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[2017] ZALCJHB 339
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NUMSA obo Kili and Others v Viva Steel FAB Engineering (Pty) Limited t/a Viva Engineering (JS159/16) [2017] ZALCJHB 339 (6 September 2017)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case No. JS 159/16
In
the matter between:
NUMSA
OBO THEMBA KILI AND 10
OTHERS
Applicant
and
VIVA
STEEL FAB ENGINEERING (PTY) LIMITED
t/a
VIVA
ENGINEERING
Respondent
Heard:
10 may 2017
Delivered:
06 September 2017
Summary:
Dismissal based on operational requirements. Reduction of customer
orders and introduction of voluntary severance packages
sufficient to
demonstrate the Respondent’s operational difficulties. The
Applicants’ dismissal not unfair.
JUDGMENT
BALOYI
AJ
Introduction
[1]
Eleven individual employees (Applicants) assisted by the trade union,
National Union of Metal Workers of South Africa (NUMSA)
approached
this Court to prosecute an unfair dismissal claim based on
operational requirements. The application is opposed and
both parties
led evidence in support of their respective cases. The Applicants
sought relief of reinstatement while the Respondent
moved for
dismissal of the Applicants’ claim with costs.
Background
[2]
The Respondent is a metal fabrication company supplying its finished
products to companies conducting mining activities. In
2013 it had
two workshops, one in Germiston and another in Spartan (known as shop
1 and shop 5 respectively) in the East Rand.
The painting functions
were outsourced to V n V Short Blasters that was carrying out its
activities in Brakpan, also in the East
Rand owned by one Hennie Van
den Veen
(van den Veen). The
Respondent took over the business of V n V (the paint shop) under
desperate circumstances as Van den Veen abandoned
his business. He
disappeared without trace, thus leaving his employees and landlord
unpaid. At that time the Respondent had huge
customer orders which V
n V had to paint on its behalf. As a result, it found itself with no
option but to foot V n V’s bills
in order to get the production
going. The Respondent facilitated introduction of V n V employees to
a Labour Broker. Later on and
out of negotiations with the trade
union, the Respondent dispensed with the services of the Labour
Broker and took a decision to
employ them on permanent basis. At the
beginning of 2015 the Respondent experienced a shortage of orders and
its operations were
severely affected to a point that it invited
employees to apply for voluntary severance packages. The services of
34 employees
from various sections were eventually terminated out of
this arrangement.
[3]
The four night
shift
employees were absorbed into day shift as the volume of work went
down. On 08 April 2015 the Respondent issued notice in
terms of
section 189(3) of the Labour Relations Act
[1]
(LRA) contemplating to retrench employees in the paint shop. In terms
of the notice four employees were likely to be affected.
On 17June
2015 a whilst consultation process was still in progress relating to
the four workshop employees, the Respondent issued
another notice in
terms of section 189(3) contemplating further retrenchment. This time
twenty employees were affected. 12 of the34
employees who took
voluntary severance packages were from the paint shop. Consultations
took place on 29 April 2015, 03 June 2015
and 29 June 2015. Failure
to reach agreement on renewal of lease agreement between the
Respondent and the landlord affected the
Respondent’s
operations. The lease agreement expired on 30 June 2015 and the
Respondent was forced to close the workshop.
[4]
On 21 July 2015 the Respondent issued another notice in terms of
section 189(3) of the LRA. The trade union and the Respondent
agreed
to facilitation before the Commission for Conciliation, Mediation and
Arbitration (CCMA) which sat for some days between
August and October
2015. Extensions were agreed to be based on the trade union’s
proposal for skills training. The trade
union held a view that there
was no need for further retrenchments as 34 people had already taken
voluntary severance packages.
The Applicants were ultimately
dismissed on 14 October 2014. At the time of their dismissal the
Respondent had already laid the
Applicants off. The Applicants
referred an unfair dismissal dispute based on operational
requirements on 02 November 2015 to the
Metal and Engineering
Industries Bargaining Council (MEIBC). The dispute was thereafter
referred to this Court in terms of Rule
6 following the issuing of
the certificate of outcome to the effect that the dispute remained
unresolved.
The
evidence
[5]
In support of its case, the evidence tendered by the Respondent’s
first witness, Mr Michael Pollestrini (Pollestrini)
is essentially
that the employment of workshop employees on a permanent basis on 29
October 2014 came at the time when there was
sufficient work. Day and
night-shift operations were set up on this basis. It had at a minimum
of 150 tons of work to be done which
had later dropped to 40 tons.
The parties were unable to reach an agreement during consultation
meetings. The Second notice
in terms of section 189(3) of the
LRA was precipitated by the landlord’s intentions to increase
rental to the paint shop
by 80%. This left the Respondent with no
option but to close the workshop as the increase was excessive. Lack
of premises became
an additional problem to the decreased work.
[6]
After expiry of the lease and closure of the paint shop, the paint
shop employees were made to report at the Germiston workshop.
It was
not possible to do painting and blasting in Germiston and Spartan
workshops. The paint shop employees were made to work
short time in
that they were divided into two teams with team A working for the
period between Mondays and Wednesdays while team
B was working
between Wednesdays and Fridays. It was the Respondent’s
inability to secure new business which led to its decision
to offer
voluntary services packages. On 30 June 2015 a skills test (also
referred to as skills audit) was conducted and Mr Philip
Diamond
(Diamond) was tasked to steer the process. The employees volunteered
to be tested with exception of Ngobese and Myeni.
They all passed
after being tested.
[7]
There were only three grinders amongst the 34 people who took
voluntary severance packages and the Respondent was only capable
of
filling two of the three grinding positions by J Nxumalo and W
Monyamangene while the third one became redundant. On 25 July
2017
Ngobese and Myeni volunteered to work as labourers at Shop 5 in
Spartan. Mntambo volunteered to do cleaning despite his willingness
to do grinding that he passed its tests. On 01 September 2015 the
Respondent undertook another skills test on advice of the CCMA
facilitator which the employees refused to take on reason that they
did not have overalls. In January 2016 the Respondent re-employed
Joe
Mashiloane as a forklift driver because he had the relevant operator
licence. The Respondent was unable to find positions for
the
remaining 11 employees. On comparing the Respondent’s financial
position for 2014 and 2015 financial years, the Respondent
suffered
losses in excess of R2 million.
[8]
Contrary to the Applicants’ propositions he maintained that
there was significant drop of work as they used to have 150
–
250 tons of work and the financial statements reflected loss of
revenue. He admitted to having outsourced part of the Respondent’s
work in November 2014. The reason being that there was sufficient
work then, the Respondent had deadlines to meet and retrenchment
was
never an issue then. He further pointed out that there was no longer
outsourcing at the time of closure of the workshop in
June 2015. The
work was reduced and the Respondent was experiencing financial
losses. Although the Respondent did not specifically
cite financial
reasons for the retrenchment in two meetings, the losses were
experienced. Inheriting Van den Veen’s debts
also took its toll
on the Respondent.
[9]
In April 2015 they outsourced work to Majestic for sandblasting as
the Respondent was only doing short blasting. In July 2015
the
Respondent outsourced work to JR & L for paint work after closure
of its workshop. He did not dispute the Applicants’
proposition
that the employees who were not tested for grinding did not refuse to
do so but Diamond did not want to test them because
they did not have
clean overalls. He went on to state that the employees were normally
provided with new overalls in June or July
and it did not happen
because the paint shop was already closed. According to what
Diamond told him they blatantly refused
to take the skills test. He
admitted to the fact that Cronje had indeed asked them about the
skills they had on advice from the
CCMA. He was unable to give
account to the effect that none of the employees were advised to
apply for general worker positions.
[10]
Diamond was the Respondent’s second witness and confirmed that
he conducted the first and second skills audits. On the
first one
only Monyemangene, Hugo, Mntambo and Khumalo told him that they could
work with a grinder hence he tested them. During
the second skills
audit held on 27 July 2015 only Monyemangene participated, the rest
refused. He was asked by management to find
two labourers at shop 5
in Spartan, Ngobese and Myeni volunteered. He had no knowledge that
the Applicants were not tested because
of dirty overalls. He was able
to remember that Chipape told him that he could operate a forklift.
He was however not sure on whether
Chipape was asked about the fork
lift or whether he volunteered the information. He tested the
employees on the grinder based on
what they told him.
[11]
Phehello Samuel Tshabalala (Tshabalala), one of the Applicants and
NUMSA shop steward testified in support of the Applicants’
case. He disagreed with any suggestion that there was no work in the
paint shop. The Respondent took the work away and gave it
to the
subcontractors who were used during the period between November 2014
and January 2015. Closure of the workshop was highly
unnecessary as
34 people had already taken voluntary severance packages. The
Respondent’s losses were caused by paying both
paint shop
employees and the subcontractors at the same time. He was aware of 9
people who were placed in shops 1 and 5 while the
remaining 11 were
retrenched. On 30 June 2015 Diamond asked them as to which jobs were
they doing at the paint shop. He took those
with overalls in good
condition for testing and told the rest that they would be supplied
with overalls. They were told that the
purpose of testing them on
grinding and drilling was to have them ready for consideration should
the positions be available. He
had never refused to be tested and it
was never brought to his attention as a shop steward that some
employees refused to be tested.
[12]
When they were invited to the work place on 01 September 2015 they
were already laid off. What happened on that day did not
amount to an
interview as in his case he was specifically asked if he could weld.
He also played a role of an interpreter for the
other employees.
Ngobese and Myeni did not volunteer as alleged, they were
telephonically contacted and told to report at Shop
5. It was never
suggested to the paint shop employees that they should volunteer to
perform cleaning duties.
[13]
He stated that a ‘
lot of work’
in the paint shop
he referred to was the very work that was available during November
2014, December 2014 and January 2015. He
maintained that even after
January 2015 three subcontracting companies operating in the same
premises as the Respondent were receiving
substantial workflow from
the Respondent, namely Majestic, MCS and Hender. JR & L were also
used after the retrenchment. He
denied that there was a difference
between short blasting done in the paint shop and sandblasting that
was outsourced to Majestic.
He agreed to the proposition that the
Respondent had time frames within which it had to deliver to its
customers. He did not find
rationale behind outsourcing that was
carried out when they were working on short time if the Respondent
was worried about the
time frames. He agreed that the Respondent’s
consultation with the trade union on short time was precipitated by
shortage
of work. He had no knowledge about finances, he was
therefore not in a position to testify to that effect. He
emphatically pointed
that the Respondent never mentioned financial
problems as a reason for the retrenchment. He however agreed that the
state of the
Respondent’s finances was shown to the trade
union. He did not know the reason for closure of the workshop. He
admitted that
the other workshops did not have equipment for
sandblasting such as air receivers, dust extraction unit and
compressors. He denied
that Diamond asked him if he had other skills,
he was only asked if he could grind.
The
arguments
[14]
The drop in work flow followed by financial losses were major factors
calling for retrenchment, so argued the Respondent. The
closure of
the workshop was caused by an 80% increase on rental which the
Respondent found unsustainable. Opening a new workshop
as intimated
by the Applicants was not a viable option because of work shortage.
The work that came after closure of the paint
shop was indeed
outsourced as the Respondent was no longer capable of performing it.
Such work did not solve the Respondent’s
work shortage
problems. The Respondent had taken steps to avoid job losses in the
paint shop and only succeeded in placing 7 employees
out of 18 to the
alternative positions.
[15]
The Applicant’s arguments were heavily rested on the fact that
there was no need to retrench the paint shop employees
because the
shedding of 34 employees through voluntary severance packages created
vacancies. Only 4 employees were affected by
the retrenchment in the
paint shop but the Respondent elected to hide behind the paint shop
closure in order to unfairly dismiss
the Applicants. Its financial
statement for the period ending February 2016 reflected that profits
were made. Pollastrini and Diamond
gave evidence of poor quality on
their attempt to demonstrate that the Respondent took measures to
place the employees in alternative
positions. The Respondent’s
claim that the Applicants refused to be tested was a way of escaping
that the Applicants were
turned down due to dirty overalls.
Analysis
[16]
It is highly appropriate at this very point to pay attention to those
issues the Court is required to determine as identified
by the
parties in paragraph 4 of the pre-trial minute which reads as
follows:
“
4.1
Whether the dismissal of the individual applicants was automatically
unfair in that the reason for their dismissal
was that the respondent
unfairly discriminated against them on an arbitrary ground.
4.2 Whether the
dismissal of the individual applicants was substantively unfair.
4.3 The relief to be
awarded.
4.4
Costs.”
[17]
In so far as item 4.1 above is concerned, no case was laid in support
of this issue. I therefore see no harm being perpetuated
by
considering it abandoned. What matters most is the substantive
fairness of the dismissal which the Respondent is, as it is the
case
here placed to the task of establishing. Relief sought as identified
flowed from the Respondent’s failure to establish
the fairness
of the dismissal. In
South
African Chemical Workers U and Others v Afrox Ltd
[2]
the Labour Appeal Court laid down the employer’s duty in this
regard at paragraph 44 follows:
“
[44]
The requirements that must be proved to show substantive fairness are
those set out on
section
189 (2)
,
read with
sections
189 (7) and 196
(
para
[36]
above). The employer bears the onus of proving substantive
fairness and the other requirements set out above (in
para
[37]
),
and must do so on a balance or preponderance of probabilities (the
civil standard of proof). If a presiding officer is
unable to
conclude, on the basis of the evidence presented to her or him, that
a dismissal was fair, it follows (because of the
incidence of the
onus
)
that the employer will fail in its defence to a claim by an employee
for unfair dismissal.
[18]
In
Chemical Workers
Industrial Union and Others v Algorax (Pty) Ltd
[3]
the Labour Appeal Court called for caution to be applied upon
determination of substantive fairness of the dismissal based
operational
requirements and had this to say at paragraph 69:
“
[
69]
Sometimes it is said that a court should not be critical of the
solution that an employer has decided
to employ in order to resolve a
problem in its business because it normally will not have the
business knowledge or expertise which
the employer as a
businessperson may have to deal with problems in the workplace. This
is true. However, it is not absolute and
should not be taken too far.
When either the Labour Court or this Court is seized with a dispute
about the fairness of a dismissal,
it has to determine the fairness
of the dismissal objectively. 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”.
[19]
In this instant case the Applicants denied that the Respondent was
under financial distress. The reason being that there was
sufficient
work which the Respondent had elected to outsource to subcontracting
companies instead of giving it to them to execute.
The facts of this
matter undoubtedly revealed that the following issues were not in
dispute:
19.1
During November 2014, December 2014 and January 2015 the Respondent
had to
deliver 150 to 250 tons of steel work.
19.2
The Respondent had time frames within which it had to deliver its
customers’
finished work.
19.3
Short blasting was during those peak periods carried out at the paint
shop
situated in Brakpan.
19.4
After January 2015 the Respondent felt an impact of economic down
turn experienced
in the mining industry which led to reduction of
work flow from the Respondent’s customers.
19.5
The Respondent subsequently introduced voluntary severance packages
which 34
people had taken.
19.6
Only 2 of the 34 employees who took voluntary severance packages were
grinders.
19.7
The drop in workflow caused the Respondent to transfer the night
shift employees
in the paint shop to day shift.
19.8
The increased rental for the paint shop led to its closure as the
Respondent
was unable to sustain it.
19.9
Shops 1 and 5 were not equipped to perform sandblasting functions.
19.10
By agreement between the trade union and the Respondent, the
Applicants had to work short
days at shop 5 after the paint shop was
closed.
[20]
It bears mention that the dismissals based on operational
requirements are specifically regarded as dismissals occasioned on
no
fault basis. Section 189 of the LRA has been designed to prevent
injustices in circumstances where dismissals based on operational
requirements are likely to occur. The basics of this protection were
clearly unpacked in
Johnson
& Johnson (Pty) Ltd v Chemical Workers Industrial Union
[4]
as follows:
“
[
23]
Every person has a fundamental right to fair labour practices
(section 23(1)(a) of the Constitution).
In the present context
expression is given to this in the LRA by affording an employee the
right not to be unfairly dismissed (section
185) and an employer the
right to dismiss an employee accordance with a fair procedure
(section 188(1)(a)(ii) and (b)).
[24]
Section 189 regulates the exercise of the competing fundamental
rights of an employee not to be unfairly
dismissed and that of an
employer to dismiss for operational reasons. It is a provision
that is inextricably linked to the
fairness or otherwise of a
dismissal based on operational requirements. Apart from that it
serves no other purpose”.
[21]
As I am dealing with this matter I kept high note of the fact that
only substantive fairness is the issue requiring determination.
On
the other hand, it is worth mention that the provisions of sections
189 or 189A largely bring about pre-dismissal mechanisms
which boil
down to procedures. The procedures are immensely helpful towards the
establishment of whether a fair reason existed
for the dismissal.
This is certainly picked up from issues discussed during
consultations as well as evidence tendered here. The
cumulative
effect of the above makes it difficult to find that no reason existed
for the Respondent to offer voluntarily severance
packages. The
Applicants’ contention that the Respondent was nevertheless
making profit is definitely lacking in foundation
when taking into
account that no evidence was led on behalf of the Applicants on this
aspect. Furthermore that the departure of
34 people on voluntary
severance packages created vacancies seem to be subjectively based on
hope rather than reality consistent
with undisputable facts appearing
above. That the Respondent used the workshop closure as an excuse to
effect dismissal is certainly
an introduction of an unsustainable
motive in the light of the undisputed issue about rental increases.
In the
SACWU
[5]
case the Court was alive to this aspect and ultimately held as
follows:
“
[43]
This does not necessarily mean that dismissal will only be fair if
used as a means of last resort.
By making fairness of the
dismissal a matter of proof (
sections
188 (1) (a)
and
192
(2)
),
the LRA has made the assessment of fairness dependent on the factors
proved and canvassed in evidence in court. This imposes
a
discipline upon the parties to the dispute and the person hearing the
case. If an employer wishes to show that it considered
appropriate options other than dismissal it must present evidence to
that effect and explain why it chose a particular course and
not
another. If an employee wishes to challenge that evidence it
must do so by proper cross-examination on the relevant issues
and, if
considered necessary, by leading rebutting evidence. If this
shows up the untenability of the employer’s position,
it will
have a material effect in the final assessment of fairness. The
presiding officer’s assessment of the fairness
or otherwise of
the dismissal will also be dependent on the evidence presented before
him or her. An assessment on ‘moral’
considerations
not based on the evidence led at the trial will be impermissible.
(All this is not new. It happens every
day in all courts, in
relation to all sorts of different kind of issues. It is the
very stuff of litigation and adjudication.)”
[22]
Particular regard in these circumstances should be given to the fact
that by 30 June 2015, 34 employees had already left the
Respondent
after taking voluntary severance packages, secondly, consultations
over workshop employees who were initially affected
and those
affected upon issuing of the second notice had already commenced. The
CCMA’s advice to conduct a skills audit was
seemingly
misconstrued as the Applicants incorrectly laboured under the
impression that once tested for performance of a particular
task,
employment was guaranteed.
[23]
Since it became quite clear that the Respondent did not have
vacancies to accommodate all paint shop employees, it is therefore
immaterial to decide whether the Applicants were not tested because
they refused to or because they were turned away due to the
condition
of their overalls. In actual fact even if they were tested and
passed such tests, the situation as it stood could
not render them
employable within the Respondent due to unavailability of vacancies
coupled with financial distress that was caused
by little work
flowing into the Respondent’s operation. In the circumstances I
see no reason for a finding that the Respondent
has unfairly
dismissed the Applicants. Based on the above the Applicant’s
application cannot succeed.
[24]
The parties were well of the same mind about the relationship between
the Respondent and the trade union that was still ongoing.
In their
view the award of costs was not a preferred item for determination by
this Court. On this note making a cost order will
in deed not serve
the requirements of law and fairness.
[25]
In the premises the following order is therefore made:
Order
The
Applicants’ unfair dismissal claim is dismissed.
There
is no order as to costs.
___________________
M M BALOYI
Acting Judge of the Labour Court of
South Africa
Appearances
:
For
the Applicant
:
Advocate. Van der Riet
(SC)
Instructed
by: Mabaso
Attorneys
For
the Respondent: Advocate. S Collet
Instructed
by: Ken
McDade Attorneys
[1]
Act 66 of
1995.
[2]
1999 10 BLLR 1005
LAC
[3]
(2003) 11 BLLR 1081
(LAC) The Court in paragraph 70 went further to
point that the Court should not hesitate to deal with an issue that
requires
no special expertise, skill or knowledge particularly where
logic and common sense prevail.
[4]
(
[2008] ZALAC 10
;
1998)
12 BLLR 1215
at paras 23 and 24
[5]
See footnote 1.