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[2015] ZALCPE 65
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Mengo and Others v Daly Sales and Merchandising (Pty) Ltd t/a Crakshaw Designs (P47/11) [2015] ZALCPE 65 (11 December 2015)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Not
Reportable
Case
no: P 47/11
In
the matter between
NELSON
MENGO AND 2
OTHERS
Applicant
and
DALY
SALES AND MERCHANDISING (PTY) LTD
t/a
CRAKSHAW
DESIGNS
Respondent
Heard:
09-10 March 2015
Delivered:
11 December 2015
Summary:
The applicant may not rely on its refusal to participate in
consultation to prove the procedural unfairness
of a retrenchment.
JUDGMENT
LALLIE,
J
[1]
The first respondent operated in the business of fitting marble,
granite and engineered kitchen and bathroom tops. Selling marble
and
granite tombstones formed a very small portion of the applicant’s
business. When the first respondent indicated that
it could no longer
pursue the business owing to unfavourable economic conditions, the
second respondent bought it in order to retain
a presence in the Port
Elizabeth area in the hope of retaining and expanding its market
share. The individual applicants (“applicants”)
were
originally employed by the first respondent and became employees of
the second respondent as a result of the sale of business.
[2]
During January 2010, the applicant trade union (NUM) commenced wage
negotiations with the first respondent. NUM was acting on
behalf of
its members who were employed by the first respondent including the
applicants. The meeting was followed by further interaction
between
the parties which I will deal with later in this judgment. It
culminated in the applicants’ dismissal on 21 July
2010. NUM
referred an unfair dismissal dispute on behalf of the applicants to
the Commission for Conciliation Mediation and Arbitration
(the CCMA).
A certificate of the non-resolution of the dispute was issued on 3
September 2010 and on 06 September 2010, the dispute
was referred to
arbitration. At the arbitration which was scheduled for 22 November
2010, the first respondent submitted that the
applicants were
dismissed for its operational requirements whereupon the commissioner
made a ruling that the CCMA lacked jurisdiction
to arbitrate it. The
matter was thereafter referred to this court for adjudication. The
applicant submitted that the applicants’
dismissal was both
substantively and procedurally unfair, a claim which the respondents
denied.
[3]
The applicants submitted that their dismissal for operational
requirements of the respondent was substantively unfair because
there
was no good, alternatively insufficient reason for their dismissal.
The respondents did not disclose the reasons for and
the operational
difficulty which led to their dismissal. They further alleged that
the respondent failed to demonstrate that the
retrenchment was
necessary or it was the only practical solution to the alleged
operational problems or that the extent of the
retrenchment was
justifiable given the overall nature of the respondent’s
operational position. They further pleaded that
their dismissal was
automatically unfair for two reasons. The first is related to the
transfer of the business from the first to
the second respondent in
terms of section 197 of the LRA. And the other is that their
dismissal is in conflict with section 187
(1) (a) of the LRA as it
occurred during and was motivated by their participation in a
protected strike.
[4]
The factual basis of the applicants’ claim is briefly that in
2009 the first respondent and its employees represented
by NUM
entered into wage negotiations. Early in 2010, the first respondent
informed NUM that the wage negotiation could not be
pursued as it
sought to consult on retrenchment of some employees. It implemented
short time unilaterally and in May 2010, NUM
referred a dispute to
the CCMA. NUM gave the first respondent a strike notice and its
members employed at the first respondent
went on a go slow. In June
2010, there were consultations between the first respondent and NUM.
The purpose of the consultations
was disputed by NUM which insists
that it was a continuation of the wage negotiations while the first
respondent maintains that
the consultations related to the
retrenchment of some employees. One of the applicants, Mr Mengo
(“Mengo”), was a shop
steward. He got to know a few days
after his dismissal that the reason for the dismissal was
retrenchment. The applicants submitted
that the manner in which they
were selected for retrenchment remained a mystery. After all the
evidence was led the applicants
submitted that they were no longer
pursuing the arguments that their dismissal was automatically unfair.
[5]
Justifying the substantive fairness of the dismissal, Mr Daly
(“Daly”) who was the owner of the first respondent
testified that he bought the business in 2006. Its purchase price was
R4 million. The second respondent supplied it with the marble,
granite and engineered tops which the first respondent cut and fitted
in kitchens and bathrooms. As the owner, he was at the business
daily
and dispatched teams of workers to jobs. He monitored the business
daily, weekly and its monthly turn over. The income was
based on a
commission which was paid to them at Crankshaw, Queenstown. It varied
from 30% to 20% of the job. He dismissed the applicants
on 2 July
2010 because of the downward trend in business which was affected by
the world economic meltdown. The downward spiral
of the business
affected the construction business as well as competitors of the
first respondent. In 2008, the first respondent
had about 21
employees of five people teams consisting of a fitter and two general
assistants and an employee in the office environment.
As the
recession progressed numbers dwindled and in 2009, the first
respondent was left with about five people. By September 2011,
the
business was costing him a lot to keep afloat and he sold it at a
loss at the price of R72 251,00 including property and plant
on 10
November 2011. The reason for the retrenchment, therefore, was that
the first respondent could no longer afford to pay all
its employees
and the employees were reduced by one team which consisted of the
applicants. Daly’s evidence on the reason
for the retrenchment
was not refuted. I, therefore, have to accept that the first
respondent’s financial constraints constituted
valid reason for
retrenchment. The applicant withdrew its claim that the applicants’
dismissal was automatically unfair.
[6]
I will now turn my attention to the issue of the procedural fairness
of the applicants’ retrenchment. On 4 December 2009,
NUM
submitted proposals for wage negotiations to the first respondent.
They demanded 25% wage increase across the board, provident
fund,
housing and skills development. The first respondent forwarded the
proposals to SEESA an employers association that it affiliated
to for
assistance. SEESA arranged a meeting with NUM officials for 12
January 2010. It, however, had to be postponed owing to the
unavailability of a NUM official and shop steward. It was held on 2
February 2010 but no agreement was reached as NUM demanded
a 25% wage
increment while the first respondent refused to give any increment.
On 11 March 2010, a further meeting was held where
NUM officials
reduced their demand to 15% but the first respondent insisted on no
wage increment. On 13 April 2010, the NUM officials,
having obtained
a certificate of the non-resolution of a dispute between itself and
the first respondent, served the first respondent
with a notification
to embark on industrial action. On 19 April 2010, SEESA invited the
NUM officials to a meeting at the first
respondent’s premises
to discuss short time. NUM officials were not available and the
employees were represented by Mengo
who agreed with the first
respondent that employees would work short time. In a meeting of 06
May 2010, NUM reduced its demand
to 11% but the first respondent did
not move from its position not to grant wage increment as it alleged
that it could not afford
it.
[7]
On 12 June 2010, SEESA invited NUM officials to a retrenchment
consultation scheduled for 15 June 2010 at the first respondent’s
premises. As NUM officials opted not to honour the consultation
meeting, Mengo represented the employees. The first respondent
informed Mengo that the short time which NUM had suggested would not
work. It also intimated that it would proceed to retrench.
The first
respondent served its employees with retrenchment notices. The first
respondent held a further meeting with NUM officials
on 15 June 2010.
NUM informed the first respondent that its employees were on a go
slow and demanded a 5% wage increase. They refused
to discuss
retrenchment and insisted on pursuing wage negotiations. At the
meeting of 23 June 2010, the first respondent disclosed
the reason
for retrenchment to be lack of business. In a meeting that the
parties held on 20 July 2010, NUM officials refused to
discuss the
issue of the criteria to be used in the retrenchment exercise and
walked out as an expression of their dissatisfaction
to what they
perceived to be the first respondent’s unacceptable conduct of
changing wage negotiations into retrenchment
consultation. The first
respondent selected applicants for retrenchment having used
employees’ skills to select fitters and
LIFO to select general
workers. It dismissed them for its operational requirements and paid
them severance pay. The first respondent
submitted that it did not
employ new employees after the applicants’ retrenchment except
for one employee who was engaged
in January 2014 to finish a job.
[8]
The applicants’ claim that their retrenchment was procedurally
unfair is based on the submission that it is contrary to
the
requirements of section 189 of the LRA and that the first respondent
failed to disclose in writing or at all to the applicants
and NUM
representatives, all the relevant information as required by section
189 (3) of the LRA. It failed or refused to consult
adequately,
meaningfully or at all with the applicants or their NUM
representatives in any or all of the matters that it was required
to
consult on in section 189 (2)(a). The first respondent’s case
was that its attempts to consult adequately with the applicants
and
their NUM officials were thwarted by their refusal to consult on
retrenchment and their persistence to pursue wage negotiations.
Although the applicants initially denied having received the notice
in terms of section 189 (3), they later conceded that consultation
meetings on the retrenchment were held. They conceded that a NUM
official and representative were present when the consultations
took
place. They argued that the first respondent morphed retrenchments
into the wage negotiations. It is common cause that on
the
consultation meeting of 20 July 2010, union representatives walked
out in protest as they were refusing to consult on retrenchment
but
wished to pursue wage negotiations. NUM may not lay the blame for the
quality of the consultation at the door of the first
respondent when
it abdicated its duty as a consulting party. In
NUMSA
v General Motors of SA (Pty)
Ltd,
[1]
it was held that NUMSA could not rely on its intransigence during the
consultation process in proving procedural unfairness of
a
retrenchment. In
SAA
v Bogopa and Others,
[2]
blameworthy conduct of an employee and his or her trade union which
prevents consultation to reach finality may not be relied upon
for
proving procedural unfairness of retrenchment. As NUM thwarted the
first respondent’s efforts to comply with provisions
of section
189 of the LRA, it may not seek to rely on the first respondent’s
failure to fulfil its obligations set out in
section 189 of the LRA.
It is common cause that consultation meetings were held between NUM
officials, and representatives and
the first respondent but the
quality of the consultation was influenced by NUM’s conduct. I,
therefore, conclude that the
first respondent discharged the onus of
proving the procedural fairness of the applicants’ dismissal
for its operational
requirements.
[9]
In the premises, the following order is made:
9.1
The applicants’ claim is dismissed.
_______________
Lallie, J
Judge of the Labour Court
of South Africa
Appearances
:
For
the Applicants:
Advocate Grogan
Instructed
by Wesley Pretorius & Associates
For
the Respondent: Mr Unwin of Chris Unwin Attorneys
[1]
[2009] 9 BLLR 914
(LC) at para 56.
[2]
[2007] 11 BLLR
1064
(LAC) at para 44.