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[2018] ZALCJHB 310
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Mokgodi v Travelex Africa Foreign Exchange (Pty) Ltd (JS664/15) [2018] ZALCJHB 310 (2 October 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JS 664/15
In the matter between:
SEFUFI JEFFREY
MOKGODI
Applicant
And
TRAVELEX AFRICA FOREIGN EXCHANGE
(PTY) LTD
Respondent
Heard:
26 February 2018
Delivered: 2 October 2018
JUDGMENT
TLHOTLHALEMAJE, J.
Introduction:
[1]
In his statement of claim, the applicant, Mr Sefufi Jeffrey Mokgodi
(Mokgodi), challenged the substantive fairness of his dismissal
based
on the operational requirements of the respondent, Travelex Africa
Foreign Exchange (Pty) Ltd (Travelex). Travelex opposed
Mokgodi’s
claim.
Background:
[2]
Mokgodi was previously employed at another retail
entity as General Manager: Financial Services.
During
August 2014, he was headhunted and offered the position of Head
of Retail by Travelex. Having accepted the position,
he
commenced
his employment with effect from 1 September 2014
,
and reported directly to the Chief Executive Officer (CEO) of
Travelex.
[3]
On 17 March 2015,
Mokgodi received a notice in terms of the provisions of section
189(3) of the Labour Relations Act (LRA),
[1]
which
inter alia
recorded
that Travelex was contemplating dismissing him on account of his
position having become redundant
[2]
.
[4]
The reasons for the contemplated dismissal based on Travelex’s
operational requirements included financial pressure brought
about by
the economic climate and trading conditions; the need to align
Travelex’s organisation design and review its management
and
support structures; improved efficiency and reduced management
overheads.
[5]
In the notice, it was further indicated that several alternatives
were implemented including a four month cost and expenditure
rationalisation; a moratorium on the hiring of new employees
effective from December 2014; launching of new staff initiatives
aimed at improving revenue and new promotional campaigns. It was
further indicated that in the last 12 months prior to the notice,
six
employees had been dismissed.
[6]
The notice also listed other positions that were to be affected by
the restructuring process, including that of Head of Retail.
Attached
to the notice was Travelex’s proposed new organisation
structure, in terms of which the position of Head of
Retail was
abolished.
[7]
Travelex requested a facilitation by the Commission for Conciliation
Mediation and Arbitration (CCMA) on 19 March 2015,
further
pointing out that the contemplated dismissals were as a consequence
of a loss of a major contract at OR Tambo International,
which
constituted an average 50% of its revenue; the company’s
financial performance being below par for a variety of reasons,
a
forecast of R6m loss for 2015; and the need for effective structure
alignment.
[8]
On 13 April 2015, a consultative meeting was convened and
facilitated by a Commissioner appointed by the CCMA.
In that
meeting a proposal was made and accepted that the employees would
elect three individuals to act as the representatives
of the affected
employees. The consultation process was extended to 22 May 2015
and further dates were scheduled. During
the consultation process,
Mokgodi had requested that he be consulted separately from others,
which request was denied by the facilitating
Commissioner.
[9]
Mokgodi subsequently requested a private meeting with the CEO of
Travelex. In that meeting it was pointed out to him that in
terms of
the contemplated redesigned organisational structure, the position of
Retail Head would be abolished and that in its place,
two positions
of Regional Retail Managers would be established. The one position
would be dedicated to the inland operations, whilst
the other would
be dedicated to coastal areas of the Republic. The CEO also advised
Mokgodi that he should fully participate in
the agreed facilitated
consultation meetings, and further that it would be unfair to run a
parallel consultation process dedicated
only to him.
[10]
On 15 June 2015, other employees affected by the
restructuring process reached a settlement agreement with Travelex,
in terms of which there was consensus on the termination of their
services, service pay and other statutory payments. Travelex
also
made certain and specific undertakings in favour of the employees
i.e.
conditions for re-employment.
[11]
Mokgodi was not party to the
settlement agreement. On 28 May 2015, a draft settlement
agreement was handed to him, it
terms of which he would be paid
severance pay and other statutory payments due to him. He refused to
sign the draft settlement
agreement on the basis that he did not
agree with certain clauses of the draft agreement, and further since
he would be seeking
legal advice as his dismissal was unfair
[3]
.
His services were then terminated on 30 June 2015, following a notice
of termination issued on 31 May 2015.
[12]
On 30 September 2015, Mokgodi referred an unfair dismissal
dispute to the CCMA and after attempts at conciliation
failed, the
dispute was referred to this Court for adjudication.
The
evidence:
[13]
Travelex led the evidence of its CEO Mr Kananelo Makhetha (Makhetha)
which is summarised as follows:
13.1. Travelex main business model is
the buying and selling of foreign currencies to businesses and/or
social travellers. Its other
component is remittance business which
entails the transactional transfer of money by foreign nationals (who
resides in the Republic
for work, business or other reasons), to
other persons in foreign territories.
13.2. Makhetha was appointed to the
position of CEO of Travelex in October 2014. Like Mokgodi,
Makhetha was also headhunted
and employed with his specific mandate
from the board being to immediately implement measures to prevent
further financial loss
in Travelex. At the time of his employment,
the company’s finances were essentially in a parlous state.
13.3. In consultation with the Human
Resource Department, Makhetha had initiated a restructuring process
aimed at turning the company
around, to enhance its revenue, and
minimise the financial losses.
13.4. The financial results and
position of the company were not in dispute. As part of the
restructuring measures, Makhetha considered
reducing the number of
positions in the Head Office. One of the positions identified was
that of Head of Retail (the position occupied
by Mokgodi), together
with those of the two Deputy Heads of Retail. Those three positions
were to be condensed into two, being
Retail Managers inland and
coastal.
13.5. On 17 March 2015, a
notice was issued advising employees of the intended retrenchment
process and inviting them
for consultations. At the conclusion of the
retrenchment process a total of 12 employees had their services
terminated.
13.6. At the time that Makhetha
commenced his employment, Travelex had submitted a tender in respect
of a contract with Airports
Company of South Africa (SOC) Ltd (ACSA)
at OR Tambo International Airport (OR Tambo) to retain premises where
its branch operated.
The tender bid was unsuccessful, and Travelex
had instituted legal proceedings to review the decision. Pending the
review application,
a decision was then taken to embark on the
restructuring process, including closing down the OR Tambo Airport
branch, which had
continued to be operational pending the review
application.
13.7. Makhetha confirmed that the
facilitated consultations resulted in a settlement agreement being
concluded between Travelex
and the affected employees. Mokgodi had
however approached him to seek a “private”
facilitated consultation process
on the basis he had been recently
employed by Travelex, and further since the company ought to
have been aware of its intentions
to abolish the position of Head of
Retail prior to it being offered to him. Makhetha held the view that
such request would render
the entire retrenchment process unfair.
13.8. During that period, Travelex was
successful in its application to review and set aside the awarding of
the OR Tambo contract
to another entity. This resulted in the
retrenchment exercise at the OR Tambo office being abandoned as it
continued to be operational.
13.9. In respect of other employees at
head office however, a settlement agreement was concluded. Mokgodi’s
view however remained
that he was not bound by the settlement
agreement, contending that he was treated unfairly by Travelex.
13.10. Subsequent to the restructuring
process, Travelex is reported by have made a profit and had achieved
a costs saving of approximately
six million rand.
13.11. According to Makhetha, the
employees who held the two positions of Deputy Head of Retail
submitted their applications for
the new positions of Regional Retail
Managers (Inland and Coastal). Their applications were successful.
Mokgodi on the other hand
had informed Makhetha that he would not
apply for any position within Travelex.
[14]
Mokgodi’s testimony is summarised as follows:
14.1. Having been headhunted and
appointed as Head of Retail, he had been informed prior to his
appointment that the purpose of
his position would be to enhance the
strategic approach of Travelex and to design strategic plans in
order to ensure that
the company was profitable.
14.2. He held the view that his
retrenchment was unfair as he was lured from his previous employment,
notwithstanding the fact that
Travelex knew that it was already in
dire financial state, and that his dismissal took place within a
very short space of
time after his appointment.
14.3. When Travelex initiated its
retrenchment process, ‘he was viewed as nothing but a costs
saving measure’, and his
personal circumstances as an
individual were not taken into consideration.
14.4. In his view, the OR Tambo branch
constituted an important component of the business and its closure
would have had profound
consequences. In the end, the OR Tambo branch
was not closed down, and this had assisted Travelex to keep afloat.
In that respect,
he expected that he would be recalled back to his
employment.
14.5. Under cross-examination, Mokgodi
conceded that he joined Travelex voluntarily, but contended that he
was not aware that it
was a loss making entity. He further conceded
that during August 2014, he became aware that Travelex was not
making a profit.
He acknowledged that it was incumbent upon the CEO
to turn the business around, which he had done by reducing the Head
Office personnel.
14.6. When cross-examined on the
reason why he had elected not to apply for any of the two positions
of Regional Retail Manager,
his response was that at the time those
positions were made available, he was on leave of absence. On his
return to work, those
positions were already occupied by his former
deputies.
Issues
for determination and evaluation:
[15]
Central to this dispute is whether the dismissal of Mokgodi was
substantively fair in the sense of whether sufficient reasons
existed
for his dismissal; whether his position was redundant necessitating
the need to retrench him; whether Travelex had considered
alternatives prior to the dismissal; and whether proper consultations
were held prior to his dismissal.
[16]
Mokgodi had further contested
the procedural fairness of his retrenchment, contending that no
proper consultations were held and
that the notice had not met the
requirements set out in section 189(3) of the LRA. The issue that
arose in this instance was whether
the provisions of section 189A of
the LRA were applicable, and whether Mokgodi was permitted to contest
the procedural fairness
of his retrenchment when the provisions of
section 189A(13) found application. At the commencement of the trial
proceedings however,
the allegation of procedural unfairness was no
longer pursued. This was a wise move in view of the authoritative
decision in
Steenkamp and
Others v Edcon Limite
d
[4]
.
[17]
What remains in dispute is the
substantive fairness of the retrenchment, meaning whether there was a
fair reason to retrench related
to Travelex’s operational
requirements. The basic requirements for substantive fairness
[5]
entails that the retrenchment must be based on the employer’s
economic, technological, structural or similar needs and no
other
untoward reason; the dismissal must have been operationally
justifiable on rational grounds and based on reasons that would
be
objectively defendable; the employer must have properly considered
all available alternatives to dismissal, and demonstrate
that a
dismissal was the only available option
[6]
,
and last, the employer must have adopted a selection criteria that
was fair and objective.
[18]
The above requirements are to
be taken into account, bearing in mind that the employer was entitled
to choose the manner in which
it runs its business, provided that it
did not change the terms and conditions of employment of the
employees without their consent
[7]
.
In the end however, it is for the Court to determine whether the
decision to dismiss is reasonable and fair, not only when viewed
from
the perspective of the employer’s operational needs or desires,
but also whether it is objectively reasonable
and fair to the
affected worker
[8]
.
[19]
The onus to establish the fairness of the dismissal is on the
employer. In accordance with the parties’ signed pre-trial
minutes, Mokgodi conceded that there was a general need to retrench.
He however contended that he should not have been retrenched
as
Travelex failed to consider whether his position was objectively
redundant.
[20]
There are several difficulties with Mokgodi’s case. To the
extent that he had conceded that there was a general need
to
retrench, he cannot in the same vein, nonetheless argue that he
should not have been retrenched. More than that mere averment
is
required.
[21]
Travelex’s position however was that based on its operational
requirements following the restructuring, Mokgodi’s
position
was found to be redundant as a result of creation of a new structure.
Furthermore, it was not in dispute that the Head
Office personnel,
including Mokgodi, acted more as support structure, and further that
the head office was overpopulated, necessitating
a reduction. These
are issues that were not seriously contested during the trial
proceedings.
[22]
Mokgodi’s allegations of unfairness are clearly not based on
Travelex’s operational requirements or the manner
with which
the dismissal was effected, but on his own personal circumstances. At
most, he had conceded under cross-examination
that as a result of
these personal factors, he should have been exempted from
retrenchment. His evidence was that he was aggrieved
by the fact that
he was headhunted, employed and dismissed within a short period of
time. As a result of his dismissal, he and
his family (including his
extended family), were severely and financially prejudiced.
[23]
One can appreciate Mokgodi’s source of grief, and to a large
extent I agree that what happened to him when he had secure
employment at his previous place of employment can
prima facie
be considered to be unfair. However, that unfairness does not have
anything to do with the decision to declare his position redundant.
He had conceded that there was a need to retrench, and the fairness
thereof can only be determined in accordance with the four
requirements set out in
Woolworths
. His personal circumstances
are important factors to be considered only in the event that he may
be entitled to some form of relief.
[24]
It was further not seriously disputed that the vast majority of 19
positions affected by the restructuring process, including
that of
Mokgodi, were based at the head office. Only five out of 24
positions at the OR Tambo office were affected. Ultimately,
12
employees from head office including Mokgodi were retrenched. It was
also not disputed that following the consultation process
and the
settlement agreement with other employees, a special provision was
made for those employees based at the OR Tambo office
pending the
review application, and there was an agreement to the effect that
should the review be successful, those employees
would not be
retrenched, and that if the office was to close down as a result of
the unsuccessful review, they would be retrenched.
[25]
The OR Tambo office was Travelex’s lifeline, and Mokgodi’s
contention was that once that office was retained and
because it had
generated an income, he assumed that he would recalled. When it
was nonetheless put to him under cross-examination
that Travelex
suffered a R4.2m (R6m) loss even when that office continued to
operate prior to the completion of the restructuring
process, he
could not proffer an answer. He further conceded that the
retrenchment process taking place at the head office had
nothing to
do with the then status of the OR Tambo office.
[26]
What is fatal to Mokgodi’s case however is that where he had
alleged that he should not have been retrenched despite
Travelex’s
parlous financial state, he did not state what the alternatives were
and what position in the OR Tambo office
or even head office, should
have been considered for him. At the opposite end, he had conceded
that he was informed of the two
positions created subsequent to the
restructuring process. Makhetha’s undisputed version was that
Mokgodi informed him that
he would not apply for any of the
positions. It follows that his contention that he was on leave when
the positions were made available
and that they were already filled
when he came back does not take his case any further. Those positions
were available to him,
he was made aware of them and given his
seniority, it is more than probable that had he applied like others,
he would not have
found himself in the position he is currently.
[27]
It was further common cause that Mokgodi was party to the
consultation/facilitation process and at some point, sought to be
treated differently. Again, his reasons in that regard were personal
and had nothing to do with the fairness of that process. In
my view,
to the extent that a settlement agreement was reached with other
employees who were in a similar position as Mokgodi,
there can be no
basis to conclude that the process was unfair to him or that there
was an obligation on Makhetha to consult with
him separately because
of his own personal circumstances.
[28]
Having had regard to the evidence, , I am
satisfied that Travelex had a genuine need to retrench, based on its
economic, structural
and overall operational requirements. The
dismissal of Mokgodi was therefore operationally justifiable and was
based on reasons
that were objectively defendable. To the extent that
the consultation process was facilitated by the CCMA leading to a
settlement
agreement, I am further satisfied that all available
alternatives to dismissal were properly considered, that a fair and
objective selection criterion was adopted, and that ultimately, the
dismissal of Mokgodi together with those of others was fair
and
reasonable, and a measure of the last resort.
[29]
What remains to be determined is the question of costs. It was
submitted on behalf of Travelex that costs in this case were
warranted as the claim had no merit in the first place. I agree that
the claim had no merit. I have however had regard to the requirements
of law and fairness, and it is my view that any other employee who
was headhunted, appointed and dismissed within a period of ten
months
would have been gravely aggrieved. These are not factors pertinent to
the overall consideration of fairness in this case,
but it is my view
that it would however be iniquitous and remiss of the Court to ignore
them for the purposes of determining whether
a cost order is
warranted.
[30]
Accordingly, the following order is made;
Order:
1. The dismissal of the Applicant on
account of the Respondent’s operational requirements was
substantively fair.
2. There is no order as to costs.
_____________________
E.
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the Applicant: Adv. H. Bucksteg
Instructed
by: Carel J Schoeman Incorporated
For
the Respondent: Mr S. Snyman of Snyman Attorneys
[1]
Act 66 of 1995, as amended
[2]
Which recorded
inter alia
that:
“…
Due to the fact that it is
contemplated that your current position may become redundant if the
new structure is implemented which
may lead to your retrenchment,
the time has unfortunately now arrived for us to commence with a
consultation process in terms
of section 189A of the Labour
Relations act 66 of 1995 (“as amended”). It is
accordingly necessary inn such circumstances
to consult with you
regarding the possible retrenchments, on issues as detailed below.
We wish to confirm that none of these
issues have been finally
determined. The company’s final decision would depend on such
representations you may make.
…
The reason why the company is
contemplating the retrenchment?
As already mentioned, the current
economic climate and trading conditions as well to align the
company’s organisation design
accordingly, has forced Travelex
Africa to review the company’s management and support
structure…”
[3]
The clause of the draft settlement agreement that the applicant did
not agree with recorded the following:
“…
4. SETTLEMENT
This agreement is entered into in
full and final settlement of all claims of any nature whatsoever
arising from the termination
of the employment of the employee with
the company.
5. GENERAL
5.1 This agreement shall constitute
the entire contract between the parties who by their signature
hereby acknowledge that no
representations have been made or
warranties given or conditions or stipulations attached to any of
the matters referred to in
this agreement. No variation of
this/other agreement shall be of any force or effect unless recorded
in writing and signed by
or on behalf of the parties by the
representatives duly authorised thereto.
5.2 The terms and conditions of this
agreement are confidential between the parties and shall not be
disclosed to anyone else.
Any disclosure in violation of this
section shall be deemed a material breach of this agreement.
[4]
(2016) 37
ILJ 564 (CC);
2016 (3) BCLR 311
(CC);
[2016] 4 BLLR 335
(CC);
2016
(3) SA 251
(CC) at para
[31],
where it was held that;
“
Section
189A expressly limits the disputes that can be referred to the
Labour Court. Only those concerning a fair reason
for the
dismissal can be referred – in other words
disputes about substantive fairness. Both referral options
expressly impose a time bar. Disputes about procedure under
section 189A cannot be referred to the Labour Court by
statement
of claim, but must instead be brought by the speedier
means of motion proceedings.” (Citations omitted)
[5]
See
Woolworths (PTY) Ltd
v SACCAWU and Others
[2017]
12 BLLR 1217
(LAC); (2018) 39 ILJ 222 (LAC) at para [3]
[6]
CWIU v Algorax (Pty) Ltd
[2000] 11 BLLR 1081
(LAC)
paras 69 – 70;
NUM
and another v Black Mountain Mining (Pty) Ltd
[2014]
ZALAC 78
[7]
Forecourt Express (Pty) Ltd
v SATAWU
(2006) 27 ILJ
2537 (LAC) para 39
[8]
BMD Knitting Mills (Pty)
Ltd v SACTWU
[2001] 7 BLLR
705
(LAC) para 19