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[2018] ZALCJHB 52
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Kobua v AVK Valves Southern Africa (Pty) Ltd (JS556/16) [2018] ZALCJHB 52 (26 January 2018)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JS 556/16
In
the matter between:
NKABELA
RICHARD KOBUA
Applicant
and
AVK
VALVES SOUTHERN AFRICA (PTY) LTD
Respondent
Heard:
09
- 10 November 2017
Delivered:
26 January 2018
JUDGMENT
MAMOSEBO;
AJ
Introduction
[1]
The
issue which this Court is called upon to decide in terms of sec 188
of the Labour Relations Act
[1]
(LRA) is whether the dismissal of the applicant was for a fair reason
based on the respondent’s (AVK Valves) operational
requirements
and whether it was effected in accordance with a fair procedure. Both
parties led their evidence through single witnesses.
In assessing
both the procedural and substantive fairness of this dismissal, the
provisions of s 189 of the LRA must be taken into
account.
[2]
Sec
189 provides:
“
189.
Dismissals based on operational requirements.—(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 no collective agreement that requires consultation, a
work-place forum if the employees likely to be affected by the
proposed dismissals are employed in a work-place in respect of which
there is a work-place forum;
(c)
if
there is no work-place forum in the work-place 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;
(d)
(e)
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 consulting parties must
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.
(3) The employer must disclose
in writing to the other consulting party 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; and
(h) the possibility of the future
re-employment of the employees who are dismissed.
(4) The provisions of section 16
apply, read with the changes required by the context to the
disclosure of information in
terms of subsection (3).
(5) The employer must allow the
other consulting party an opportunity during consultation to make
representations about any
matter on which they are consulting.
(6) The employer must consider
and respond to the representations made by the other consulting party
and, if the employer
does not agree with them, the employer must
state the reasons for disagreeing.
(7) The employer must select the
employees to be dismissed according to selection criteria—
(a) that have been agreed to by the
consulting parties; or
(b)
if no criteria have been agreed, criteria that are fair and
objective.”
[3]
T
he
applicant, a single witness, alleged that AVK Valves did not comply
with sec 189 because it failed to engage him in a meaningful
consensus seeking process, failed to consult with him about the
retrenchment, in general, and the selection criteria, in particular,
and it had no good reason to retrench him.
[4]
AVK
Valves’ defence is that it had a compelling reason following a
directive from the Board of Directors to restructure the
logistics
department and to declare the position of the Supply Chain Manager
redundant and create a new position of Group Logistics
Manager. It
alleges that it tried to involve the applicant in meaningful
consultations but all was in vain because of his recalcitrant
conduct. It has even paid him a retrenchment package.
[5]
The
following background is necessary:
5.1
The applicant was employed by AVK Valves as a Supply Chain Manager
from 01 February 2016 to 03 May 2016, a
period of about 3 months. His
employment was terminated on 03 May 2016 allegedly based on the
company’s operational requirements.
AVK Valves’s Board of
Directors took a decision in a meeting held on 20 April 2016 to
declare his position redundant and
create a new position at executive
level of Group Logistics Manager. The incumbent of the new position
was required to have: A
financial background in addition to
Information Technology (IT) and Logistics qualifications. Although
the applicant possessed
a degree in logistics and a diploma in
computer science he lacked a formal qualification and experience in
financial management.
He only passed three accounting modules.
[6]
The applicant was invited to a disciplinary enquiry on 21 April 2016.
The process was abandoned on that day. Instead, the employer
served
him with a letter signed by Mr Brian McGugan, the Managing Director,
dated 21 April 2016 under the head: ‘Notice of
possible
redundancy due to restructuring’. This letter sets out
in a summarised version, the process contemplated
in sec 189 when an
employer embarks on a process of retrenchment. The applicant was
invited to attend a follow up meeting on 26
April 2016 at 09:30,
which he did.
[7]
Present at the mentioned meeting was Ms Van der Walt, Mr Fanus, and
Mr Brian Mc Gugan. Mr Fanus is normally utilised by the
employer to
assist with labour related matters affecting the company. The
applicant contended that he did not engage with anybody
on the day
the notice was read and presented to him. He was asked to prepare
written representations which would be dealt with
on another date. Ms
Van der Walt on the other hand testified that the issue of redundancy
was discussed with the applicant
on that day. The sec 189
notice is dated 26 April 2016 but as testified to by Ms Van der Walt,
it was only served on the applicant
on 29 April 2016. Be that as it
may, the opening sentence thereof reads:
“
This serves
to advise you that the company is proposing to restructure the
business. The position of Supply Chain Manager is one
of the affected
positions and therefore you are a potentially affected employee.”
The
subsequent paragraphs notified him that he was the only affected
employee and the company has considered other alternatives
but could
not find any but still invited his inputs on the aspect of
alternatives. The redundancy was anticipated to take
effect by the
end of the same month, April 2016. The meeting was adjourned to 29
April 2016 on which date the applicant rejected
the advice offered by
Mr Fanus. The meeting was then adjourned to 02 May 2016 and further
rolled over to 03 May 2016 due to a fatality
at work which required
the presence of Ms Van der Walt.
[8]
On 03 May 2016 the applicant furnished his written response and read
out his (counter-) proposals in the meeting after which
he was asked
to step out of the boardroom to enable the employer contingent to
caucus. On resumption, he was informed that
his services are
terminated; he will be furnished with the certificate of service and
asked to vacate the premises.
[9]
Over and above the common cause factors above, Ms Van der Walt, the
Group Human Resources Manager, added that:
AVK Valves SA
has expanded and merged with other companies, namely, AVK Holdings
SA, AVK Manufacturing SA, PV Group which
necessitated a
restructuring of the company, its organogram and roles. The applicant
was not excluded from applying for the newly
created position. His
scope of work was restructured to add the financial responsibilities
at an executive level, which functions
were earlier performed by his
Managing Director. The restructuring brought about a clear
demarcation of roles at the top levels.
[10]
The applicant’s case on the other hand was that the company
should have promoted him to the new
position or should not have
restructured his position at all because he is a suitable candidate.
His own legal advisors, FNB on
Law, advised him to engage in the
consultation process during internal processes, which were correct.
They also advised him that
the process followed was correct. Neither
the applicant nor his legal advisors requested the company to extend
the consultation
period or sought any other alternatives. He conceded
that the employer had afforded him adequate opportunity to consult.
[11]
The conclusion in the applicant’s written response meri
t
full quotation:
“
It has
become crystal clear that the proposed restructuring of only my
position (Supply Chain Manager) is nothing but racism and
discrimination which stems out of hatred for black African
people to hold senior position[s] at both AVK Valves and Premier
Valves. And this will be supported by the rejection of the
above representations. And I am prepared not to rest until it
has
received [the] necessary attention and the impact may not be the nice
one. Also due to the fact that I have noticed that management
has
already made [a] decision regarding my dismissal but only whitewashed
as restructuring, I refer to it as Automatically Unfair
Dismissal and
I am prepared to fight to the end.”
Discrimination
was not pleaded and there was no evidence to substantiate this
allegation. However, this response resulted in the
employer stopping
the process and terminating the applicant’s services.
[12]
The following appears in the applicant’s letter of appointment
dated 04 December 2015 written by Mr Brian McGugan, Managing
Director
and a member of the Board of Directors to whom the applicant
reported:
“
We are
pleased to offer you employment at AVK Valves Southern Africa (Pty)
Ltd. We feel that your skills and background will be
valuable asset
to our team.
The position we are offering you is
Supply Chain Manager. Your immediate supervisor will be Brian
McGugan. Working hours will be
from Monday to Thursday 08:00 –
17:00 and Fridays 08:00 – 16:00. This is a permanent position
with 3 months’
probation period. The probation period may be
extended. We would like you to start as soon as possible.
We are confident you will be able to
make a significant contribution to the success of AVK Valves SA and
we look forward to working
with you.”
Three
months later, this did not seem to be the position.
[13]
The issue that stands for determination is whether, based on the
above exposition, the dismissal of
the
applicant was procedurally and substantively fair.
[14]
Mr Khomola, appearing for the applicant, sought to persuade me that I
should consider the contradictions in the testimony of
Ms Van der
Walt to discredit her. She stated in her evidence-in-chief that on 03
May 2016 when the applicant left the room the
meeting recessed but
later in cross-examination changed and said she cannot recall when he
left the meeting. In my view, this is
not a material contradiction.
See
S
v Mafaladiso
[2]
.
[15]
It may be so that the applicant was invited to engage in the
restructuring process and seemingly failed to do so. He testified
that he did not engage because he was told to submit written
responses. Despite the fact that he may have received advice
from his
legal advisors it is unclear what advice he received. Sec 189 places
the onus on the employer to consult. The word ‘must’
is
used. The invitation extended by the employer to the applicant to
engage was, in my view, insufficient to encourage
him to
participate meaningfully.
[16]
The applicant comes across as a person who used the entitlement card
to demand the new position. This position, coupled with
the fact that
he may not have fully understood the aspects around the creation of
an executive position which partly absorbed his
functions, safe for
the financial qualification, was inadequately dealt with by the AVK
Valves. Seemingly, he did not even make
an effort to enquire from the
employer whether it will be an option for them to train him in
the required area of financial
management or at least afford him the
opportunity to acquire the requisite skill in that area. He did not
engage in asking them
to identify his shortcomings in order to meet
the requirements for the incumbent’s or potential candidate’s
skills
and competencies relating to the required financial skills and
whether the company would be willing to fast-track him for that
purpose. I do not think the company canvassed this aspect at all with
the applicant. The impression I gain is that the company stopped
engaging the applicant as soon as they reached a stage of being
accused of racial discrimination.
[17]
I observed the applicant when he gave his testimony in court. I am
inclined to believe that he could have participated and
engaged in a
meaningful joint consensus seeking process or to even attempt to
consider any of the factors as listed in the
Act. I am mindful
of the fact that he does not have a legal background neither does he
possess qualifications in the employment
relations field. He was also
unassisted during the ‘so-called’ consultation
proceedings.
[18]
The Constitution
[3]
guarantees
everyone the right to fair labour practices. However, the meaningful
participation of parties in such processes is within
each party’s
control. The applicant was not a rank-and-file employee but a manager
with a tertiary qualification. However,
retrenchment processes are
highly emotive because they involve bread and butter issues and a
person’s job is on the line.
It is unfortunate that the
applicant went into all but one meeting of 03 May 2016 and remained
silent when the process was that
of his engagement. The applicant was
very long-winded. The only inference that I can draw under the
circumstances is that based
on the fact that he came to attend the
disciplinary process and may have been shocked to learn that the
process had changed to
a consultation process, where his job was on
the line, following a decision that was already taken by the board.
His was a knee-jerk
reaction and may not have been in the right frame
of mind.
[19]
Coming to the role of the company. If the Board took the decision on
20 April 2016 that the applicant’s post ought to
be declared
redundant and he was only notified of the consultation process on 21
April 2016, it becomes necessary to determine
if sec 189 was complied
with. Mr Khomola, in his written submissions, argued that none of the
meetings was going to change the
fact that the applicant had to go as
no other alternatives were considered. This, counsel submitted, was
admitted by Ms Van der
Walt. Ms Van der Walt further suggested that
even if alternatives were to be considered the applicant was not
participative. I
do not see what positive result the engagement
alternatives could yield because in the sec 189 notice the company
stated that there
were no other alternatives. The company contended
that it planned to suggest other options but they could not even get
to that
stage because of the applicant’s conclusion, invoking
racism, left them shocked and speechless. In my view, if there
were other options available the company ought to have been
forthright with the applicant and placed those on the table for
consideration
and not wait for that easy escape route. Ms Van der
Walt did not mention during trial what those other options were. The
company
representatives had to seek an adjournment during the last
meeting to determine a way forward, having taken a few minutes to
recover
from the applicant’s representations. With the
applicant, it was either the promotion to this job or nothing. In my
view,
a cooling off period was necessary for both parties to absorb
the representations and on the return date re-engage in a more
meaningful
manner.
[20]
The head office of this company, whose Board of Directors took the
decision to declare the position of the applicant redundant,
is in
Denmark. Their other offices are in the United Kingdom. This is a
global company. The applicant was previously permanently
employed in
another company before he joined AVK Valves. The company cannot tell
me that they did not know earlier about the
future plans for
the merging or expansion of the companies. The applicant's employment
lasted for three months only. Had he known
he would not have left his
previous stable employment to join AVK Valves. Borrowing from the
words of Froneman DJP in
Johnson
& Johnson (Pty) Ltd v Chemical Workers Industrial Union
[4]
“
Wondrous and
mysterious though the ways of global capitalism may be for some, for
others they bring only cold comfort.”
[21]
The retrenchment of the applicant took effect on 03 May 2016. This
means the entire process was only afforded seven working
days. AVK
Valves seems to suggest that the blame for the inadequate
consultation should not be placed at its doorstep but that
the
applicant failed to participate fully and meaningfully in the
consultation process. Froneman DJP made the following remarks
in the
Johnson
& Johnson
case
[5]
:
“
[23] Every
person has a fundamental right to fair labour practices (s23 (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 (s185) and an employer the right
to dismiss an employee
for a fair reason based on the employer’s operational
requirements and in accordance with a fair
procedure (s 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.”
[22]
AVK Valves had the primary obligation to ensure that the applicant
was not unfairly dismissed. If the applicant only made
representations on 03 May 2016 and the consultation process was
stopped on the same day, it cannot be argued even by a stretch of
imagination that a joint consensus seeking process was followed. In
my view AVK Valves frustrated the process by abruptly stopping
it. It
may even befit the view, as argued by the applicant, that the process
was followed with no intention of ever reaching consensus.
The
applicant bluntly labelled the process ‘a sham’ and one
can see where he was coming from.
[23]
This period of seven days was not of sufficient duration to enable
the parties to put their respective proposals on the table,
to
consider them and to engage in a joint consensus-seeking
exercise. The information on the new position and any other
alternatives was never explored fully and meaningfully. In my view
the employer, whose responsibility it was to initiate the process
when contemplating retrenchments ought to have considered the
representations carefully and its disagreement with the applicant
should not have resulted in uncalled for termination of the process
and dismissal of the applicant. I therefore find that the employer
failed to follow a fair process.
[24]
The applicant maintained his stance that he was competent and capable
to occupy the new position. This aspect was not interrogated
at all.
The company seems to have moved from the premise that because the
applicant lacked the formal financial qualification he
was not the
right person for the job. The exact details and nature of the job
were never canvassed to eliminate him completely
from the
competition. I am not satisfied that AVK Valves has shown good cause
dismissing the applicant, particularly because the
applicant’s
appointment letter showed that AVK Valves was impressed by the
applicant’s skills. There was inadequate
disclosure and no
meaningful consultation in respect of the requirements for this new
position. There was clearly insufficient
information before the
parties to confirm that there was a good reason to dismiss the
applicant. Sec 16 requires the disclosure
of all relevant information
that will allow the consulting party to engage effectively in
consultation. The reasons proferred by
AVK Valves for declaring the
applicant’s position redundant are that he lacked a formal
qualification in finance. I cannot
help but take cognisance of the
fact that the consultation process was predicated on the Board
declaring the applicant’s
position redundant irrespective of
the reasons advanced. This defeats the purpose of consultation
because a decision was predetermined.
The phrase “when the
employer contemplates terminations” therefore finds no meaning.
For these reasons, I am also of
the view that there was substantive
unfairness.
[25]
Having found that the decision to retrench the applicant was unfair,
what remains is to determine the appropriate award to
him. The
applicant has prayed for an order of reinstatement or compensation. I
am of the view that reinstatement is not a viable
option considering
that employment relationship is dependent on trust and compatibility.
The incident of 03 May 2016 may have damaged
relations irretrievably.
[26]
Sec 158 (1) of the LRA stipulates:
“
(1) The
Labour Court may –
(a)
Make
any appropriate order, including …
(v) an award of
compensation in any circumstances contemplated in this Act.”
[27]
Sec 193 of the LRA provides:
“
(1) If the
Labour Court or an arbitrator appointed in terms of this Act finds
that a dismissal is unfair, the Court or the arbitrator
may –
(a)
order
the employer to reinstate the employee from any date not earlier than
the date of dismissal;
(b)
order
the employer to re-employ the employee, either in the work in which
the employee was employed before the dismissal or in other
reasonably
suitable work on any terms and from any date not earlier than the
date of dismissal; or
(c)
order
the employer to pay compensation to the employee.
(2) The Labour Court or the arbitrator
must require the employer to reinstate or re-employ the employee
unless –
(a) the employee does not wish to be
reinstated or re-employed;
(b) the circumstances surrounding the
dismissal are such that a continued employment relationship would be
intolerable;
(c) it is not reasonably practicable
for the employer to reinstate or re-employ the employee; or
(d) the dismissal is unfair only
because the employer did not follow a fair procedure.”
[28]
Mindful of the fact that the employer has already paid a severance
package to the applicant, I am of the view that compensation
is an
appropriate remedy. This will also make up for the applicant’s
lost right to a fair hearing before he was dismissed.
The applicant
is therefore entitled to compensation for the remuneration that he
would have been paid between the date of dismissal
and the last day
of the adjudication, calculated at the employer’s rate of
remuneration on the date of dismissal in
terms of s 194 (1).
[29]
On the question of costs, there is no reason why costs should not
follow the result.
[30]
The following order is made:
Order
1.
The
dismissal of the applicant was both procedurally and substantively
unfair
2.
The
respondent, AVK Valves Southern Africa (Pty) Ltd, is ordered to pay
the applicant compensation for the remuneration he would
have been
paid between the date of dismissal and the last day of the
adjudication of this case calculated at the employee’s
rate of
remuneration.
3.
The
respondent is to pay the costs of this application on a party and
party scale.
_______________
M C Mamosebo
Acting
Judge of the Labour Court of South Africa
Appearances:
For
the Applicant:
Adv ML Khomola
Instructed
by:
Mudau & Netshipise Attorneys
For
the Respondent:
Mr IT Allis of Allis Attorneys
[1]
Act 66 of 1995 as amended.
[2]
2003 (1) SACR 583
(SCA) at 593i – 594f;
S
v Mkohle
1990 (1) SACR 95
(A) at 98f – g.
[3]
S 23 of the Constitution of the Republic of South Africa, 108 of
1996 as amended
[4]
(
1999)
20 ILJ 89 (LAC) at para 2
[5]
At paras 23 and 24.