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[2016] ZALCJHB 47
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Engelbrecht v Fraser Alexander (Pty) Ltd (JS518/2014) [2016] ZALCJHB 47 (10 February 2016)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not
reportable
Case
No: JS 518/2014
In
the matter between:
BAREND
JOHANNES JAKOBUS
ENGELBRECHT
Applicant
and
FRASER
ALEXANDER (PTY)
LTD
Respondent
Heard:
16 November 2015
Delivered:
10 February 2016
Summary
:
Alleged unfair retrenchment in terms of
section 191(5)(b)(ii)
of the
Labour Relations Act 66 of 1995
.
Retrenchment is found to be fair.
JUDGMENT
AC
BASSON, J
[1]
The
respondent retrenched the applicant on 8 May 2015. The applicant
alleged that his retrenchment was substantively and procedurally
unfair in terms of
section 191(5)(b)(ii)
of the
Labour Relations
Act
[1
]
for
the following reasons:
(i)
The respondent unilaterally decided to
restructure its Water Treatment Division before it commenced with the
consultation process.
(ii)
The respondent unilaterally decided to
declare the applicant’s position redundant before it commenced
with the consultation
process.
(iii)
A vacant position in the Tailing Division –
namely, that of a Project Manager – exited. The applicant had
applied for
the position. He alleged that he was qualified to fill
the position, alternatively that he required minimal training in
order to
fill the position. The respondent, however, decided to
appoint an outsider to the position – a one Mr Joel Kgomo
(“Kgomo”).
(iv)
The respondent refused to bump the
applicant into the position of Mr Da Silva (“Da Silva”)
who was employed in the Water
Treatment Division. The applicant
alleged that he was duly qualified to fill the position and that he
had the necessary experience
to fill the position. Moreover he was
more senior than Da Silva.
(v)
The respondent refused to consider bumping
across its other four divisions thus preventing the applicant from
identifying suitable
potions where it could bump the applicant to.
[2]
The applicant seeks maximum compensating
and costs in respect of claim one. In respect of claim 2 – a
claim of notice pay
– the applicant accepted the tender to pay
the notice pay plus interest. The applicant seeks costs in respect of
claim 2.
[3]
At the outset it should be noted that the
applicant conceded that there was a general need to retrench.
[4]
Although the respondent opposed the claim,
it conceded that the applicant’s retrenchment was procedurally
unfair but only
to the extent that a decision was taken to appoint Mr
Kgomo to a possible alternative position before the applicant was
interviewed
for this position. At the commencement of the
proceedings, the respondent tendered compensation in an amount
equivalent to three
months as compensation for such procedural
unfairness. The offer was made with prejudice but was rejected by the
applicant. The
respondent seeks costs of suit in the event of this
Court not awarding more than three months’ compensation to the
applicant.
Substantive
fairness of the dismissal
[4]
In light of the applicant’s
concession that there was a general need to retrench within the Water
Treatment Division, the
issue of the substantive fairness of the
dismissal is confined to the consideration whether there was a fair
reason to retrench
the applicant. It was also common cause that at
some point in time the respondent’s Water Treatment Division
suffered a loss
in the region of R20 million after tax.
[5]
The respondent led the evidence of Mr Johan
Moolman (“Moolman” - the former Managing Director of the
Water Treatment
Division and the evidence of Mr Aiden Gotz (“Gotz
- the former Operations Director: Tailings Division and now the
Senior
Manager: International Operations of the respondent).
Bumping
[6]
According to Moolman, the respondent did
not consider bumping the applicant into a position in one of the four
divisions operated
by the respondent because the divisions operated
as separate business units. On behalf of the respondent it was
conceded that whilst
bumping is a possible alternative in the context
of a retrenchment, such
bumping should take
place within a specific “universe” which in these
circumstances should be the Water Treatment Division.
It is also
relevant to point out that, at the time when the applicant requested
to be bumped into another position, he had already
applied for the
vacant position in the Tailing Division.
[7]
More important is the fact that the
applicant contended that he could have been bumped into Mr Da Silva’s
position. In this
regard, the evidence of Moolman was that the
applicant was not suitable for that position because he lacked the
requisite product
knowledge and experience to develop specific water
treatment solutions for customers in the Water Treatment Division. In
any event,
Da Silva was also retrenched some three months after the
applicant.
Vacant
position
[8]
In respect of the vacant position it was
the evidence of Gotz that the successful applicant for this position
(Kgomo) was the more
suitable candidate because he had more project
management experience and that he was qualified in engineering,
procurement and
construction management (“EPCM”). His
evidence was confirmed by the contents of an email of a certain Mrs
Adele O’Callaghan
in which she stated that the applicant was
not the more suitable candidate. This position was advertised
internally and externally.
[9]
It could not be disputed by the applicant
that this position to which Kgomo was appointed was a three months
fixed term contract
and not a permanent position. Notwithstanding
this fact, the applicant pleaded in his statement of case that he
should have been
offered this position. I will return to this point
hereinbelow. Suffice to point out that should this Court ultimately
decide that
the applicant ought to have been offered the position;
the applicant would in any event and have been employed in this
position
for a period of three months only. I have also pointed out
that the respondent has already made a with prejudice offer to the
applicant
in respect of any unfairness relating to this appointment
which the applicant rejected.
[10]
The respondent’s witnesses explained
why Kgomo was the better candidate and did so with reference to an
email of O’Callaghan.
The applicant submitted that there is a
fatal flaw in the case presented by the respondent in that it had
failed to call Mrs Callaghan
as a witness although she was available
as a witness.
Procedural
fairness
[11]
It should again be restated that the
applicant has conceded that there was a general need to retrench. The
applicant has also conceded
under cross-examination that he was
involved in the consideration of alternatives to the closure of Water
Treatment Divisions.
(I will refer in this regard to the process that
was followed in more detail herein below.)
[12]
The applicant tried to convince this Court
that he was completely unaware of the possibility that he may be
retrenched. There is
no merit in this assertion: Firstly, in an email
dated 16 March 2014, he made a statement that can only mean that he
was fully
aware of the state of affairs in the Water Treatment
Division and that he must have been aware that there was a
possibility that
he may be retrenched, namely, that ‘You may
know FAWT is not performing as anticipated on the implementation
side, that I
form part of, things are very quiet.’
[13]
Furthermore, the applicant also could not
explain why he then applied for the vacant position on 16 March 2014
if he was unaware
of the possibility of a possible retrenchment.
[14]
Regard must also be had to the procedure
that was actually followed by the respondent: On 10 March 2014, Mr
Moolman sent out an
email to employees from the Water Treatment
Division (including the applicant) to attend a special meeting on the
same date. The
applicant was unable to attend because he was at a
site in Rustenburg. The minutes of the meeting reflect that a special
board
meeting was held with the shareholder and that it expressed its
concern and dissatisfaction with the financial performance and
prospects of the Water Treatment Division. The minutes also record a
loss of R20 million after tax for 2014. An investment of R40
million
also had to be written off. The minutes further reflect that the
meeting was held in order for management to share the
need for change
in the business. The applicant subsequently received a copy of the
minutes.
[15]
A second meeting was held with staff on 13
March 2014. The applicant was present at this meeting. At the
meeting, the staff was
informed that five alternatives were explored.
The minutes reflect that the respondent considered the fourth option
to be the most
viable option, which was:
‘
Right
size for sustainable-keep operations and focus on MR’s
competitive advantage in coal; fix & sell MT investment;
recover
R40m investment and retain priority access to MT technology.’
[16]
On 12 March 2014, the applicant applied for
a position of Project Manager in the Tailing Division. I will return
to this position
as a possible alternative to retrenchment herein
below.
[17]
A third meeting was held with staff on 18
March 2014. The applicant was present at the meeting. The minutes
reflect that the chairperson
extended an invitation for more
alternatives to be presented and the need to discuss them with EXCO
before arriving at a final
decision. The slides used during this
session are attached to the minutes.
[18]
On 24 March 2014, a fourth meeting was held
during which a further slide show was presented. The fourth option
namely the right
sizing of the division was discussed and a new
organogram for the Water Treatment Divisions was presented. The
positions of,
inter alia,
the
applicant (Technical Support) and that of Mr Da Silva were identified
as being redundant. All in all, eight of the sixteen positions
in the
division were affected by the new structure. At the meeting, it was
stated that the respondent would optimise the use of
staff-members’
expertise.
[19]
After this meeting, individual meetings
were held with affected employees. At the individual meeting held
with the applicant, the
respondent furnished a
section 189(3)
-letter
to the applicant in which it is stated,
inter
alia,
that – (i) it was
communicating its final decision in terms of the turnaround strategy;
(ii) the applicant’s position
was redundant; (iii) the
respondent would consult with the applicant before making a final
decision regarding his future employment;
and (iv) the next
consultation meeting would be the next day, namely 25 March 2014.
According to Moolman this meeting did not take
place at the request
of the applicant.
[20]
After this meeting, a series of
correspondence were exchanged between the applicant and the
respondent. In a letter dated 27 March
2014, the respondent confirmed
to the applicant that his position had become redundant and that the
respondent would consider all
possible alternatives including
re-deployment.
[21]
On 28 March 2014, the applicant furnished a
further letter to the respondent in which the applicant requested to
be provided with
a list of all positions within the respondent across
all five divisions irrespective of whether those positions were
vacant in
order for him to identify possible positions into which the
respondent could bump him. In particular, the respondent asked for an
organogram of each division. The applicant further confirmed that he
had applied for the vacant position of project manager (Tailings)
and
confirmed that he was duly qualified for this position. This letter
was followed up with a further letter stating that the
respondent had
not provided him with the required list and that the respondent was
not entitled to declare his position redundant
prior to complying
with the provisions of
section 189
of the LRA.
[22]
The respondent held a further meeting with
the applicant on 2 April 2014. During this meeting the applicant
again asked for the
aforesaid organograms. The respondent informed
the applicant that it refused to provide him with the said
organograms as it would
not consider any bumping.
[23]
On 7 April 2014 the applicant again sent a
letter to the respondent in which he stated that the respondent was
rendering his possible
retrenchment procedurally and substantively
unfair by failing to provide the aforesaid list of positions and by
failing to consider
bumping.
[24]
A further meeting took place between the
applicant and the respondent on 10 April 2014. At this meeting
Moolman confirmed that the
interviews for the position of Project
Manager (Tailings) were scheduled for 16 April 2014 and that the
applicant had been shortlisted
for the position.
[25]
On 14 April 2014 (prior to the applicant
attending the interview) the applicant was informed by Moolman that
the applicant had been
afforded the opportunity to make
representations and that the respondent had considered those
representations. Moolman informed
the applicant that no positions
existed that matched the applicant’s skills ‘except maybe
for the position of project
manager that you have applied for’
and that the applicant’s skills could not be reasonably
accommodated in the new
structures of the Water Treatment and
Tailings divisions. The applicant was also informed that he could not
be bumped into alternate
positions in the Water Treatment division.
The letter further states that the consultation process had been
exhausted in the opinion
of the respondent and requested the
applicant to revert in writing by 15 April 2014. Moolman testified
that he had not for purposes
of this letter investigated whether the
applicant could be bumped into an existing position in the Tailings
division.
[26]
On 6 May 2014 Moolman again wrote to the
applicant informing him of the reasons as to why Kgomo was regarded
as the better candidate
for the position of project manager in the
Tailings Division.
Evaluation
[27]
If regard is had to the evidence it is
clear that the applicant adopted an uncooperative attitude towards
the consultation process.
In fact, the applicant made it clear in his
evidence that he believed that Moolman was incompetent and unable to
properly manage
the affairs of the Water Treatment Division. The
minutes of one of the consultation meetings also reflect that the
applicant had
lost his confidence and trust in the Water Treatment
Division.
[28]
It is in my view clear from the evidence
that the respondent did not take a unilateral decision to declare the
applicant’s
position redundant. If regard is had to the process
that was followed and the fact that a number of consultation meetings
were
held with the employees of the Water Treatment Division, it is
clear that the respondent only took the decision to downsize the
Water Treatment Division after consultations and only after the
respondent had considered the various alternatives in respect of
the
downsizing of Water Treatment Division.
[29]
Accordingly, it is concluded that the
applicant’s retrenchment, other that as was conceded by the
respondent, was procedurally
and substantively fair.
[30]
More in particular in respect of the
refusal to bump the applicant into another position, I can find no
unfairness in the respondent’s
refusal to do so. The applicant
pleaded that he wished to have been bumped into the position of Da
Silva. The respondent has given
detailed evidence as to why Da Silva
was the better candidate. I can find no reason to reject the evidence
tendered on behalf of
the respondent in respect of the position of Da
Silva. Da Silva’s was in any event also retrenched three months
later.
[31]
In respect of the submission that the
applicant ought to have been bumped into other divisions: Firstly,
the evidence showed that
the different divisions within the
respondent operate independently. Secondly, during his evidence, the
applicant was unable to
identify into which position he should have
been bumped into as an alternative position.
[32]
One last observation regarding the position
of Kgomo. The applicant pleaded that he ought to have been offered
the position of Kgomo.
I have already pointed out that Kgomo was
found to be the better candidate. Moreover, the position of Kgomo was
in any event only
a three months’ fixed term contract. However,
insofar as there may have been any unfairness in respect of the
appointment
of Kgomo, I award the applicant compensation equal to 3
month’s salary.
Appropriate
relief
[33]
I have already referred to the fact that
the respondent has tendered an amount of three months’
compensation in respect of
any unfairness relating to the position of
Kgomo. Although, I am satisfied that the retrenchment was fair, I
award the applicant
three months’ compensation in respect of
any unfairness that may have occurred during the appointment of Kgomo
to the advertised
position.
Costs
[34]
It cannot be concluded that the applicant
was substantially successful with his case. In fact, he was offered
an amount of three
month’s compensation with prejudice which he
has rejected. The respondent submitted that the applicant should pay
the respondent’s
costs. I have, however, in the interests of
justice, decided to make no costs order. In respect of claim 2 the
respondent is ordered
to pay the costs.
Order
[35]
In the event, the following order is made:
35.1
The retrenchment of the applicant was substantively and procedurally
fair except in respect of the filling of the position
in the Tailing
Division.
35.2
In respect of any unfairness relating to the position in the Tailing
Division, the respondent is ordered to pay
the applicant three
months’ compensation. In respect of claim 1 (the claim for
unfair retrenchment) each party to pay its
own costs.
35.3
In respect of claim 2 the respondent is ordered to pay the costs.
________________
AC
Basson, J
Judge
of the Labour Court
Appearances
:
For
the Applicant:
Dr G Ebersöhn
of Gerrie Ebersöhn Attorneys
For
the Respondent:
Advocate MJ van As
Instructed
by:
Webber Wentzel Attorneys
[1]
Act
No. 66 of 1995.