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[2016] ZALCJHB 10
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South African Transport and Allied Workers Union and Others v G4S Aviation Secure Solutions (JS49/12) [2016] ZALCJHB 10 (13 January 2016)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: JS49/12
In the matter between:
SOUTH AFRICAN
TRANSPORT AND ALLIED WORKERS UNION
First Applicant
DININDZA AND 29
OTHERS
Second and Further
Applicants
and
G4S AVIATION SECURE
SOLUTIONS
Respondent
Delivered:
13 January 2016
JUDGMENT
TLHOTLHALEMAJE, J
Introduction:
[1]
This
matter was presented before the court as a stated case. The second to
further applicants were all employed in the respondent’s
Specialised Cargo Handling Unit (The ‘SCH’) at the OR
Tambo International Airport. They were dismissed on account of
the
respondent’s operational requirements. They however disputed
the substantive fairness of the retrenchments and seek retrospective
reinstatement in the event that a finding is made in their favour.
Background to the
dispute:
[2]
The
individual applicants each earned an amount of R6 000.00 per month in
terms of a collective agreement (
SCH
Employment Conditions; Funeral Benefits and Rostering
)
concluded on 20 August 2009 between SATAWU and the respondent. If
they did not fall within the Bargaining Council, they would
have
earned R3 400.00 per month. The respondent was of the view that as a
result of the remuneration costs, it was unable to be
competitive
with other role players in the market as the rates that it was paying
to its employees were far higher than what its
competitors were
paying in the industry. On 22 September 2011, it issued a notice to
SATAWU, indicating its intention to cancel
the collective agreement
in terms of section 23 (4) of the Labour Relations Act
[1]
(The LRA).
[3]
On
30 September 2011, the respondent had issued notices of contemplation
of dismissal based on its operational requirements. The
notice
complied with the provisions of section 189 (3) of the LRA. Initially
it was expected that approximately 60 employees would
be affected by
the retrenchment process. However, only 26 were ultimately
retrenched. A process of facilitation through the CCMA
was initiated.
Several meetings were held with the facilitator between October 2011
and 21 November 2011.
[4]
A
number of alternatives to retrenchment were considered, including a
reduction of monthly employee remuneration and alternative
employment
within G4S Cash Services (the respondent’s sister company) if
the employees met the requirement for the posts,
which included
recognition of prior service at G4S, and a Firearm Competency
Certificate. Any alternative appointment in G4S would
have followed
upon successful job interview.
[5]
A
meeting was held between the parties on 19 October 2011 to discuss
the cancellation of the agreement. On 20 October 2011 the respondent
had confirmed that clause 1 of the agreement (which dealt with
employment conditions of employees in the SCH) was cancelled with
immediate effect.
[6]
On
19 December 2011 SATAWU referred a dispute to the CCMA alleging the
unfair dismissal of its members. A conciliation meeting held
on 11
January 2012 failed to resolve the dispute.
[7]
It
was further common cause in accordance with the pre-trial minutes
that not all of the individual applicants were retrenched.
In in this
regard, the third and twenty-ninth applicants still remain employed.
The twelfth applicant was retrenched and subsequently
re-employed by
the respondent. The twenty-fifth and twenty-eight individual
applicants were transferred to G4S Cash Solutions,
and the
twenty-sixth individual applicant accepted an alternative position.
[8]
The
issue for determination is whether or not the respondent had a fair
reason to dismiss the remaining individual applicants by
reason of
its operational requirements.
Respondent’s
submissions:
[9] The submissions made
on behalf of the respondent can be summarised as follows;
9.1
The
make-up of the SCH business had altered since 2009 with many of its
clients electing to arrange their own transportation and
only
requiring security services.
9.2
The
rates being paid to the SCH staff were significantly in excess of
what its competitors were paying, and the SCH Unit was unable
to
successfully compete for business because of its staff costs.
9.3
In
essence, the agreement with SATAWU had resulted in the respondent not
being as competitive as it would have otherwise been. This
had also
resulted in a lack of profitability for the business unit.
9.4
Reliance
was placed on the Labour Appeal Court’s decision in
General
Food Industries Ltd v Food and Allied Workers Union
[2]
for
the proposition that a company was entitled to retrench in order to
maximise its profits and be competitive in the industry
it operated
in. To this end, it was contended that the dismissal of the
individual applicants based on its operational requirements
was
substantively fair and was to give effect to a requirement based on
its economic needs, and was also operationally justifiable
on
rational grounds.
Applicants’
submissions:
[10] The submissions made
on behalf of the applicants are summarised as follows:
10.1
The
individual applicants were not employed as security officers but
rather in the positions that were reflected in their payslips.
Most
of them performed the work of controllers.
10.2
They
were also not paid as security officers in terms of the Road Freight
Bargaining Council Regulations, but that were paid in
terms of other
regulations under the Bargaining Council.
10.3
The
dismissals were unfair in that at the time that the respondent
decided to embark on the retrenchment route, positions were still
available to the individual applicants
albeit
at a lower salary.
10.4
The
initial intention of the respondent was to cancel the collective
agreement so that the individual applicants could be paid at
a lower
rate, and that when it could not do so, it had then decided to effect
the retrenchments in circumstances that were not
justifiable or fair.
10.5
The
applicants had conceded that the respondent had conveyed its reasons
for the retrenchments. They nevertheless contended that
the reasons,
i.e. the need to be competitive, were not reasonable nor fair, as
this had more to do with the respondent’s
competitors than its
own need to restructure. To this end, it was contended that the
retrenchments were pre-determined, as the
respondent’s main
intention was to pay the same lower salaries as its competitors.
The
legal framework and
evaluation:
[11]
To the extent that the Applicants have referred
a
dispute about substantive fairness of the retrenchments, this Court,
in terms of section 189A (19) of the LRA will be obliged
to find that
the dismissal was for a fair reason if-
(a)
the
dismissal was to give effect to a requirement based on the employer’s
economic, technological, structural or similar needs;
(b)
the
dismissal was operationally justifiable on rational grounds;
(c)
there
was a proper consideration of alternatives;
(d)
selection
criteria were fair and objective.
[12] Under section 213 of
the LRA, ‘
operational requirements’
is defined to
mean ‘
requirements based on the economic, technological,
structural or similar needs of an employer
.’ The Code of
Good Practice: Dismissal based on Operational Requirements as
contained in the LRA further states in Item 1
that;
“…
As
a general rule, economic reasons are those that relate to the
financial management of the enterprise. Technological reasons refer
to the introduction of new technology that affects work relationships
either by making existing jobs redundant or by requiring
employees to
adapt to the new technology or a consequential restructuring of the
workplace. Structural reasons relate to the redundancy
of posts
consequent to a restructuring of the employer’s enterprise.”
[13] As to what
constitutes ‘similar needs’ is not defined in the LRA or
the Code. It is however accepted that this
concept is broad enough to
include factors that generally have economic consequences for the
enterprise. For the purposes of the
definition in section 213 of the
LRA, these factors will ordinarily be determined by circumstances of
each case.
[14] The issues
surrounding whether the respondent had considered alternatives to
retrenchments or whether a fair selection criteria
was utilised are
not for consideration before this court in view of these factors not
having being placed in dispute by the applicants.
In this case, it is
also accepted that the reasons for the retrenchment (i.e. the need to
be competitive) does not appear to be
in dispute. The only issue is
whether these reasons were fair and acceptable, or constituted a
sound commercial rationale.
[15]
The approach in determining the substantive fairness of a dismissal
on the grounds of the employer’s operational requirements
has
received attention by this Court and the Labour Appeal Court over
time. In
Van
Rooyen and Others v Blue Financial Services (South Africa) (Pty)
Ltd
[3]
,
this court made reference to the objective enquiry as enunciated in
BMD
Knitting Mills (Pty) Ltd
[4]
wherein Davis AJA (as he was then) had formulated the applicable
principles as follows;
‘
The starting
point is whether there is a commercial rationale for the decision.
But, rather than take such justification at face
value, a court is
entitled to examine whether the particular decision has been taken in
a manner which is also fair to the affected
party, namely the
employees to be retrenched. To this extent the court is required to
enquire as to whether a reasonable basis
exists on which the
decision, including the proposed manner, to dismiss for operational
requirements is predicated. Viewed accordingly,
the test becomes less
deferential and the court is entitled to examine the content of the
reasons given by the employer, albeit
that the enquiry is not
directed to whether the reason offered is the one which would have
been chosen by the court. Fairness,
not correctness is the mandated
test’
[16]
Central
to the enquiry is whether the
employer
has established that an operational requirement existed for
retrenchment, it being trite that the onus is placed on it
to do so
as contemplated in section 192 (2) of the LRA. In this case, the
primary reason for the retrenchments was that the respondent
was not
being competitive. To this end, its contention was that the business
unit concerned had altered its make-up, resulting
in its clients only
requiring security services. Furthermore, and as already indicated,
the rates being paid to the individual
applicants were significantly
in excess of what its competitors were paying, leading to the unit
being unprofitable and not being
competitive. The applicants’
contention on the other hand was that the respondent’s
inability to compete could never
have been a justification for
retrenchments.
[17]
T
he
question whether a restructuring was necessary in order to increase
the business’ competitiveness or to increase efficiencies
by
cutting labour costs was considered in
General
Food Industries Ltd v FAWU
[5]
.
The Labour Appeal Court, per Nicholson JA, held that the Act (LRA)
recognises the right of an employer to dismiss employees for
a reason
based on its operational requirements without distinguishing between
a business struggling to survive and a profitable
business wanting to
increase its profits.
[18] A
similar approach had been adopted in
Fry’s
Metals (Pty) Ltd v National Union of Metal Workers of SA &
Others
[6]
where Zondo JP (as he then was) stated that the dismissal for a
profit oriented reason within the context of operational requirement
was fair as it fell squarely within the financial reason as
contemplated in section 213 of the LRA. The LAC had equally found
that there was no legal basis for the proposition that an employer
could not dismiss employees for operational reasons purely for
the
purpose of making profits as opposed to resorting to dismissal in
order to ensure the survival of the business or undertaking.
[19] In applying the
above principles to the facts of this case, the first issue to be
dealt with pertains to the submissions made
in regards to the
employees that were identified for retrenchments. In this regard, it
was submitted during arguments that the
individual applicants were
controllers, whilst the respondent had intended to retrench security
officers. The response to this
contention was that the employees
identified for retrenchments were
de facto
employed as
security guards, irrespective of what they were initially employed as
or, what was reflected in their payslips or certificates
of service.
[20] It is my view and
also as correctly pointed out on behalf of the respondent that
nothing turns on these submissions in view
of the fact that the
selection criteria used to identify the individual applicants was not
placed in dispute. Furthermore, I did
not understand it to be in
dispute, that the employees were
de facto,
employed as
security guards, irrespective of what they were initially employed
as, or what was reflected in their payslips or certificates
of
service.
[21] In regards to the
rationale for the retrenchments, when regard is had to the principles
set out in the authorities cited in
this judgment, the particular
reasons for the retrenchment in my view falls squarely within the
realm of economic reasons contemplated
within the meaning of
‘operational requirements’. These reasons related to the
financial management and competitiveness
of the enterprise (within
the meaning of ‘
similar reasons’
), and the LRA
allows an employer to restructure an enterprise in order to ensure
its competitiveness and survival, let alone maximise
its profits as
espoused in
General Food Industries Ltd v FAWU
.
[22] I am thus satisfied
that there was indeed a fair reason for the dismissal, and that the
retrenchments, which were based on
the respondent’s need to
remain competitive and profitable, were a rational and logical
decision. Other than contending that
it was not permissible for an
employer simply to retrench in order to remain competitive, the
applicants have not advanced any
cogent argument that indicated that
the decision was not in any manner commercially rational. There was
no evidence adduced nor
arguments advanced to demonstrate that the
respondent had acted in bad faith when effecting the retrenchments,
or that it had sought
to serve an ulterior motive.
[23] The contention that
the retrenchments were in response to the respondent’s failure
to get an agreement on the cancellation
of the relevant clause of the
collective agreement cannot be sustainable in the light of the
acknowledgement by the applicants
that the primary reason for the
retrenchments was that the respondent needed to reduce its labour
costs in order to remain competitive.
Whether or not it had obtained
an agreement on the cancellation of the clause was immaterial as it
had acted within its rights
in cancelling the clause under the
provisions of section 23 (4) of the LRA.
[24] I am further
satisfied that the decision to retrench was not only aimed ensuring
the respondent’s survival but also at
preserving jobs in the
light of the initial number of potential retrenchees identified as
opposed to employees ultimately retrenched.
I am also satisfied that
to the extent that the individual applicants were retrenched in order
for the respondent to remain competitive
in the industry it operated
in, such a decision was fair, as it was informed and justified by a
proper and valid commercial or
business rationale.
[25] In the light of the
above conclusions, I am satisfied that the respondent has on the
balance of probabilities, discharged the
onus placed on it in proving
that there was indeed a commercial rationale to invoke the provisions
of section 189, read together
with section 189A of the LRA. It
therefore follows that the applicants’ claim should be
dismissed. I have further had regard
to considerations of law and
fairness, and I am satisfied that there is no basis for a cost order
to be made in this case.
Order:
I.
The
dismissal of the second to further applicants on account of the
respondent’s operational requirements was substantively
fair.
II.
There
is no order as to costs.
__________________
Tlhotlhalemaje, J
Judge
of the Labour Court of South Africa
APPEARANCES:
On behalf of the
Applicant:
Mr V Shongwe of SATAWU
On behalf of the
Respondent: Mr
C Beckenstrater of Moodie & Robertson
Attorneys
[1]
Act 66 of 1995
[2]
(CA11/2002)
[2004]
ZALAC 4
(11 May 2004) at para [62]
[3]
(2010) 31 ILJ 2735
(LC) at para 15. See also
CWIU
v Algorax Ltd
[2003] 24 ILJ 1917 (LAC) at para [69] – [70] where the court
held:
“
The
question whether the dismissal was fair or not must be answered by
the court. The court must not defer to the employer for
the purpose
of answering that question. In other words, it cannot say that
the employer thinks it is fair, and therefore,
it is or should be
fair…… Furthermore, the court should not hesitate to
deal with an issue which requires no special
expertise, skills or
knowledge that it does not have but simply requires common sense or
logic”
[4]
[2001] 7 BLLR 705
(LAC)
[5]
[2004] 7 BLLR 667
(LAC)at para 52.
[6]
(2003) 2 BLLR 140
(LAC) at para [33]