’
remuneration, calculated at rate of
pay they were each receiving at the time of their retrenchment in
December 2011, within 21
days of the date of this judgment, as
follows:
Applicant
Name
Monthly
Wage (Rands)
Compensation
(Rands)
2
A
S Mawae
2,297.27
6,891.81
3
T
Majola
3,077.65
9,232.95
4
T
A Makgowe
3,173.16
9,519.48
5
R
Tewukeni
3,772.00
11,316.00
6
E
T Setlhangu
2,878.71
8,636.13
7
G
Lemisoni
2,997.27
8,991.81
8
J
G Sibiya
3,327.48
9,982.44
9
P
M P Moleofane
2,949.84
8,849.52
10
M
I Mokaiwa
4,436.64
13,309.92
11
R
Munkuli
3,090.15
9,270.45
13
M
S Nkhumeleni
2,748.33
8,244.99
14
J
R Macheli
3,358.26
10,074.78
15
J
N Subere
3,127.41
9,382.23
16
N
L Seanego
3,315.60
9,946.80
17
I
E Selepe
2,969.46
8,908.38
18
S
K Morwa
4,225.50
12,676.50
Total
155,234.19
[57]
In the event there is any dispute about the
determination of the rate of remuneration in paragraph [56], any of
the parties may
approach the court on application to determine the
same.
[58]
The respondent must pay the applicants
costs.
R
LAGRANGE, J
Judge
of the Labour Court
Appearances:
For
the applicants: P Nkutha
Instructed
by: Finger Phukubje Inc.
For
the respondent: J W Pienaar of Louw Pienaar Attorneys and J
Orschman
Instructed
by: GVDB Inc.
[1]
[1997]
8 BLLR 1068
(LC)