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[2017] ZALCD 6
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National Union of Metal Workers of South Africa (NUMSA) obo Shezi and Others v Laser NCN (Pty) Ltd (D729/09) [2017] ZALCD 6 (31 January 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Not
Reportable
CASE
NO. D729/09
In
the matter between:
NATIONAL
UNION OF METAL WORKERS OF SOUTH
AFRICA
(NUMSA) obo ERIC SHEZI & 20
OTHERS
Applicant
and
LASER
CNC (PTY)
LTD
Respondent
Heard:
15 December 2016
Delivered:
31 January 2017
Summary:
Claim of unfair dismissal due to operational requirements –
discrimination on union membership -
selection
criteria Lifo per department, with skills retention fair and
objective – reinstatement exercise discriminatory against
applicant’s members – compensation appropriate.
JUDGMENT
CELE
J
Introduction
[1]
This is a claim of unfair dismissal by the Respondent of employees
that were members of the Applicant, due to the operational
requirements of the Respondent in terms of section 189A of the Labour
relations Act.
[1]
The Respondent contemplated retrenchment during the global economic
crisis of the time in 2009. While the reason for retrenchment
was
heavily contested in the pleadings and during trial, the Applicant
has conceded that there was a need for the Respondent to
retrench.
The Applicant has also withdrawn its complaint on procedural
fairness. In any event 21 employees were dismissed at an
industry
where, more than 200 employees were employed.
[2]
The gravamen of the Applicant’s complaint is that its members
were unfairly discriminated against on the basis of their union
membership. The Applicant seeks reinstatement for its members and in
the alternative, compensation. The Respondent opposed the
claim and
the relief sought.
Factual
Background
[2]
The Respondent had a positive record month for its business in June
2008, being its last financial month as the Respondent's
financial
year ran from July to June of each year. It then experienced a huge
and sudden downturn that occurred in orders coming
to it, especially
from by far its largest customer, Bell Equipment. It was as if
somebody had turned the tap off. As from July
2009 onwards the
business just collapsed. There was a negative turnaround of some R20
million. The forecasts received by the Respondent
suggested that the
drop in orders might be temporary but that turned out not to be so
and sometime around December 2008 or January
2009 the Respondent
realised that retrenchments were likely. As such, a genuine economic
rationale existed which justified retrenchment
in general.
[3]
The Respondent tried several alternatives to resist forced
retrenchments, including short time, general cost cutting, the waiver
of salary and loan interest by the majority shareholder, pay cuts by
directors, changes to working methods, an exemption from the
Metal
and Engineering Industries Bargaining Council (MEIBC) wage increase,
the disposal of equipment, borrowing money and, eventually,
a
voluntary retrenchment exercise. The employees whose applications for
voluntary retrenchment were accepted included 12 members
of the
Applicant and 31 non-unionised employees.
[4]
On 10 February 2009 the Respondent, which falls within the
jurisdiction of the MEIBC, held a meeting at its premises to advise
its employees of a forthcoming retrenchment exercise. Two members of
Applicant were invited. One was Mr Themba Nene, who is an
individual
Applicant in this matter. Those Applicant members advised the
Respondent that they did not have a mandate to deal with
the matter
and did not remain in the meeting. A trade union official as well as
shop stewards did attend subsequent convened meetings.
The initial
meeting and subsequent meetings were also attended by representatives
of the Respondent's non-unionised employees.
[5]
The Respondent issued out a notice in terms of section 189 (3) of the
LRA to the Applicant dated 10 February 2009 advising it
that the
Respondent was contemplating retrenchments that might affect its
members, and disclosed relevant information in terms
of the
sub-section. The selection criteria proposed were “last in,
first out”, per department, with consideration being
given to
the company’s need to retain certain skills and experience. The
Applicant was invited in the notice to consult with
it regarding
those issues as well as any other matters that might be of relevance
and to make proposals regarding a method for
determining the skills
and experience which would be retained and whether individual
employees possessed such skills and experience.
[6]
Various meetings were held, in particular, on 12 February, 24
February and 5 March 2009. Among the employee representatives
present
at each meeting were Mr Mncube, who is the Applicant’s
official, Mr Themba Nene and Mr Raymond Mabizela, who were
Applicant’s shop stewards. In attendance there were also people
representing non-unionised employees, several of the respondent’s
directors, and an agent employed by the MEIBC, Mr Sean Drabble.
[7]
At the meeting of 12 February 2009 the Respondent set out its
position regarding the proposed retrenchments and put up an
organogram,
though without employees’ names appearing on it. In
a letter dated 12 February 2009 the Respondent wrote to the applicant
responding to two points that had been raised at the meeting of 12
February 2009. On 19 February 2009 the applicant sent its proposals
to the Respondent in writing. In a letter dated 19 February 2009 the
Respondent replied to those proposals in writing. At the meeting
of
24 February 2009 the Respondent advised that 43 applications for
voluntary retrenchment had been received and accepted by it.
The
company showed a slide projection at the meeting of 5 March 2009
where the documents at pages 107 to 133 of the bundle were
presented.
At the meeting of 5 March 2009 the union representatives held a
caucus with the MEIBC agent after whom the union official,
Mr Mncube,
spoke and the meeting terminated shortly after that. On 5 March 2009
the applicant sent complaints about the retrenchment
process to the
Respondent in writing. In a letter dated 6 March the Respondent
responded in writing.
[8]
The individual applicants, who were all members of Applicant, were
dismissed on or about 12 May 2009, ostensibly for reasons
based on
the Respondent's operational requirements. Following the
retrenchments the Respondent did re-employ certain retrenchees,
both
voluntary and otherwise, among whom were some of the original
individual applicants.
The
issue
[9]
Essentially, the applicant’s complaint is that the individual
employees were unfairly selected for retrenchment in circumstances
where others ought to have been selected in their places, and that
they were targeted for selection because they were members of
the
Applicant’s union.
[10]
The complaint that the Applicant’s members had been
specifically targeted for retrenchment arose in a number of contexts,
being:
·
the
appointment of team leaders who were thereby immunised from
selection;
·
transfer
of employees to the Fettling Department which was then closed
down;
·
the
refusal to appoint a facilitator;
·
the
pressure coming from employees to finalise the process and the
allegation that people were saying that the Applicant was holding
up
the process;
·
the
entries that allegedly appeared in Mr Raymond Mabizela’s diary
concerning incidents that allegedly suggested a campaign
against the
Applicant’s members.
·
the
selection criteria and their application, which included the failure
of the company to bump people from one department to another;
·
the
failure to re-employ the Applicant’s members when work, even of
a temporary nature, became available;
Evidence
and analysis
[11]
A retrenchment process which leads to a dismissal is a no fault
dismissal exercise. The onus to prove the fairness thereof
lies with
the employer and in this case the Respondent.
Appointment
of team leaders
[12]
In the consultative meeting of the parties held on 5 March 2009 the
Applicant’s representatives came across surprised
by the
existence of a group of employees called team leaders. According to
the respondent’s evidence, in particular Mr Fletcher,
the
appointment of team leaders took place at various times. Most of the
appointments were said to have taken place before the
respondent
contemplated retrenchments, many of them well before then. Only three
of the team leaders are said to have been appointed
after the
company’s record month, June 2008. The appointment dates are
set out in the list of team leaders in the bundle
of documents
supplied. It was conceded that none of the team leaders were
appointed from Applicant’s members. The explanation
is that the
Applicant represented nowhere near the majority of employees in the
Respondent’s workplace and several of the
individual
applicant’s members, being fettlers, runners and general
workers, performed tasks that required relatively little
skill.
[13]
The approach adopted by the witnesses of the Applicant was to deny
knowledge about the appointment of team leaders. Mr Themba
Nene then
said that he could not dispute some of the appointment dates and, in
relation to others, he said that he disputed them
because he was not
told about them at the time of the appointments.
[14]
The minutes of 5 March 2009 have an entry with the following of
relevance here:
“
NM
and Themba Nene (TN) raised their disapproval on how the Team Leaders
had been elected. Carl Clark (CC) responded stating that
the Team
Leaders had been identified on certain strengths and attributes and
that this had been done long before there was any
economic collapse.
Secondly, if they were so very concerned about the selection process,
why did they not approach management then
for clarity?”
[15]
NM was reference to Mr Njabulo Mncube. It was submitted by Mr Reddy
for the Applicants that Mr Clark’s response (quoted
in the
minutes) was both remarkable and strange. The response suggested that
this was the first occasion when the work force and
union were
informed of the fact that team leaders had been selected and further
what the selection criteria therefor were. It further
suggested that
the work force would have been unaware that certain of their
co-workers were team leaders, which in itself was rather
odd. Mr
Reddy, hopefully erroneously and not deliberately, left out the
second part of the minutes which answered the very issue
he raised.
That part of the minutes reads:
“
Secondly,
if they were so very concerned about the selection process, why did
they not approach management then for clarity?”
[16]
According to the minutes the Applicant would have known about the
appointment of team leaders when that was done and the Applicant
did
nothing to raise any concern in relation thereto. I accept that the
Applicant was supplied with a copy of the minutes and that
this
aspect was never corrected. The inference to be drawn is that the
Applicant knew about the appointment of team leaders and
had no
concern to raise in respect thereof. Further, I accept the undisputed
evidence of the Respondent that the Applicant represented
nowhere
near the majority of employees in the Respondent’s workplace
and that several of the individual applicant’s
members
performed tasks that required relatively little skill.
The
transfer of employees
[17]
The transfer of employees to the Fettling Department which was then
closed down was another basis for the attack of the selection
of the
Applicant’s members. It was Applicant’s version that all
of the employees that were transferred to the fettling
department and
who were compulsorily retrenched were union members. Each one of
them, prior to their alleged transfer was situated
in either the
bending, welding or quality department. The Applicant further said
that not a single employee who was transferred
to the fettling
department was non-unionised. Mr Fletcher’s conceded in his
evidence that the fettling department had its
numbers swelled with
union members prior to the decision taken to close down the same. He
said that every Driver who did the Bell
Equipment deliveries knew the
needs of the customer had years of experience on that route and had
then to be retained. Reluctantly,
he conceded that other Drivers
employed by the Respondent could do the self-same delivery.
[18]
I am persuaded by Mr Reddy’s submissions that a
number of welders
were moved from one department to another, which second department
was, according to the Respondent, not identified
for retrenchment.
Again those transferees were not union members who, had they not been
transferred, would have been susceptible
to retrenchment as they were
possessed of shorter service than a number of union members. It is
further not in dispute that the
lateral restructuring as testified to
by Fletcher involved only non-union members and no union members were
transferred from one
department to another, save fettling.
[19]
Further, I agree also that, whatever might have been the intention of
the Respondent, the fact of the matter is that all employees
who were
transferred, and who happened not to be union members, were not
retrenched. It is wondered why not a single union member
was
considered a suitable candidate for such similar transfer. By way of
a further example no welders in the stainless steel department
were
retrenched. It is indeed worth noting that at the time of the
retrenchment that department grew to include employees Messrs
Coleman, Xulu, Gordon and Smith. Had they remained in their original
departments they would have had to compete with union members
with
longer service records for retrenchment. And those four just happened
to be non-union members. The Respondent did not produce
any objective
facts to demonstrate the business rationale underlying the transfer
process. The selection process to identify employees
to be
transferred and the timing thereof left much to be desired.
The
refusal to appoint a facilitator.
[20]
The Applicant asked that, a facilitator be appointed. The Respondent
did not agree with the proposal. The Applicant conceded
that, there
was no obligation on the Respondent to accede to the request but said
that, the fact that the request was made was
indicative of a measure
of mistrust by the union towards the employer in the manner in which
the selection of retrenchees was predicted
to unfold; otherwise it
would not request a facilitator in the first place. It averred that
an employer committed to embarking
upon a fair process for
retrenchment would be expected readily to agree to the appointment of
such facilitator. What the Applicant
said it intended was the
facilitator would act as some sort of mediator in identifying whether
the Respondent was playing fair
in identifying a particular union
employee for retrenchment and likewise whether the union was making
appropriate concessions when
one of its members was correctly and
fairly suggested for retrenchment.
[21]
I find nothing sinister in the Respondent refusing to have a
facilitator appointed. The Applicant could equally request for
the
appointment of a facilitator as a consulting party representing the
majority of employees whom the employer contemplated dismissing.
In
my view, nothing turns on this issue.
The
pressure coming from employees to finalise the process
[22]
According to the Respondent, there was also the pressure coming from
employees to finalise the process and the allegation that
people were
saying that the Applicant was holding up the process. This pressure
was said to come from the majority of the employees
in the work place
and that those were mostly none-unionised workers. Mr Siphiwe Xulu, A
Director of the Respondent testified about
the meeting that was
called by employees who wanted the retrenchment process to be
expedited and about the list of more than 100
of them who signed what
might be termed a petition intended to indicate that, if they were
selected for retrenchment, they would
not challenge the process. Some
of the people who signed the document were Applicant’s members
themselves, and a few were
even applicants in this matter. He also
said that there were stories that. the Applicant was holding up the
process but that, these
had not emanated from management. Management
was committed to going through a fair and proper consultation
process. Not much came
from the Applicant on this aspect. A number of
queries raised by the Applicant might have contributed to some delay
in finalising
the retrenchment process but the Applicant has not
referred to any display of impatience by the Respondent. Nothing of
significance
therefore turns on this issue.
The
entries that allegedly appeared in Mr Raymond Mabizela’s diary
[23]
There were entries that allegedly appeared in Mr Raymond Mabizela’s
diary concerning incidents that, allegedly suggested
a campaign
against the Applicant’s members. While this aspect was
introduced by Mr Reddy through cross-examination, the issue
could not
be taken much further as Mr Mabizela referred to, never came to
testify. This issue was never raised in the pleadings
to alert the
Respondent of it. Therefore no adverse inference may be drawn to the
failure of the Respondent to call a rebutting
witness for this
aspect.
The
selection criteria and their application
[24]
The selection criteria and their application, which included the
failure of the company to bump people from one department
to another
was yet another source of complaint by the Applicant for its members.
Evidence of the Applicant is that it is not without
significance that
each one of the 30 names proposed by the Respondent for compulsory
retrenchment, the majority of whom were union
members, despite union
members being in the minority, turned out to be the very same persons
who were ultimately retrenched. Applicant’s
complaint was that
no amount of debate on the matter, of which there was none, would
conduce to dissuade the Respondent from altering
its departmental
Last in First Out (LIFO) approach as the targeted union members were
not, according to the Respondent, going to
be spared.
[25]
Mr Reddy then submitted that any argument that non-union members were
also retrenched cannot be destructive of the argument
that union
members were targeted. He contended that by devising this stratagem
of LIFO, departmentally, it was no more than a ruse
to safeguard the
jobs of so many others who would ordinarily have been in front of the
retrenchment queue but who were able to
avoid those consequences by
nifty manipulations. Further that it was a departure from the
well-established approach to fair retrenchment
criteria, unless some
rationale existed for its invocation. Whatever might be the
acceptable guidelines or requirements for invoking
this method, the
Respondent, apart from only merely contending that it considered it
necessary to employ LIFO departmentally, failed
to demonstrate that
there was such a need.
[26]
He said that the Respondent was, by no means, a large-scale employer
with its set up located at different places, that might
render inter
departmental transfers unwieldy. On the contrary, it was a medium
sized employer, employing less than 200 workers,
most of whom fell
into six to seven different categories of skills namely drivers,
welders, machine operators and others, with
approximately 20 to 30
within management. Further, its entire operations were situated in
one location and the evidence suggested
that, while there were
different departments within the work force, just about the entirety
of the manufacturing processes undertaken
at the work place was
carried out in a very much inter-mingled fashion, meaning that the
entire workforce appeared to be in close
physical proximity to each
other and interacted with each other throughout the course of a day’s
work.
[27]
There is a dispute between the parties as to whether the departmental
LIFO approach was complained of during the meetings of
February and
March 2009. Mr Reddy said that it was improbable in the extreme, if
not simply false, that this would not have been
complained of by the
Applicant. He averred that the suggestion that the Applicant had in
fact agreed to the retrenchment of its
members was a too generous
interpretation of the minutes of the 5
th
March 2009 and it
was far more probable that, as both Messrs Nene and Mncube stated,
the Applicant merely acquiesced in the Respondent
choosing the date
when the voluntary retrenchees would terminate their employment. It
was submitted that, at least on the probabilities,
there could not
have been agreement that compulsory retrenchments would take place
departmentally.
[28]
When the Respondent issued out a notice in terms of section 189 (3)
of the LRA to the Applicant, in respect of the selection
criteria
proposed, letter read:
"
4.1The
company proposes that employees are selected for retrenchment on the
basis of "last in, first out", per department,
with
consideration being given to the company's need to retain certain
skills and experience. You are invited to consult and make
proposals
regarding a method for determining the skills and experience which
will be retained and whether individual employees
possess such skills
and experience.
4.2
Where several employees possess substantially the same skills and
experience, then the company proposes that selection for dismissal
be
on a "last in, first out" basis.
"
[29]
Therefore the selection criteria proposed upfront were “last
in, first out”, per department, with consideration
being given
to the company’s need to retain certain skills and experience.
The Applicant was invited in the notice to consult
with it regarding
those issues and to make proposals regarding a method for determining
the skills and experience which would be
retained and whether
individual employees possessed such skills and experience. The
invitation was unequivocal about the proposed
selection criteria. One
expects that if the Applicant was opposed to the proposal its
position would be made adequately clear in
its dealings with the
Respondent.
[30]
Mr Xulu testified that the Applicant agreed to the proposed selection
criteria and he said that he would produce minutes of
a meeting where
the above was agreed to. He was ultimately unable to produce such
minutes.
Mr
Xulu said that a company organogram was displayed that showed the
jobs but not the names of people performing those jobs and
that this
was done by way of a slide projection. The minutes of the meeting of
12 February 2009 reflected the same. He conceded
though
that the Applicant
did not take any part in the subsequent meeting at which the
compulsory retrenchees were selected. In its letter
dated 19 February
2009 the applicant proposed: "LIFO system and bumping". The
minutes of the meeting dated 24 February
2009 stated:
"SD
(Stephen Dalbock, a director of the respondent) presented the
selection criteria process the company was contemplating
and stated
that the following approach was envisaged:
-
A
panel would be convened (Respective Senior Management, Respective
Line Management, Employee Representative and NUMSA Employee
Representative)
-
Each
Department shall be assessed independently
-
Last-in
First-out and skills retention criteria shall be adopted
-
Where
applicable Department restructure may take place in line with skills
retention.
[31]
I agree with Mr Haslop for the Respondent that although the minutes
reflected that the Applicant did raise certain issues about
other
aspects of the retrenchment, there is no minute that this particular
proposal met with any resistance from it. Indeed, they
reflect that
the applicant requested, amongst others and through Mr Drabble, a
list of each affected department and the affected
employees. Mr
Drabble asked that the lists be distributed at the meetings with the
allowance of a caucus if requested. Even the
agenda for the meeting
of 5 March 2009 reflected that a list of affected departments and
names was a matter arising from the previous
meeting. The minutes do
indeed reflect that the union representatives did raise certain
issues at the meeting of 5 March 2009 and
the fact that Mr Sabelo
Ntuli's situation as well as those relating to the team leaders and
the bending department was specifically
raised seems to indicate that
there was a discussion about individuals as well as posts. Again the
minutes are silent about the
Applicant objecting to LIFO per
department, with consideration being given to the Respondent’s
needs to retain certain skills
and experience. I hold therefore that
the Applicant did not object to the selection criteria proposed by
the Respondent. The Applicant
merely acquiesced in the Respondent
choosing not only the date when the voluntary retrenchees would
terminate their employment
but also to the selection criteria
proposed by the Respondent. Accordingly, selection criteria agreed to
or even fair and objective.
The
failure to re-employ the Applicant’s members
[32]
The failure to re-employ the Applicant’s members when work,
even of a temporary nature, became available was also a serious
issue
raised by the Applicant. Out of the 33 non-union members who accepted
voluntary retrenchment 31 of them were re-employed
by the Respondent.
Of the 12 union members who accepted voluntary retrenchment only 4
were re-employed. Out of 11 non-union members
who were retrenched, 8
were re-employed. Of the 21 union members who were retrenched, only 3
were re-employed. A number of union
members gave up their union
membership around the time that they were re-employed. Mr Tyrone
Coleman gave up his membership with
the Applicant and, at the
consultation process, he represented the non-union employees.
Significantly his son, Mr Reece Coleman
and his nephew Mr Clyde
Gordon were saved from retrenchment through lateral transfer.
[33]
When the issue of re-employment was dealt with Mr Xulu said that, at
one point, the company required certain skills on an urgent
basis.
When he was unable to get hold of a particular person with that skill
he moved on to the next one on the list. He said that
he had
difficulty in tracing Applicant’s members for reinstatement. He
conceded that he could very easily have contacted
the Applicant but
he said that, he never thought of doing so. Mr Reddy argued that the
failure or refusal to reinstate or re-employ
a former employee in
terms of an agreement is an unfair labour practice, yet neither the
union nor any of the individual applicants
referred such a complaint
to the bargaining council. In addition, the company did re-employ
some Applicant’s members, including
some of the original
individual applicants in this matter.
[34]
From the given figures more compulsory retrenchees came from the
Applicant’s members than from non-unionised employees.
Yet
unionised employees were in the minority. More non-unionised
employees on compulsory retrenchment were reinstated than unionised
workers. Almost all voluntary non-unionised employees were
reinstated. A minority of unionised voluntary employees were
reinstated.
From these figures, assuming they are correct, there is
overwhelming evidence that the Respondent took a position a firm
stand
against Applicant’s members in the reinstatement
exercise. The Respondent had to explain this disparity. The evidence
of
Mr Xulu is far from convincing when he said that he could not
trace unionised employees but could easily trace non-unionised
workers.
[35]
The Applicant has successfully demonstrated that its members were
treated differently than non-unionised employees during the
reinstatement exercise. The overwhelming inference to draw from the
proven facts is that the differentiation was premised on union
membership. Discrimination on the basis of union membership has
therefore been established by the Applicant. It remained for the
Respondent to prove the fairness thereof. All that the Respondent did
was to deny deferential treatment. No evidence was led to
justify it
and therefore to say it was fair. I conclude therefore, that
discrimination of the Applicant’s members on union
membership
in the reinstatement exercise was unfair.
[36]
The primary remedy for the members of the Applicant is one of
reinstatement. The Applicant has asked for that relief but that,
in
the alternative compensation may be ordered. Undisputed evidence was
however led that, the Respondent was undergoing another
retrenchment
exercise. I find therefore that it is not reasonably practicable for
the Respondent to reinstate or re-employ the
employees represented by
the Applicant. Compensation is found to be an appropriate remedy. The
dismissal of the employees by the
Respondent in this matter was
automatically unfair in terms of section 187 (1) (f) of the LRA. In
striving to determine a just
and equitable amount of compensation,
the following facts and factors are part of the considerations:
a)
There
existed a fair reason to embark on retrenchment;
b)
The
Respondent attempted to follow a fair procedure;
c)
The
respondent acted under the pressure of non-unionised employees who
were in the majority;
d)
The
Respondent is undergoing yet another retrenchment exercise;
e)
The
employees were dismissed in 2009 and a period just more than 7 years
has elapsed;
f)
The
employees concerned have not found alternate employment;
g)
This
is a no blame dismissal.
[37]
In the circumstances the following finding and order shall issue:
1.
The
dismissal of the thirteen employees of the Respondent represented in
this matter by the Applicant was substantively unfair due
to them
being discriminated against by the Respondent on their union
membership.
2.
The
Respondent is ordered to compensate each employee in an amount
equivalent to twelve (12) months of the salary each earned on
the
date of dismissal.
3.
Such
payment is to be made within 14 days from the date of this order.
4.
The
Respondent is ordered to pay half of the costs of this claim.
_____
Cele J
Judge of the Labour
Court of South Africa.
APPEARANCES:
FOR
THE APPLICANT: Mr Reddy
Instructed
by: Harkoo Brijlal and Reddy
FOR
THE RESPONDENT: Mr Haslop
Instructed
by: Woodhead Bugby Inc.
[1]
Act Number 66 of 1995 hereafter
referred to as the LRA.
[2]
See section 189A (18) of the LRA.