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[2017] ZALCJHB 121
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MEDWUSA and Others v Strapping and Profile Manufacture CC (JS15/15) [2017] ZALCJHB 121 (5 April 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JS15/15
In the matter between:
MEDWUSA
First
Applicant
GLADWIN
XHALI
Second Applicant
DENNIS
NXUMALO
Third Applicant
AUBRREY
SEKGOBELA
Fourth Applicant
and
STRAPPING &
PROFILE MANUFACTURE C.C.
Respondent
Heard:
04 August 2017
Delivered:
05 April 2017
JUDGMENT
MAHOSI
AJ
The
first applicant, MEDWUSA,
approached
this Court by way of a statement of claim to challenge the
substantive and procedural fairness of the dismissal of its
members
(‘The individual applicants”).
The
relief sought is that each be retrospectively reinstated with
compensation.
Background facts
[1]
The
salient feature of this matter may be summed up thus. The individual
applicants were all employed by the respondent as machine
operators
earning R5 039.45 on 30 June 2009 and were retrenched on the 31
st
of October 2014. It is common cause that the reason for the
retrenchment was that the specific section had become totally,
completely
and uneconomically viable in the manufacturing process of
the company. As a result of the retrenchment, MEDWUSA referred their
unfair dismissal dispute to the Commission for Conciliation Mediation
and Arbitration (“CCMA”) on 1 December 2014. The
dispute
was unsuccessfully conciliated on 6 January 2015 and an outcome
certificate was issued. MEDWUSA then referred the dispute
to this
Honourable Court on the basis of that outcome certificate.
[2]
MEDWUSA
’
contention
is that no proper or fair consultation took place, that no specific
selection criteria could be agreed upon and that
the respondent’s
decision not to transfer the individual applicants to other
departments was unfair. The respondent opposed
this matter and
contended that the decision to retrench the individual applicants was
taken after due consultation with all the
parties concerned and that
the retrenchment was the last option in the prevailing circumstances.
The respondent further contended
that there were no other positions
available in any of its other departments and could therefore not
transfer them or invite them
to apply. Furthermore, the respondent
contended that bumping was not an option in the prevailing
circumstances as the individual
applicants were skilled employees and
the “last in” employees were mostly general labourers who
earned much less than
the individual applicants, who in any way
indicated that they were not interested in accepting any of the
bumping positions. The
parties led evidence through their respective
witnesses to which I now turn.
Evidence
of
parties
[3]
Two
witnesses
led evidence for the respondent and one witness led evidence for the
applicants.
The respondent’s
witnesses
Mr Hendrick Meyer’s
testimony
[5] Mr Meyer testified
that he was the managing member of the respondent. He stated that on
30 April 2014, a meeting was held with
the employees in which it was
confirmed that the Pallet Net section was not financially viable. He
confirmed that on 15 May 2014,
a letter was sent on behalf of the
respondent, by Frontier Employers’ Association to the
applicants in response to its letter
dated 6 May 2014. In the said
letter, the respondent denied the allegation that it threatened to
dismiss the applicants’
members if they do not give up their
membership with the union. The letter further confirmed the meeting
of 30 April 2014 and that
the purpose of the said meeting was to
inform the employees that certain of the operations were financially
non-profitable and
that retrenchment might be unavoidable and
imminent.
[6] He testified that on
25 August 2014, the respondent received a letter from the union
raising concerns about the designed shifts
including arrangement of
shift work. He stated that at the time the union was not recognised.
The union requested a consultation
meeting, through a letter dated 17
September 2014. In the said letter the union suggested two possible
date, being 3
rd
or 10
th
of October 2014. On the
10
th
of October 2014, the union sent another letter to
cancel the meeting of the 10
th
of October 2014 and
suggested to reschedule the meeting to the 14
th
of October
2014.The meeting was finally held on the 14
th
of October
2014. On the 23 October 2014 the individual applicants were issued
with a final notice of retrenchment.
[7] On the reasons for
retrenchment, Mr Meyer testified that the Pallet Net section was not
financially viable and, as a result,
the whole section was closed.
This necessitated the retrenchment of all the employees who were
employed in that section. He stated
that there were no other
positions available in any of its other departments and could
therefore not transfer them or invite them
to apply. He further
testified that bumping was not an option in the section as the
individual applicants were skilled employees
and the “last in”
employees were mostly general labourers who earned much lesser than
the individual applicants, who
in any way indicated that they were
not interested in accepting any of the bumping positions. It was his
view that the respondent
had a fair reason to retrench the employees
of the Pallet Net and a fair procedure was followed in retrenching
them.
[8] Under
cross-examination, Mr Meyer testified that the employees were not
issued with a written notice for the meeting of the
30
th
of April 2014 as it was a social meeting and the employees were aware
that respondent was in trouble. He stated that the respondent
broadcasted the notice to the employees. He denied the allegation
that the closure of Pallet Net was not discussed in the said
meeting.
On the reason why a notice of consultation was not issued between 30
April to September 2014, he testified that he consulted
with the
employees and that he had witnesses to that fact. He stated that
there were no minutes of consultation as the meeting
was social.
[9]
Mr. Meyer conceded that the respondent received a letter that
proposed a meeting from the union on the 11
th
of September
2014. In this letter, the proposed agenda related to organisational
rights and night shift work of the employees.
He further conceded
that the respondent’s notice of retrenchment dated 10 September
2014 was sent to the union on 12 September
2014, which was after
receipt of the union’s letter dated 11 September 2014.
[10]
On the proposed dates of meetings by the union, he conceded that the
respondent did not propose the earliest date. He testified
that there
were two meetings that were held with the union, but stated that he
did not bring the minutes of the said meetings.
He conceded that he
did not deal with the concerns that were raised by the union and that
the meeting of 25 September 2014 was
the only meeting. He did not
issue the individual applicants with a written proposal of an
alternative position. On the issue of
transfer, he testified that the
applicants had to drop salaries and had to be trained. However, he
was of the view that training
would take longer.
[11]
Mr. Meyer testified that he bought the company called Flexinet in
2012 and that the said company was in Kings Williams Town.
He
confirmed that Flexinet made pallet net, but it was his view that it
was on a sophisticated level. He conceded that there was
no meeting
on 14 October 2014. He confirmed that the second applicant was in
hospital on 23 October 2014, when he signed his retrenchment
notice.
He said he could not wait for her to be discharged from the hospital
as the section was closed.
[12] When asked if it was
decided on the 25
th
of September 2014 who should be
retrenched, Mr Meyer stated that the respondent decided to retrench
all the employees of the Pallet
Net section. He stated that about
four or five employees were employed on a contract basis after the
individuals were retrenched.
He testified that the individual
applicants were offered employment by Mr Ooshuizen but they refused
to accept the offer. When
it was put to him that the applicants’
case was that the respondent employed 16 employees after the
individual applicants’
dismissal, he stated that it was done
long after the retrenchment.
Mr Peter Oosthuizen
[13]
Mr Oosthuizen testified that he was employed by the respondent as a
general manager of Strapping and Profile department. He
further
testified that after the retrenchment of the individual applicants,
there were positions at the Flexi Net SA. At the beginning
of April
2015, he allegedly telephoned the second applicant on three occasions
to offer him a job but he stated that he was waiting
for the CCMA
dispute to be resolved. He testified that the second applicant was
the only one offered the position because he was
more qualified and
trainable.
[14]
Under cross-examination, he denied that he only called the second
applicant in 2014 to persuade him to drop the CCMA case.
He further
testified that he called him on three different occasions but that he
did not send him a letter or an sms.
The applicant’s
witnesses
Mr Gladwin Xhali
[15]
Mr Xhali is the second applicant in this matter. He testified that he
attended the meeting of 30 April 2014. In the said meeting,
Mr Meyer
allegedly threatened the employees that if they do not resign from
the union he would dismiss them and close down his
company. He
further testified that the said meeting was attended by the union
members, including a few who were not union members,
and that they
were not informed of the possible retrenchment. Mr Xhali testified
that he was part of the meeting of 25 September
2014. He stated that
the purpose of the meeting was to discuss the worker’s right,
but Mr Meyer mentioned the issue of possible
retrenchment.
[16]
On the issue of notice of intention to retrench, he testified that he
received a letter dated 10 September 2014 whilst he was
in hospital,
before undergoing an operation. He testified that the respondent
could avoid the retrenchment by transferring them
to other
departments as they could all operate all the machines. He denied the
allegation that he was orally invited to apply for
other positions
and stated that he would have accepted a position with a lesser
salary, as he was not employed.
[17]
Mr Xhali testified that on 8 October 2014, he lost one of his fingers
whilst at work. He was then admitted to the hospital
and whilst he
was there his manager came to the hospital to deliver a letter of
intention to retrench him. The following day after
his operation, a
lady from his work arrived at the hospital with a final notice of
retrenchment. Mr Xhali stated that he felt very
hurt to be retrenched
whilst he was at the hospital. On the fairness of the retrenchment,
he testified that of the six employees
who were retrenched four were
union members and only two were non-union members. The two non-union
members were re-employed within
a week. On the closure of the Net
Department, he testified that the function of the department was
shifted from the Strapping and
Profile to Flexi Net.
Legal principles and
Evaluation
[18]
Item 1 of the Code of Good Practice on dismissal based on operational
requirements provides that:
(1) The
Labour Relations Act (Act 66 of 1995) (“the Act”) defines
a
dismissal
based on the
operational
requirements
of an employer as one that is based on the
economic, technological, structural or similar needs of the employer.
It is difficult
to define all the circumstances that might
legitimately form the basis of a dismissal for this reason. 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 which 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.
[19]
MEDWUSA’s
contention was that there was no need for the respondent to retrench
the individual applicants. The respondent contended
that the
retrenchment of the individual applicants was unavoidable as the
section in which they were employed, the Pallet Net section,
was not
financially viable. The question is whether, subsequent to its
decision to close the Pallet Net section, the respondent
complied
with its obligations in terms of section 189 of the LRA.
Section
189(1) requires the employee to consult with affected employees prior
to embarking on retrenchment programmes and provides
as follows:
‘
(1)
When an employer contemplates dismissing one or more employees for
reasons based on the employer‘s
operational requirements, the
employer must consult -
(a)
any person whom the employer is required to consult in terms of a
collective agreement;
(b)
if there is not collective agreement that requires consultation
–(i)
a workplace forum, if the employees
likely to be affected by the proposed dismissals are employed in a
workplace in respect of
which there is a workplace forum ; and
(ii)
any registered trade union whose members are likely to be affected by
the proposed
dismissals ;
(c)
if there is no workplace forum in the workplace in which the
employees likely to be
affected by the proposed dismissals are
employed, any registered trade union whose members are likely to be
affected by the proposed
dismissals ; or
(d)
if there is no such trade union, the employees likely to be affected
by the proposed dismissals
or their representatives nominated for
that purpose.
(2)
The employer and the other consulting parties must in the
consultation envisaged by subsections
(1) and (3) engage in a
meaningful joint consensus-seeking process and attempt to reach
consensus on:
(a)
appropriate measures -
(i)
to avoid the dismissals ;
(ii)
to minimise the number of dismissals ;
(iii)
to change the timing of the dismissals ; and
(iv)
to mitigate the adverse effects of the dismissals;
(b)
the method for selecting the employees to be dismissed; and
(c)
the severance pay for dismissed employees.
[20]
In summary, the evidence shows that there was a social meeting on
30
April 2014. The respondent alleges that the purpose of the said
meeting was to inform the employees that certain of the operations
were financially non-profitable and that retrenchments might be
unavoidable and imminent. MEDWUSA’ contention is that the
purpose of the meeting of 30 April 2014 was to threaten the employees
with dismissal and closure of the company if they refused
to resign
from being members of MEDWUSA. In response to the alleged threats,
MEDWUSA wrote a letter to the respondent to deny the
allegations and
to state that the purpose of the meeting was to inform the employees
that the operations of the respondent has
to be closed or sold
because it had become financially non-profitable.
[21]
MEDWUSA sent a letter dated 25 August 2014 to the respondent to raise
concerns about the design or arrangement of night shift.
There was no
response. On 11 September 2014, MEDWUSA sent a letter to the
respondent to request a meeting for the purpose of discussing
organisational rights and the issue of night shift. The proposed
dates were 25 or 29 September 2014. On12 September 2014, the
respondent sent a
notice
of retrenchment
to the union dated 10 September 2014. On the same day, the respondent
sent a letter in response to the letter dated 25 August 2014
in which
it stated that the issue of retrenchment would also be discussed in
the proposed meeting. It is my view that the meeting
of 30 April 2014
was not a consultation meeting as envisaged by section 189 of the
LRA, as it was just a social meeting. The first
written notice of
retrenchment as required by section 189(3) is the notice of12
September 2014, which was sent after the union
had proposed a meeting
for organisational right. Section 189(3) requires that
the
employer must issue a written notice inviting the other consulting
party to consult with it and disclose in writing all relevant
information, including, but not limited to –
‘
(a)
the reasons for the proposed
dismissals;
(b)
the alternatives that the employer considered before proposing the
dismissals, and the
reasons for rejecting each of those alternatives;
(c)
the number of employees likely to be affected and the job categories
in which they
are employed;
(d)
the proposed method for selecting which employees to dismiss;
(e)
the time when, or the period during which, the dismissals are likely
to take effect;
(f)
the severance pay proposed;
(g)
any assistance that the employer proposes to offer to the employees
likely to be dismissed;
(h)
the possibility of the future re-employment of the employees who are
dismissed;
(i)
the number of employees employed by the employer; and
(j)
the number of employees that the employer has dismissed for reasons
based on
its operational requirements in the preceding 12
months.’
[22]
It is common cause that the consultation meeting was held on 25
September 2014. MEDWUSA
’
s
contention was that the meeting held on 25 September 2014 did not
constitute consultation on the basis that the respondent insisted
to
add the issue on retrenchment in the meeting that was scheduled to
only discuss organational rights. One of the respondent’s
directors, Mr Hennie Meyer, was allegedly aggressive towards the
employees and
MEDWUSA
’
s
official. The respondent denied this and submitted that the meeting
was also scheduled to discuss possible dismissal based on
operational
retrenchment. The evidence proves that the notice of the retrenchment
that was sent to
MEDWUSA
on 12 September 2014 was compliant with section 189(3) of the LRA.
[23]
MEDWUSA’s further contention is that on 25 September 2014, the
respondent had already decided on the employees to be
retrenched as
he insisted that its decision was final and that only MEDWUSA members
were selected to be retrenched. It is trite
that where there is no
agreement to a selection criteria, the employer may choose a
selection criteria. In choosing the selective
criteria, the employer
has to ensure that such criteria are both objective and fair. In this
case, the respondent submitted that
no specific criteria could be
applied as the whole whole section in which the individual applicants
were employed was closed down.
MEDWUSA did not dispute the fact that
all the employees of the Pallet Net Section were retrenched.
[24]
In
Nkosinathi
Mbongiseni Mtshali v Bell Equipment,
[1]
the LAC dealt with the issue of bumping and stated as follows:
‘
It
is clear from the authorities referred to above that bumping forms
part of LIFO as a method for selection of employees to be
retrenched.
It was therefore incumbent on the respondent to have consulted on its
application to determine whether its application
would have been
appropriate in the circumstances of this case. It was not for the
respondent to decide unilaterally that it would
not be appropriate to
apply bumping especially where it was not specifically prohibited in
the collective agreement. Reasons why
the respondent considered the
application of bumping inappropriate or unfair should have been
tabled for consideration by the consultation
parties before a final
decision could be taken. Any decision taken together with the
consulting parties should have been reduced
to writing and singed by
the parties if it was to contradict the collective agreement.’
[25]
In this case, the respondent decided not to consider applying bumping
at all. No evidence was presented to show that the individual
applicants were offered alternative positions and that they refused
to accept lower positions. There was further no evidence presented
to
show that that there were no other positions available in any of its
other departments.
[26]
Item
12 of the Code of Good Practice on dismissal based on operational
requirements provides that
:
‘
(1)
Employees
dismissed
for reasons based on the employers’ operational requirements
should be given preference if the employer again
hires employees with
comparable qualifications, subject to -
(a)
the employee, after having been asked by the employer, and having
expressed within
a reasonable time from the date of dismissal a
desire to be re-hired; and
(b)
a time limit on preferential rehiring. The time limit must be
reasonable and must
be subject of consultation.
(2)
If the above conditions are met, the employer must take reasonable
steps to inform
the employee, including notification to the
representative trade union, of the offer of re-employment.’
[27]
Mr Meyer testified that he bought the company called Flexinet, which
made Pallet Net on a sophisticated level; that the respondent
employed four or five employees on a contract basis after the
retrenchment of the individual applicants and further 16 employees
were employed long after the retrenchment. In addition, Mr Xhali’s
testimony that two non-union members were re-employed
within a week
is not disputed. The respondent could not produce proof that it took
reasonable steps to
inform
the employee of the offer of re-employment.
[28]
In my view, the evidence is compelling that, subsequent to a notice
of retrenchment, there was only one consultation meeting.
There is no
evidence that the parties
engaged
in a meaningful joint consensus-seeking process and attempt to reach
consensus on
appropriate
measures to avoid the dismissals; to minimise the number of
dismissals;
to
change the timing of the dismissals and to mitigate the adverse
effects of the dismissals. There was further no attempt to reach
consensus on the method for selecting the employees to be dismissed.
Lastly, the respondent failed to present proof that retrenchment
was
the last option. Therefore, it cannot be said that the individual’s
dismissal was substantively and procedurally fair.
Costs
[29] With regard to
costs, I am of the opinion that the requirements of law and fairness
dictate that there should be no order as
to costs.
Order
[30] Accordingly, I make
the following order:
a)
The individual applicant’s dismissal is hereby declared
substantively and
procedurally unfair.
b)
The respondent is ordered to reinstate the individual applicants with
retrospective
effect from the date of dismissal.
c)
There is no order as to cost.
__________________
Mahosi
AJ
Acting
Judge of the Labour Court
APPEARANCES:
FOR
THE APPLICANT: Mr Solomon General
Sebola,
MEDWUSA’
official.
FOR
RESPONDENT: Mr
Bokkas Potgieter of Frontier Employer’s Association.
[1]
DA 16/12, delivered 22
July 2014.