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[2017] ZALCD 24
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AMCU obo Employees Listed in Annexure FA 1 v Patcon Construction and Civil Engineering Contractors (Pty) Ltd (D1489/17) [2017] ZALCD 24; (2018) 39 ILJ 586 (LC) (13 December 2017)
Reportable
THE
LABOUR COURT OF SOUTH AFRICA,
HELD
AT DURBAN
Case No: D 1489/17
In
the matter between:
AMCU
obo THE EMPLOYEES LISTED IN
ANNEXURE
“FA 1”
Applicant
and
PATCON
CONSTRUCTION AND CIVIL
ENGINEERING
CONTRACTORS (PTY) LTD
Respondent
Heard
:
01 December 2017
Delivered
:
13 December 2017
Summary:
(S 189A (13) application - stalled consultation process –
compensation suitable alternative –
meaning of procedural
unfairness in s 189A(13))
judgment
LAGRANGE
J
Background
[1]
This is an application in terms of section 189A (13) of the Labour
Relations Act, 66 of 1995 (‘the LRA’) by AMCU
on behalf
of 88 employees or former employees of the respondent, a construction
company (‘Patcon’). Apart from seeking
a direction
ordering Patcon to comply with a fair consultation procedure, the
union seeks an order interdicting the company from
dismissing any
employees who are still employed and reinstating any that had been
retrenched pending the conclusion of the consultation
process above.
In the alternative, the union claims compensation for lack of
compliance with a fair procedure.
[2]
There is a dispute as to which of those employees the union is
entitled to represent on a list annexured as “FA1”
to the
founding affidavit. There is also a lack of clarity as to which of
them have been retrenched already and which of them remain
employed,
though this is within the respondent’s knowledge.
[3]
What the parties are agreed on is that, approximately 33 of the
employees on the list were retrenched in March 2017 and a further
10
employees were retrenched in April 2017. A number of the remainder
were retrenched at the end of September 2017 -and on13 October
2017
Patcon retrenched a further 30.
[4]
Section 200 of the LRA provides that:
“
200.
Representation of employees or employers
(1)
A registered trade union or registered employers' organisation
may
act in any one or more of the following capacities in any dispute to
which any of its members is a party-
(a)
in its own interest;
(b)
on behalf of any of its members;
(c)
in the interest of any of its members.
(2)
A registered trade union or a registered employers' organisation
is
entitled to be a party to any proceedings in terms of this Act if one
or more of its members is a party to those proceedings.”
The
LAC held in
MacDonald's
Transport Upington (Pty) Ltd v Association of Mineworkers &
Construction Union & others
[1]
that this section only refers to circumstances where a union is
itself a party to a dispute and that it does not deal with the
situation where it is acting purely in a representative capacity for
a member. However, the LAC further held that:
“
[37]
In
National Union of
Mineworkers on behalf of Mabote v Commission for Conciliation,
Mediation & Arbitration & others
(Mabote
), the
Labour Court (Steenkamp J) recognised that s 200 and CCMA rule 25(1)
found union rights and individual rights.
On appeal,
in
Kalahari
Country Club v National Union of Mineworkers &
another
(2015)
36
ILJ
1210
(LAC ) the decision was upheld. The distinction between the
distinct roles of a union is, accidently,
illustrated by
the controversy that arose in
County
Fair Foods (Pty) Ltd v Commission for Conciliation, Mediation &
Arbitration & others
(2003)
24
ILJ
355
(LAC ) (
County
Fair
).
A worker was dismissed. The dispute was referred to the CCMA
by union A, in its name, as it could do in terms of s
200(1)
(b).
Later union A
withdrew, but the worker presented himself with union B as
his representative, who sought
to have itself substituted
for union A. The employer argued that the dispute was only
between it and union A.
The court held that substance had
to prevail over form: the dispute was about the worker's
dismissal and it mattered not which union 'represented' him.
Plainly, what triumphed was the worker's choice of his
representative.
[38] In this matter, AMCU
had become a party in its own right, but its presence could not have
been limited to that role alone.
What is an
employer's locus standi to concern itself with
the union membership status of an employee?
[39] Although this matter
can be decided on the interpretation issue alone, as did the
Labour Court, the conduct of the appellant
is so egregious that it is
appropriate to deal with the tactic adopted by it, ie to challenge
the right of its dismissed employees
to demand in dismissal
proceedings before an arbitration forum to be represented by
a union of their choice
of which they claimed to be
members.
[40] Bluntly, what
business is it of an employer, in such circumstances, to concern
itself with whether membership dues are
up to date or any other
aspect of the relationship between individual employees and
their union? In my view, there is no basis
at all.
[41] On the facts of this
case, the individuals claimed to be members and the union claimed
them as members. Assuming
that the employer's challenge that the
individuals were not in good standing were to be true, surely the
choice of the union to
elect not to cancel the membership
or enforce specific performance is one which it can make without
regard to any third party?
No creditor is by law obliged to cancel
a contract because the debtor fails to comply with the terms of the
contract. Moreover,
it has been held by Basson J in
Transport
& General Workers Union & others v Coin Security
Group (Pty) Ltd
(2001)
22
ILJ
968
(LC) at paras 160-161 that
an
employee who appears before the Labour Court represented by
a union pursuant to s 161(1)
(c)
of
the LRA, needs not have been a member at the time of that employee's
dismissal. If that be so, the relationship between union and
a purported member in such proceedings is not dependent, in the
least, on a history of membership, a point also latent in the
decision in
County
Fair
above
where a union claimed to be acting in a representative capacity on
behalf of members of the union, it was not a matter
for the employer
to concern itself with the issue
.”
(emphasis
added)
In
this instance, AMCU claims that the employees listed on Annexure
“FA1” are members in good standing of the union.
In light
of the authority above, I am satisfied that, that puts an end to the
question about the union’s
locus standi
to represent the
individuals on that list.
Brief
chronology
[5]
On 10 March 2017, Patcon initiated retrenchment consultations by
sending AMCU a notice of proposed retrenchment in terms of
section
189A of the LRA. The prospective retrenchments arose from the
termination of core contract Patcon had with Engen, which
Patcon
anticipated would ultimately lead to the closure of the company.
[6]
A consultative meeting over the proposed retrenchments was held on 16
March 2017. During that meeting, the company proposed
a series of
phased layoffs once work at various sites was completed. The first
proposed layoff was anticipated to take place immediately
and the
consequent retrenchment would occur on 9 May 2017. The letter stated
that “It is noted that the company may be required
to further
implement and continue such layoffs in phases on other affected sites
during the consultation period”. Elsewhere,
the letter spoke of
retrenchment been implemented in 6 phases.
[7]
It is apparent from handwritten minutes of the meeting that the union
floated the idea of LIFO as a selection method, but management
felt
that it would be impractical because of the phased nature of the
process. Management also outlined the dates of proposed phased
layoffs of 60 days in consecutive stages starting on 13 April 2017
and ending on 30 April 2017. The union wanted an opportunity
to
consult with its members about the proposed 60 day layoffs and the
company indicated its intention that during the layoff periods,
consultation would take place and it would be decided whether to
extend the layoff until more work became available.
[8]
After the meeting there was a significant amount of email
correspondence. The critical communications in this regard took place
between 23 and 27 March 2017. On 23 March, the union notified the
company that following the meeting with members on 18 March,
the
union confirmed “…that our position as per the mandate
we got, we don’t agree with the layoff as you proposed,
However, we preferred the retrenchment take place as soon as
tomorrow.” After considering the union’s response,
management
responded on 27 March in an email headed “RE Patcon
-retrenchments- Engen phase 1”. The email then went on to
confirm
that Engen (Phase 1) employees would be retrenched “effective
immediately as requested”. The rest of the email set out
more
details of this retrenchment. It was clear from the tenor of the
communications that the pressing issue that the parties’
attention was focussed on was the imminent layoffs in Phase 1.
[9]
On 6 April 2017, AMCU wrote to the company requesting an urgent
meeting. The body of the letter stated that the union wish to
meet
with the company a few days later to discuss the following issues: “2
weeks of service per each year completed; Notice
pay 4 weeks; Leave
Pay; Bonus and bumping and LIFO”. Patcon unequivocally rejected
the proposed meeting in the following
terms in its reply of 10 April:
“
1. We cannot agree
to meet as requested to reopen retrenchment consultations as
proposed.
2. On written request by
AMCU as mandated by members, a request for
immediate
implementation of retrenchment was received on 23rd March 2017, and
subsequently implemented, effective 31st March 2017 at ENGEN
(phase
1).
3. To now request to
restart consultation would not be possible as phase 2 of
retrenchments will take place this week.”
On
the same day, the union confirmed that it objected to the company
proceeding with the retrenchment of employees without consultation
in
violation of the LRA. The company responded tersely, reserving its
rights and stating: “As per written confirmation from
your
offices we proceeded with the implementation of the proposed
retrenchments as explained in our previous correspondence.”
[10]
On 24 May 2017, AMCU referred an unfair retrenchment dispute to
relevant bargaining Council in which it alleged that Patcon
had not
consulted with the union in terms of the requirements of section 189
of the LRA and sought “fair consultation”
as a remedy.
The bargaining Council notified AMCU that the referral was defective
because they did not identify where the dispute
arose or the members
it represented. AMCU did not pursue that dispute referral any
further.
[11]
What followed was a long hiatus in communications between the
parties, apart from some correspondence relating to an offer
of work
for some employees in May 2017. On 6 September 2017, AMCU reopened
matters with another request for an urgent meeting.
The request was
expressed in the following terms: “We kindly request the
meeting on 8
th
September 2017 … to get clarity
regarding the agreement on [sic] place and concerns from the workers
about operation and
previous retrenchments.”
[12]
The meeting took place on 11 September and it is apparent from a
letter from Patcon confirming what transpired at the meeting
that the
union was “shocked and concerned regarding the further
implementation of the retrenchment process, after the initial
phase-in retrenchment.” The letter also reflected the union’s
belief that its email of 23 March 2017 had only been
confirmation of
the first phase retrenchment and urged the company to engage with it
on the further phasing in of retrenchments.
The letter also records
the company’s response during the meeting, in which it
reiterated its view that it had confirmed
on 27 March that the
balance of affected workers would be retrenched as per the phase-in
process. The company further confirmed
that all temporary work, in
terms of which some employees had been engaged on fixed term
contracts, would come to an end at the
end of September and the
remaining retrenchments would take place at the end of September or
in October. Lastly, the company confirmed
that it could not agree to
recommence consultation regarding retrenchment packages at such a
late stage.
[13]
On 20 September 2017, the company confirmed that all fixed term
contracts would terminate no later than 29 September 2017 and
that
other affected employees will be retrenched on 13 October 2017.
Evaluation
[14]
The synopsis abo
ve leads to a number of conclusions.
Firstly, Patcon initiated retrenchment discussions in March this
year, which contemplated the
retrenchment of all the employees listed
on Annexure “FA1”. However, at the first consultation
meeting, the attention
of the parties quickly moved to the imminent
first phase of proposed layoffs. The union’s members affected
by the first phase
were reluctant to wait for a period of two months
without pay in circumstances where the prospect of further employment
thereafter
seemed remote. This prompted the union to propose the
immediate retrenchment of those employees without the implementation
of an
interim layoff phase.
[15]
Despite the company’s contention that the union’s
communication of 27 March amounted to an agreement that it could
proceed with all retrenchments, it is fairly obvious from the
correspondence that the communications at the end of March concerned
the 1
st
group of affected employees. The company however
insisted on its own interpretation of that communication and when the
union attempted
to reopen discussions in early April, it
disingenuously refused to entertain them on the basis that an
agreement had been concluded.
It is true that much later the union
referred to an ‘agreement (in) place’, but if one has
regard to the events and
correspondence in March, April and May it is
clear that any such agreement which was reached related only to the
first phase of
the retrenchments and that the union clearly wanted to
discuss other issues but the company peremptorily shut down the
prospect
of further discussions.
[16]
The next step taken by the union in May was to refer the dispute over
the consultations to the bargaining Council that it abandoned
its
efforts in that regard once the bargaining Council raised technical
problems with the referral. Thereafter, nothing happened
until the
union tried to reopen discussions in September.
[17]
It is fair to conclude on the basis of the above that the
consultation process was unduly curtailed by Patcon and that
discussions
had not run their course except in relation to the first
phase of retrenchments, which was implemented quite rapidly, without
much
else being canvassed that one would expect in a normal s 189
consultation process. On the other hand, the union faltered in
pursuing
the failure of Patcon to re-open discussions. It certainly
cannot be said that the consultation process which took place in
March
this year entailed the kind of meaningful consultation over
proposed retrenchment envisaged in section 189 (2) of the LRA.
[18]
The issue
which then arises as what would be an appropriate remedy. In
Banks
& another v Coca-Cola SA - A Division of Coca-Cola Africa (Pty)
Ltd
[2]
it was stated that:
'[15] It is well
established that the aim of the consultation process established by s
189 is to avoid dismissal, or at least to
effect a reduction in the
number of dismissals and to mitigate the effect of dismissal on
affected employees. The nature of the
process is equally well
established - the parties are required to engage in a problem-solving
or joint consensus-seeking exercise
(see s 189(2)).
[16] The four
remedies established by subsection (13) afford the court a wide
discretion. The first two remedies (a compliance order,
and an
interdict against dismissal) clearly contemplate intervention by the
court before a dismissal takes effect, the latter (reinstatement
until there is compliance with a fair procedure, monetary
compensation) contemplate intervention after an employee has been
dismissed.
This provision is to be read with the time-limits
established by subsection (17). These contemplate intervention by the
court at
a time that is appropriate given the circumstances of the
case, and having regard to the particular remedy that is sought.
[17]
The requirement in subsection (17) that an application be brought
''not later than 30 days after the employer has given notice
to
terminate the employee's services or, if notice is not given, the
date on which the employees are dismissed'', read with subsection
(13), places what might be termed an ''outside limit'' of 30 days
post-dismissal or notice of dismissal within which the application
must be brought. However, the wording of the subsection and the
structure of s 189A generally envisage that the court may be asked
to
intervene at any appropriate stage during a consultation process that
has been initiated, or even prior to that, for example,
when an
employer purports to dismiss employees without commencing any
consultation with them or their representatives.
[18] In short,
the conclusion to be drawn from the wording of s 189A is that this
court appears to have been accorded a proactive
and supervisory role
in relation to the procedural obligations that attach to operational
requirements dismissals. Where the remedy
sought requires
intervention in the consultation process prior to dismissal, the
court ought necessarily to afford a remedy that
accounts for the
stage that the consultation has reached, the prospect of any joint
consensus-seeking engagement being resumed,
the attitude of both
parties, the nature and extent of the procedural shortcomings that
are alleged, and the like. If it appears
to the court that little or
no purpose would be served by intervention in the consultation
process in one of the forms contemplated
by s
189A(13)
(a)
,
(b)
and
(c)
,
then compensation as provided by para
(d)
is
the more apposite remedy.
[19] In
Insurance
& Banking Staff Association & another v Old Mutual Services &
Technology Administration & another
(2006)
27 ILJ 1026 (LC), Pillay J came to a similar conclusion. In that
case, the court noted that although the timing of
s 189A (13)
application is not connected to the date when the procedural
unfairness occurred, it is a relevant consideration as
to whether the
application should succeed. More specifically, the court held that if
there is an undue delay between the occurrence
of the procedural flaw
and the launching of the application, the remedies established by
subsection (13)
(a)
-
(c)
would
be inappropriate (at 1031G-H). Similarly, these remedies are not
appropriate once the retrenchment process is completed
(at 1031H-I)‘’
In
my view, the principle above is apposite here and there would be
little point at such a late stage of trying to remedy the flawed
consultation process, for those who have already been retrenched.
There is also no value in referring the matter to oral evidence
as
the consultation process, such as it was, is adequately canvassed in
the affidavits. Accordingly, an award of compensation is
appropriate
taking into account the failure of the applicants to act earlier in
obtaining the primary relief envisaged by section
189A (13), namely
to remedy the procedural inadequacies of the consultation process,
which is why the LRA requires the application
to be brought
expeditiously. Account must also be taken of the way the respondent
rebuffed attempts to re-open discussions.
[19]
In relation to any remaining employees who still face the prospect of
retrenchment, provision must be made for an opportunity
for
consultation to still take place, though given that such prospective
retrenchments should have been the subject of proper consultation
much earlier when they were first raised as a possibility only a
limited period for concluding such discussions is provided for.
[20]
An argument was advanced by the respondent that because the
applicants did not explain why the retrenchments were procedurally
unfair for want of compliance with section 189A, their claim of
procedural unfairness must fail. This argument was based on an
interpretation of the following extract from a lengthy judgement
of Zondo J in the Constitution
Steenkamp & others v Edcon
Ltd (National Union of Metalworkers of SA intervening)
:
“
[135] The LRA
spells out the consequences of an employer's breach of the procedural
requirements of s 189A (8) both in s 189A (9),
which is the strike
route, and in subsection (13). That the subsection (13) orders
are consequences of non-compliance with
the procedural
requirements is made clear when subsection (13) refers to
'non-compliance with a fair procedure'. That phrase is
a reference to
the procedure set out in s 189A. If the provisions that cover the
'fair procedure' referred to in subsection (13)
include the
procedural requirements of subsection (8), I then logically
that would lead to the conclusion that the subsection
(13) orders
represent the consequences of non-compliance with subsection (8).”
[3]
Indeed,
read in isolation, the learned judge might appear to have been
conflating fair procedure in retrenchment with compliance
with
section 189A. However, apart from the fact that this passage would
appear, strictly speaking to be
obiter
in relation to the
principal
ratio
of the decision in that case, it is doubtful
that it was intended to be read so narrowly, as is evident from an
earlier passage
in the same judgement of the learned judge, viz:
“
[124] The first
judgment is wrong that s 189A cannot be smoothed into the fabric of
the unfair dismissal provisions of the LRA.
That section fits
comfortably into those provisions. If non-compliance with s 189A
results
in dismissals being procedurally unfair
,
the
ordinary unfair dismissal provisions of the LRA as well as the
special remedies that s 189A provides may be invoked
.
If the employer's operational requirements for dismissals are
inadequate, this can be challenged as rendering the dismissal
substantively unfair with the advantage of immediate access to the
Labour Court or the right to strike provided for in s 189A may
be
invoked.”
[4]
(emphasis
added)
If
anything, it is possible that the learned judge was entertaining the
possibility that even if non-compliance with section 189A
did not
render a dismissal invalid, it might well add another dimension to
whether a retrenchment is procedurally unfair. In any
event, one
simply has to look at the wording of the introductory section of
section 189A (13) to realise that that non-compliance
with section
189A
per se
is not a prerequisite for invoking that section,
viz: “(13) If an employer does
not comply
with a fair procedure, a consulting party may approach the
Labour Court by way of an application….” The section
makes
no mention of non-compliance with section 189A as such, but
uses the broader term ‘fair procedure’ which is used
throughout
the LRA to distinguish the procedural fairness of a
dismissal from the substantive fairness of the dismissal.
[21]
One other issue remains to be dealt with. Patcon claims that the
application was out of time in view of section 189A (17) of
the LRA.
That section provides:
(17)(a)
An application in terms of subsection (13) must be brought not later
than 30 days after the
employer has given notice to terminate the
employee’s services or, if notice is not given, the date on
which the employees
are dismissed.
(b) The Labour Court may,
on good cause shown, condone a failure to comply with the time limit
mentioned in paragraph (a).”
The
application was served on 19 October 2017. Clearly, the application
is out of time in so far as any of the employees who were
retrenched
prior to 20 September 2017. There was no evidence that employees
retrenched at the end of September were personally
given notice of
their dismissal prior to their retrenchment. An argument was
advanced, as I understood it, on the basis of the
judgement in
Transport
& Allied Workers Union and others v Natal Cooperative Timber Ltd
[5]
that notice of termination
might be considered effective from the date that the union was
notified of the retrenchments. However,
that judgement makes it clear
that giving notice to the union of the retrenchments does not obviate
the need to notify the affected
individuals as well.
[6]
In any event, the provisions of section 189A(8)(b)(i) make it clear
that where no facilitation process takes place notice of termination
must be given in accordance with section 37(1) of the Basic
Conditions of Employment Act”. Accordingly, it is improbable
that the 30 day time period envisaged in s189A (17) was intended to
refer to anything other than notice to the individual employees.
[22]
In any event, as mentioned there is no evidence of any notice being
given to individual workers in respect of the retrenchments
at the
end of September and mid-October, so the 30 day time period must be
reckoned from the date of termination. Consequently,
there is no
doubt that the application was brought with the time period
stipulated in s189A (17)(a) in relation to employees dismissed
in
September and October or other employees to whom individual notices
of termination were given before the application was launched.
Costs
[23]
The application ought to have been brought earlier and the applicants
have been partially successful. On the other hand, the
respondent
sought to take advantage of a supposed ambiguity in correspondence to
avoid further consultations, when it ought to
have been clear that
the ambit of any agreement in March was very narrow and, at best for
Patcon, related only to the employees
affected by the first phase of
planned layoffs. In the circumstances, the applicants should be
awarded a portion of their costs.
Order
[1]
The forms and service provided for in the rules of the Labour Court
are dispensed with and
the matter is dealt with as one of urgency.
[2]
Within 10 days of this order, the respondent must pay compensation
equivalent to four (4)
weeks’ remuneration calculated at their
respective rates of remuneration on the date of their termination of
service, to
each of those employees whose names appear on Annexure
“FA1” to the founding affidavit who were retrenched by
the respondent
at the end of September and on or about 13 October
2017, or who were issued with notices of termination for operational
reasons
not more than 30 days prior to 19 October 2017.
[3]
The company is interdicted and restrained from retrenching any of the
remaining employees
listed in Annexure “FA1”, who are not
amongst those mentioned in paragraph [2] of the order, for a period
of two weeks
following the date of this judgment. During that period
the applicant and respondent must hold at least three meetings to try
and
reach consensus on the issues listed in s 189(2) of the LRA,
unless they agree otherwise in writing.
[4]
The respondent must pay half the applicant’s costs.
_______________________
Lagrange
J
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT:
L
Naidoo instructed by Flitcher
Poppesque
Attorneys
RESPONDENT:
C
Edy instructed by Cox Yeats
Attorneys
[1]
(2016) 37
ILJ
2593 (LAC ) at 2607, para [36].
[2]
(2007) 28
ILJ
2748 (LC), at 2755-6. See also SA Society of Bank Officials v
Standard Bank of SA (2011) 32
ILJ
1236 (LC) at 1244-5 at paras [25] – [29], and NUMSA
v General Motors of SA (Pty) Ltd
[2009] 9 BLLR 914
(LC) at
[3]
(2016) 37
ILJ
564 (CC) at 606.
[4]
At 603.
[5]
(1992) 13 ILJ 1154 (D)
[6]
At 1164E-F