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[2018] ZALCJHB 331
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Muller v Landelahni (JS829/15) [2018] ZALCJHB 331 (11 October 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: JS 829/15
In
the matter between:
MARISA
MULLER
Applicant
and
AMROP
LANDELAHNI
Respondent
Heard:
26, 27 October 2017 & 11 December 2017
Written
Closing arguments: 14 December & 15 December 2017
Delivered:
11 October 2018
JUDGMENT
TLHOTLHALEMAJE,
J:
Introduction
and background:
[1]
In her statement of claim, Ms
Marisa Muller (the applicant), a former employee of the respondent,
Landelahni Business Leaders (Pty)
Ltd t/a Amrop Landelahni (Amrop),
challenged the substantive and procedural fairness of her
retrenchment. Amrop opposed the claim,
contending that the dismissal
was justified by its operational requirements and was in compliance
with the provisions of section
189 of the Labour Relations Act
(LRA).
[1]
The applicant seeks maximum compensation in terms of the provisions
of section 194 of the LRA.
[2]
Amrop conducts its business in the recruitment of executive and
senior managers in large enterprises and state owned companies.
At
the time that it retrenched the applicant, it had a workforce of
approximately 33 employees, including the Managing Director
and
Partner, Ms Sandra Burmeister (Burmeister), the Research Team and the
Administrative Team.
[3]
The applicant commenced her employment with Amrop on
17 September 2014 in terms of a fixed term contract as
Executive
Search Recruiter. The contract was extended in
November 2014. On 30 December 2014, one of Amrop’s
Associated
Partners left. Burmeister had in January 2015,
approached the applicant with a view of making her a
Partner/Associate Partner.
With effect from 1 January 2015,
she was permanently employed in the position of Executive Search
Consultant/Associate
Partner. The change in status and title
attracted a substantial salary increase for the applicant at
R81 942.00 per month.
At the time that the applicant was offered
a permanent position, it is common cause that she had raised some
concerns regarding
some of the terms and conditions stipulated in her
offer of employment.
[4]
On or about 15 April 2015, the applicant received an email
from Burmeister with the instruction that a letter of appointment
ought to be signed by her by no later than 22 April 2015,
failing which the offer would lapse. The applicant’s
response
was to state her problems in respect of certain terms and conditions
of the offer, which she also viewed as being materially
different
from those discussed with her in early January 2015.
[5]
On 15 May 2015, a meeting was held between the applicant,
Amrop’s Office Manager, Ms Natalia Otto, and Burmeister,
where
the applicant was issued with a notice in terms of the
provisions of section 189(3) of the LRA, and informed that she
may
have to be retrenched. A final meeting was held on 25 May 2015
in regards to the retrenchment process. A letter to
the applicant
followed on the same date, advising her that consultations had been
exhausted, and that the employment relationship
would be terminated
with effect from 31
May 2015 upon payment of
what was due to her.
[6]
In accordance with the parties’ signed pre-trial minute, the
issues in dispute are;
a) Whether the applicant’s
dismissal was motivated by genuine operational requirements;
b) Whether Amrop issued a notice in
terms of section 189 of the LRA;
c) Whether Amrop conducted
consultations as envisaged in section 189 of the LRA;
d) Whether the applicant failed to
contribute meaningfully in the meetings held on 15 and 25 May 2015;
e) Whether the applicant sought to
delay or avoid the consultation process;
f) Whether the period of consultation
was reasonable;
g) Whether Amrop explored all the
alternatives prior to dismissing the applicant, including whether she
could be accommodated in
other positions.
h) Whether the applicant was on a
fixed term contract at the time of the retrenchment.
[7]
The applicant further denies that there was a need to retrench, and
contended that the issue of Amrop’s financial status
was a mere
smokescreen, as the real reason for her retrenchment was her dispute
with Burmeister regarding the terms and conditions
of her new
appointment. She contended that no alternatives to retrenchment were
looked at, and further that the selection criteria
was not fair.
Amrop on the other contends that it was operating at a loss and there
was no indication as to when its revenue would
increase or improve.
In the light of its financial position, three people including the
applicant had to be retrenched to ensure
that the company remained
financially viable.
The
evidence:
[8]
Only Ms Burmeister and the applicant testified in these trial
proceedings. Burmeister’s testimony is summarised as follows;
8.1 Amrop is in the business of
personnel recruitment, with its focus being on executive searches,
retainers and assignments. It
has assignments in couching, executive
search and placements, and has more than one entity under its
umbrella.
8.2 Amrop normally received briefs
from clients through its associates or partners in relation to a
placements and/ or assignments.
The associate or partner would
thereafter brief the researcher in respect of the prospective
candidate for placement (Headhunting).
The associate or partner would
then prepare a shortlist of candidates to be presented to the client.
Amrop would receive a third
of the payment upon the acceptance of the
brief, another third at the compilation of the shortlist of
candidates and the final
third at the conclusion of the assignment.
8.3 The organisational structure of
Amrop as at December 2014 comprised of Burmeister, whose role
included overseeing assignments
and management of individuals’
output. Below Burmeister were Partners or Associate Partners,
followed by the Executive Search
Recruiters, the Head of Candidate
Interview and the Existing Client and Talent Interface Personnel. The
next level below included
administration personnel, a Secretary,
database backup support and a Researcher.
8.4 The applicant according to
Burmeister, was employed as a result of a surge in business, which
was precipitated by the acquisition
of major contracts from companies
such as Telkom. Amrop required additional support for other
assignment as it took over the Telkom
assignment.
8.5 In her Curriculum Vitae, the
applicant had indicated that she had experience in areas such as
Human Resource Management and
Recruitment. In her interview, she had
further indicated that she had managed a retrenchment process up
until she became the casualty
of the same process herself at her
previous employment. She was therefore considered an expert in labour
relations.
8.6 The applicant earned an amount of
R60 000 (Sixty Thousand Rand) per month at the commencement of
her employment. On 26 November 2014,
her contract was
extended to 28 February 2015. She was in addition to her
basic remuneration offered a commission fee
of 2.5% on every
successful placement. The volume of assignments that Amrop had
received motivated the extension of the fixed term
contract. Between
the June and December 2014, there were at least 44 assignments,
and 24 of these were for the Telkom project.
The number was higher
than the preceding six (6) months period, and the applicant was also
doing an excellent job.
8.7 When the applicant was approached
in January 2015 to take up the position of Associate Partner,
she had raised the issue
of retaining her commission structure. There
was an agreement on the retention of the 2.5% commission payment up
until the revenue
generated. Amrop also agreed to the advance payment
of certain amounts in a form of an employee loan. The applicant’s
remuneration
increased from R60 000.00 to R81 942.00 per
month, and she became the highest paid employee second to Burmeister.
8.8 On 10 February 2015, a
draft letter of appointment was prepared for the applicant for the
position of Associate Partner.
There was however a delay in
finalising the appointment due to issues raised by the applicant
surrounding the salary structure
and other terms and conditions as
reflected in the letter of appointment.
8.9 Between January and May 2015,
Amrop had at least 23 assignments. However, as the year progressed, a
number of assignments
were cancelled. These included a number of
assignments from the Telkom Project, which had a negative impact on
the business. A
number of other clients including ATMS and the South
African Post Office (SAPO) also cancelled their assignments.
8.10 Amrop’s financial year
commenced in March 2015 and ended in February 2016. From
March 2015, it was noticed
that business had slowed down
drastically. There were five proposals for assignments received but
only one was awarded. The revenue
went down, from R13.4 Million in
2015 to R6.7 Million in 2016. In 2015, the operational expenses were
R2.5 Million and in 2016
were R4.3 Million. Amrop’s operating
profit of R3.2m in 2015 dipped to R207.797.00 in 2016.
8.11 On 14 May 2015, a
notice of contemplated retrenchment was issued to the applicant. She
was one of the three employees
identified for the contemplated
dismissal for operational requirements. The criterion used to
identify the applicant included LIFO,
her high salary and the fact
that she was the only employee at the level of partner.
8.12 The applicant was aware of
Amrop’s financial position as she had attended weekly meetings
where the figures were discussed,
and at the time, she was only
working on one assignment.
8.13 It was envisaged that the
consultation process would be concluded within two weeks in view of
the number of employees affected,
and further since Amrop was a
small business. According to Burmeister, the applicant never
raised any alternatives or objections
during the first meeting held
on 15 May 2015, but simply responded by saying “
okay
”
to what was being said.
8.14 The purpose of the second meeting
was to enable the applicant to make suggestions in regards to the
retrenchment process. She
however confirmed that her only concern was
the ‘Sonae assignment’, and had not given any
indication that
she had difficulties with the retrenchment
process, nor did she express any opposition or ask any questions. The
applicant had
further not raised any concerns regarding the timing of
the retrenchments or the selection criteria.
8.15 The applicant had failed to
attend a further meeting scheduled for 20 May 2015.
According to Burmeister, no purpose
would have been served by a
further consultative meeting as the applicant had not made any
suggestions in respect of the retrenchment
process, hence the
decision to conclude the retrenchment process on 25 May 2015.
8.16 On 11 August 2015,
Amrop employed Mr Paul O’Brian (O’Brian) on a limited
duration contract as a researcher.
This was due to the fact that the
resident researcher was due to go to Mecca for a period of three
months. O’Brian earned
an amount of R30 000.00 per month
as opposed to about R90 000 earned by the applicant. At the end
of his fixed term contract,
O’Brian left the employ of Amrop,
and the applicant has since not been replaced.
[9]
Under cross examination Burmeister further testified that the
applicant was not offered an alternative position as Amrop did
not
have any, and further since she had not proposed that she be reverted
back to the commission structure. Burmeister however
contended that
the applicant could not have made such a proposal as the R60 000.00
she would have earned on commission structure
would not have been
enough for her. She however contended that had the applicant made
such a proposal, it would have been considered.
Interlocutory
application:
[10]
The trial proceedings had commenced on 26 and 27 October 2017
and became part-heard at a stage when Burmeister’s
evidence was
disposed of and after Amrop had closed its case. On resumption of the
proceedings on 11 December 2017, and
at a time when the
applicant was about to be cross-examined, counsel for Amrop, Mr
Itzkin sought to have certain documents (email
correspondence)
admitted into evidence, and to further amend certain portions of the
statement of response. This step was necessary
according to Mr
Itzkin, in order to rebut the applicant’s evidence to the
effect that there was no response to her email
dated 15 April 2015,
in which
inter alia
, she had raised objections to certain
terms and conditions of her new appointment.
[11]
Amrop therefore sought to amend paragraph 33 of its statement of
response, in which it had conceded to the applicant’s
contentions that she had received an e-mail on 15 April 2015
advising her to sign the letter of appointment failing which
the
offer would expire; that she had responded to the email by detailing
her concerns regarding the terms of the agreement, and
that
Burmeister had not responded to her response. She had further
contended that no further discussions were held over the issue
of the
terms and conditions of her employment until her dismissal.
[12]
Counsel for the applicant, Ms Abrahams objected to the admission of
the additional document and/or amendment of the statement
of response
at that belated stage, reiterating that there was never any reply to
the email in question. She had further submitted
that during the
cross-examination of the Amrop’s only witness Ms Burmeister,
she had confirmed that indeed there was no response
from her to the
applicant’s email of 15 April 2015.
[13]
In considering the applications, it was taken into account that they
came about at the time that Amrop had closed its case,
and when the
applicant was about to be cross-examined. Significant however was the
fact that Burmeister had in her evidence in
chief, confirmed that
there was no response to the applicant’s email.
[14]
Ms Abrahams correctly pointed
out that with Amrop having closed its case, the Court did not
have the benefit of an explanation
as to the reason the document
sought to be introduced was not discovered earlier or the reason that
Amrop had pleaded its case
in the manner it had. Ms Abrahams had also
correctly pointed out that the applicant’s pleaded case and
contention in these
proceedings had been confirmed by Burmeister. To
therefore allow the new document to be admitted in circumstances
where Amrop had
closed its case, or where Ms Burmeister’s
evidence and Amrop’s own pleaded case has confirmed the
applicant’s
assertions that there was no response to her email,
would not only be prejudicial to the applicant but would further not
be in
the interests of justice.
[2]
In the light of these considerations, the applications to admit a new
document (pages 209-214) and to amend paragraph 33.1 of the
statement
of response were dismissed with no order as to costs.
[15]
The applicant’s testimony was as follows;
15.1 Upon her accepting the position
of Partner/Associate Partner, there were however outstanding issues
in regards to the terms
and conditions of her new position.
15.2 On 24 February 2015,
she was presented with a copy of her “new” contract of
employment
via
email. As she did not understand the terms and
conditions of her contract, she requested a meeting with Burmeister
to discuss same.
On 24 March 2015, she had attended a board
meeting where she was presented with a more comprehensive copy of a
contract
of employment which contained
inter alia
a restraint
of trade clause. She had difficulties with her new terms and
conditions of employment as stipulated in the draft contract.
15.3 At a meeting with Burmeister held
on 8 April 2015 to discuss her concerns, that meeting got
heated up. Burmeister
who was angry, had stormed out of the meeting
saying something to the effect that; “
I do not have to deal
with this”.
The issue was not discussed further and work
had continued as normal.
15.4 She was left in limbo and was
unsure of the status of her new contract and her targets. On
15 April 2015, she received
an email from Burmeister in
respect of a deadline for signing of the contract. She had responded
on the same date via email to
Burmeister, raising her concerns about
specific terms of the contract of employment. There was no further
communication in regards
to the matter.
15.5 On 14 May 2015, she
received an email inviting her to a meeting. At the time, she was
under the impression that the
purpose of the meeting was to discuss
her concerns in respect of her contract of employment. However, in
that meeting, Burmeister
for the first time raised the issue of her
retrenchment when she was presented with a notice. This came as a
shock to her and she
had no response hence, the only words she
uttered were “
okays
”. Her primary concern was the
assignment she was busy with which she considered to be her “baby”
and nothing
else came to mind. At the time, she was not aware of the
need to retrench and could not understand why she was to be
retrenched.
15.6 On 18 May 2015, she did
not report for duty in the morning as her nine months son was ill.
When she came to work
in the afternoon, nothing of significance
occurred. On 20 May 2015, Burmeister sent an email to her
rescheduling the
meeting for 25 May 2015. At that meeting,
she had asked about her commission, and told Burmeister that her
retrenchment
was predetermined and a smokescreen. She was of the view
that the retrenchment was a result of her raising issues concerning
the
terms and conditions of her contract of employment and for
questioning Burmeister. As such, the only issue that she discussed at
the meeting was her outstanding commission. Burmeister had however
denied that there was a dispute between them, and dismissed
her
contentions as ludicrous.
15.7 The applicant testified that she
could not understand why she was retrenched as she had brought in an
amount of at least R3
Million into the business having completed her
assignments, and further since 70% of the fees due to Amrop had been
billed and
paid in respect of her assignment (ATMS assignment).
15.8 The consultative meeting
according to her was merely meant to finalise the retrenchment
process, and the issue of alternatives
was not raised nor discussed
at the meeting. She was informed that she had been considered for
retrenchment as Amrop could not
afford her high salary. Her dismissal
took place on 29 May 2015, and since then, she was able to secure
ad
hoc
placements. She was only able to secure formal employment in
January 2017.
[16]
Under cross-examination, the applicant made the following
concessions;
a) Her claim of substantive unfairness
could not succeed if the court rejected her contentions that the
retrenchment was a smokescreen.
b) She was the second highest earner
after Burmeister, and the Telkom project was a major contract for
Amrop.
c) The market had slowed down at some
point and there was a downturn in business in 2015, resulting in
Amrop making a loss.
d) She accepted that if there was no
need to keep two partners because business was not doing well, Amrop
was obliged to retrench
one of them.
e) Amrop had financial difficulties
even though she did not know the full details. She had nonetheless
not asked for more information
in that regard.
f) If the Court accepted that Amrop’s
business was not doing well, retrenchments would be necessary, even
though she questioned
the two weeks’ period within which
consultations took place, it being her contention a decision to
retrench her had already
been taken.
g) LIFO was a fair selection criteria,
and factors to be taken into account included the remuneration of
employees and their years
of service. She had less years of service
and earned more.
h) She was told why she had been
selected and had said nothing despite being familiar with section 189
of the LRA processes as she
had conducted similar processes in the
past, and was aware of her rights.
i) Upon being informed of the
contemplated retrenchments, she had only raised two issues and
accepted that she was to be retrenched.
At the meeting held on
15 May 2015, she had asked about the timelines and raised
concerns about the ‘Sonae assignment’
which she wanted to
wrap up, and further indicated that she could hand over her other
assignments.
j) One of her clients was SAPO, and
only a portion of its fee was paid up. In January 2015, she had
between 10 – 15 assignments,
and at the time of her
retrenchment she only had one. She conceded that the recruitment
environment was difficult.
k) She conceded that she could have
raised any other issue in the consultation meeting, and further that
she was given time
off to think about the matter.
l) When a meeting proposed for
18 May 2015 did not take place and was rescheduled, for
25 May 2015, she had
time within which to think about
alternatives. She had nonetheless not done so as ‘there was no
point in doing that’,
and further since she believed that the
consultation process was not genuine.
[17]
The applicant further testified that but for the dispute surrounding
the new contract, she would not have been retrenched.
She further
testified that the issue of a salary cut was not even discussed with
her and her retrenchment was
fait accompli
. She nonetheless
conceded that she was not at any stage informed that a final decision
had been taken.
Evaluation:
[18]
In instances where an employer
dismisses an employee due to its operational requirements, the
provisions of section 188(1) read
together with those of section
192(2) of the LRA obliges the employer to prove that the reason for
the dismissal was substantively
and procedurally fair. It has been
held that the distinction between procedural and substantive fairness
in dismissals based on
operational requirements are close together,
as procedural unfairness may result in substantive unfairness
[3]
.
[19]
In discharging the onus, it is
required of the employer to present evidence substantiating not only
the need to retrench, but also
to show that the reason for the
retrenchment was fair. Aligned to the fairness component is a notice
to be issued to employees
likely to be affected by the retrenchment,
and the obligatory consultation process. That process requires the
employer to engage
in a meaningful joint consensus seeking
exercise with employees who may be affected by the employer’s
operational requirements
in regard to issues such as steps taken to
avoid or minimize the retrenchment, or to change the timing of the
retrenchments; available
alternatives, fair and objective selection
criteria, and any offers of re-employment
[4]
.
[20]
In regards to a fair reason,
and to the extent that the applicant in this case had contended that
the retrenchment was a smokescreen
in the light of her disagreement
with Burmeister over the new terms and conditions of her employment,
it has been held that the
ultimate decision to retrench must be fair,
which means that the decision must “properly and genuinely”
be justified
by operational requirements, and not be a sham or be due
to other disguised motives
[5]
.
In re-emphasising the point in
Havemann
v Secequip (Pty) Ltd
[6]
,
Savage AJA said that;
“…
a
fair reason is one that is
bona
fide
and rationally
justified, and informed by a proper and valid commercial or business
rationale. The enquiry is not whether the reason
put up is one which
would have been chosen by the court but whether the reason advanced
considered objectively is fair…”
[21]
Burmeister’s testimony was that the reason for the
retrenchment was financial affordability. Counsel for the applicant
took issue with Burmeister’s testimony in regards to the
meeting where the terms and conditions of new employment were
discussed
and where she had left after stating that she did not have
to ‘deal with this’. Burmeister’s evidence is
further
taken to task in that she had sent an email to the applicant
on 15 April 2015 stating that the company was ‘going
to have an excellent year ahead’, whilst at the same time
contending that as of March 2015, there were signs already
that
the company was going to struggle financially. Burmeister’s
evidence was also attacked on the grounds that she could
not explain
Amrop’s operating expenses for 2015 and 2016, and as such, the
financial statement she had relied upon in justifying
the
retrenchment did not make sense. In that regard, it was submitted
that Amrop had not discharged the onus to demonstrate that
the reason
for the retrenchment was fair.
[22]
It was submitted on behalf of Amrop, and correctly so, that to
the extent that there is a dispute as to whether
the dismissal
was due to operational requirements or whether it was as a result of
the dispute surrounding the new contract, the
inquiry should be into
causation, to determine the true cause of the dismissal. In this
regard, it was further submitted that the
issue to be determined is
whether the retrenchment would have occurred but for the alleged
dispute, and where the first question
is answered in the affirmative,
the next issue would be whether the alleged dispute was the ‘main’
or ‘dominant’,
or ‘proximate’ or ‘most
likely’ cause of the retrenchment, or the dispute over the new
terms and conditions
of employment.
[23]
The significant concessions
made under cross-examination by the applicant as already pointed out
elsewhere in this judgment are
nonetheless telling as correctly
pointed out on behalf of Amrop. To reiterate, she conceded that the
recruitment industry is a
difficult and competitive one, and at the
time, the market had slowed down, leading to a downturn in business
in 2015. She accepted
that there was no need to keep two partners
because business was not doing well. She had not asked for Amrop’s
financials,
and in the same vein, could not dispute that Amrop had
financial difficulties. The contention that Amrop financial
statements as
produced in court did not make sense or could not be
relied upon is belied by the applicant’s own further
concessions that
one of Amrop’s major clients SAPO, had not
paid its full fees, whilst at a later stage, other big clients such
as ATMS, Harmony
and Telkom had cancelled their assignments. The
financial statements
[7]
presented in court were audited, and it is not sufficient for the
applicant’s counsel to simply dispute those statements
without
adducing contrary evidence to indicate what the actual financial
position of Amrop was in the 2015/2016 financial year.
[24]
Further figures revealed that in January 2015, the applicant
had between 10 – 15 assignments, and that at the time
of her
retrenchment, she only had one. I further did not understand her
evidence to dispute Burmeister’s contentions that
she
(applicant) was aware of the company’s financial position as
she had attended meetings where these issues were discussed.
[25]
Other than the above concessions, Burmeister’s testimony that
Amrop experienced a revenue loss from R13m in 2015
to R6.7m in
2016, or that its operating expenses shot from R2.5m to R4.3 between
2015 and 2016 was not seriously challenged, nor
was her version that
cost cutting measures had been put in place, including looking at
staff expenditure, cutting down on luxuries,
changing insurers,
renegotiating telephone and contract prices. These measures according
to Burmeister did not achieve much.
[26]
On the other hand, the dispute
surrounding the contract in respect of the new position emanated in
January 2015. Following
various engagements (direct and via
emails) between the applicant and Burmeister since the offer and
letter of appointment in February 2015
and a more comprehensive
draft contract of employment in April 2015, it appears from the
evidence that discussions regarding
the terms and conditions of the
new appointment, reached a dead-end right into April 2015,
when the applicant was put
on terms, and when she had sent a long
email to Burmeister raising specific concerns
[8]
.
Burmeister had not responded to that email. At the same time
however, the evidence before the court was that Telkom and
other
entities had cancelled their contracts, making Amrop’s
financial position even more dire.
[27]
It was further common cause that two other individuals were affected
by the retrenchment exercise, and the decision at the
time to embark
on a retrenchment exercise can therefore hardly be construed as a
smokescreen or some vengeful attack on the applicant
based on the
dispute regarding her new terms and conditions of employment, as she
was not the only one affected. That dispute might
have been
contentious, and even if there is any merit in the contention
Burmeister had used it as a smokescreen to get rid of the
applicant,
I fail to appreciate the reason she would have waited until May 2015,
when that dispute had been on-going since January
2015. In my view,
and upon a consideration of all the objective facts, there is no
basis upon which it can be concluded that the
dispute in question was
the main’ or ‘dominant’, or ‘proximate’
or ‘most likely’ cause
of the retrenchment.
[28]
In circumstances where the applicant had made concessions such as
discussed above, which clearly indicated that Amrop was struggling
to
be a viable business with effect from March 2015, it can hardly
be argued that the reason for retrenchment as advanced,
and when
considered objectively, was unfair, or one that is not
bona
fide
and rationally justified, informed by a proper and
valid commercial or business rationale. The question whether the
applicant
was on a fixed term contract at the time of the
retrenchment in the light of these conclusions therefore becomes
irrelevant.
[29]
The fact that there was a need
to retrench does not necessarily end the enquiry into the overall
fairness of the retrenchment. What
needs to be also determined is
whether Amrop had employed a fair procedure in effecting the
retrenchment. The purpose of consultation
with an affected employee
is to enable parties in a joint problem-solving exercise, to strive
for consensus where possible, over
matters covered under section
189(2) of the LRA
[9]
.
[30]
Arguments advanced on behalf of
Amrop were that based on the applicant’s concessions, it could
not be argued that her retrenchment
was procedurally unfair. It was
further argued that based on
Peach
& Hatton Heritage (Pty) Ltd v Neethling
[10]
,
there was no requirement
for strict compliance with the provisions of section 189(2) of the
LRA where the affected employees were
senior managers who had engaged
in extensive discussions regarding the company’s forecast and
had accepted their retrenchment
[31]
It was submitted on behalf of the applicant that her contentions that
when she was handed the section 189(3) notice, she was
confronted
with a
fait accompli
, as the decision to retrench her was
taken prior to the meeting of 15 May 2015. It was also
submitted that no meaningful
joint consensus was reached or attempted
to be reached.
[32]
It was common cause that the consultations were concluded over two
meetings held with the applicant. She was only informed
on
14 May 2015 to attend a meeting the following day, and had
not been advised or forewarned of the purpose of that meeting.
When
she attended that meeting on 15 May 2015, she was then
presented with a detailed section 189(3) notice, and was
expected to
meaningfully engage with Burmeister and others on the contents of the
notice. There is merit in the applicant’s
contentions that the
news of her contemplated retrenchment came as a shock to her and as a
result, she could not meaningfully add
any value to those
consultations. It cannot be denied that indeed the applicant was
caught off guard by the news of her contemplated
retrenchment.
[33]
It needs to be reiterated that there is a reason why any document is
referred to as a ‘notice’. It is meant to
warn the
recipient of the likelihood of something taking place, and for that
recipient to be prepared for any eventuality. The
loss of a job
through retrenchment is not to be taken lightly, irrespective of
whether the affected employee is senior in the ranks
or is assumed to
know his or her rights in regards to such matters. When a section
189(3) notice is issued, it is meant for the
employee to digest its
contents, to absorb its impact, and to fully prepare for any
consultations that may take place in the future.
In this case, that
purpose was completely defeated, as the applicant was clearly
ambushed, as it was expected of her
to engage
meaningfully with Amrop on the same day that she was issued with the
notice. This cannot be fair, and I agree with her
contentions that
the process could not have been deemed as being genuine.
[34]
My conclusions as above are
further fortified by a glance of the minutes of the ‘consultations’
of 15 May 2015
[11]
.
Other than the fact that the applicant was least prepared for the
consultation as she had just been issued with a notice, Burmeister
nonetheless went straight for the jugular, informing her that there
was going to be a cut back of staff, and that she was one of
the
three identified based on LIFO. It was only thereafter that she was
informed that this was merely to notify her and to thereafter
start a
consultation. At that stage however, timelines were already set, as
discussions revolved around handing over of assignments.
In all of
these discussions, the applicant’s responses was mainly
‘
okays’
.
[35]
In the second consultation
meeting that lasted twenty minutes on 25 May 2015
[12]
,
discussions centred around the severance package, the applicant’s
commission from March 2015, her outstanding assignments,
with
Burmeister persistently informing the applicant that the company
could not afford to keep her due to its finances. It was
only in the
first meeting that the applicant was asked whether she had any
suggestions, to which she had responded that she had
none. As I had
already indicated, that response was to be expected in view of what
she had just been informed. Nowhere in the second
meeting was she
ever asked to make suggestions about anything. Instead, she was
simply informed that there was nothing that could
be done.
[36]
It is appreciated that the applicant had made various concessions,
including that as a result of the financial difficulties
faced by
Amrop, there was no longer a need to employ two partners. She had
further conceded that LIFO was a fair selection criteria,
and that
other considerations taken into account included her high salary. As
a side issue, it needs to be pointed out that the
fact that an
employee is a high earner cannot be a fair and objective selection
criteria, unless that criteria is linked to the
overall process of
restructuring or costs cutting.
[37]
Even in the face of concessions made by the applicant, this did not
imply that there was no obligation on Amrop to consider
other
alternatives, and to approach the consultation process with an open
mind. The fact that the applicant had experience in retrenchment
processes was immaterial to the objectivity required in approaching
her retrenchment. It is acknowledged that the period between
the
first and second consultation meeting was sufficient for the
applicant to come up with proposals, and on her own version, had
not
done so since there was no point. Her deflated attitude at the time
is understandable. This however did not prevent Amrop to
equally come
up with suggestions.
[38]
A consideration of alternatives
is not a one-sided affair. It is part of
a
meaningful joint consensus-seeking process involving both parties. I
t
would therefore be insufficient for the employer, in any meaningful
process, to leave it to the employee party to come up with
alternatives and suggestions, without venturing any of its own.
In
this case, there is nothing from the minutes that suggest that
Burmeister had even advised the applicant what alternatives had
been
looked at. It has since been held that
the
question, whether there was a proper consideration of alternatives,
in the context where there is justification for retrenchment
can only
relate to alternatives to dismissal as there was no possibility of
avoiding the retrenchment
[13]
.
[39]
In this case, Burmeister’s contention was
that alternatives were not offered as none existed. In the same vein
however, she
testified that the applicant had
not proposed
that she be reverted back to the commission structure, and that even
if she had, she would not have accepted that option
at
R60 000.00 as it would not have been enough for her. Even if
that was the case, that option as readily conceded by Burmeister,
was
not put to the applicant. In hindsight, Burmeister conceded that it
should have been. In my view, that option should have been
suggested
to the applicant and for her to make her own informed choices. It was
not for Burmeister to pre-empt the applicant’s
response without
the option being offered to her.
[40]
In the light of the above, even if the retrenchment was
bona fide
and rationally justified and informed by a proper and valid
commercial or business rationale, Amrop is found wanting in regard
to
its compliance with a proper joint consulting process, particularly
in regards to its obligations to look at or offer the applicant
alternative available options prior to taking a final decision to
retrench her.
[41]
The only issue in the light of the defects pointed above is that of
relief. As already indicated, she had sought maximum compensation
prescribed in section 194 of the LRA. I am however not convinced that
the circumstances of this case and also based on the conclusions
reached, justify the amount sought by the applicant. Any compensation
amount awarded in accordance with the provisions of section
194(1) of
LRA must be just and equitable in all the circumstances. In
this case, despite the procedural defects pointed out,
in the end, it
had been concluded that the retrenchment was based on a sound and
justifiable economic rationale. In the light of
the defects in the
consultation process, it would in my view, be just and equitable to
grant the applicant compensation equivalent
to three months’
remuneration, which should not factor in any commission. I have
further had regard to the requirements of
law and fairness, and I am
of the firm view that a cost order is not warranted in this case.
Accordingly, the following order is
made;
Order
1. The dismissal of the applicant
based on the respondent’s operational requirements was
substantively fair but procedurally
unfair.
2. The respondent is ordered to pay to
the applicant as compensation, an amount equal to three months’
salary calculated at
her rate of remuneration as at 29 May 2015.
3. There is no order as to costs
____________________
E Tlhotlhalemaje
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the Applicant: Adv. L. Abrahams (
Pro Bono
)
Instructed
by: Thaanyane Attorneys
For
the Respondent: Adv. R Itzkin
Instructed
by: Norton Rose Fulbright South Africa Inc.
[1]
Act 66 of 1995, as amended
[2]
See
Du Plessis v Ackerman
1932 EDL 139:
‘
As
a rule when either party has closed his case there is no proper
occasion for the introduction of further evidence by him. In
the
interests of justice, however, and owing to the inadvertence of
counsel and for other reasons, the rule is not inflexible
and in the
discretion of the trial Court such evidence may be admitted. When
both parties have closed their cases the possibility
of unfair
disadvantage is increased but the Court, in its discretion, may
sanction the admission according to the circumstances.
After
argument is begun a special danger of abuse lies in the opportunity
for the deliberate colouring or manufacture of testimony
to suit
some specific need which may be apparent only after opposing
counsel's argument has revealed where the emphasis of his
claim is
placed and what conclusions he founds on the evidence already
presented.
"The reason of the rule is grounded on the
temptation it holds out for committing the crime of perjury; when
the cause has
been argued and a party discovers the points on which
it is to rest, the Court will not permit that party to support the
weak
parts of his case by a re-examination of the case. It is right
to adhere to such a practice unless the Court discovers the
necessity
of a re-examination and that it will not be productive of
the evil on which the rule is founded."
"To make a
general practice of introducing new evidence when from the argument
of the adversary it is found where the shoe
pinches, might lead to
perjury and at all events it would be productive of confusion in
trials." "As a general rule
it will be conceded that such
re-examinations should be discouraged"
[3]
Woolworths (Pty) Ltd v
SACCAWU and Others
[2017]
12 BLLR 1217
(LAC); (2018) 39 ILJ 222 (LAC) at para [22]; See also
Ndlela v SITA Information
Networking Computing BV
(2014) 35 ILJ 2236 (LC) where it was stated that;
“
44.
Although
as a matter or practice, we tend to separate process from substance,
there are no bright lines distinguishing process
from substance in
the area of dismissals for operational requirements. The procedure
mandated by section 189 has a substantive
purpose. Its purpose is to
save jobs. This is done by considering alternative means by which
the operational problem identified
by the employer can be addressed
without resorting to dismissals. In a case such as the present,
where the proffered substantive
justification is the need to reduce
operating costs, the issue to be discussed at the consultations is
whether there are no other
areas of the employer’s business
where the costs can be reduced without affecting employment
security.
45. The purpose behind the need
to discuss the selection criterion and to implement a fair selection
criterion is also the
avoidance of loss of employment. If the job or
position cannot be saved, then the focus shifts to other means of
mitigating the
adverse effects of dismissal.”
[4]
Super Group Supply Chain
Partners v Dlamini and Another
(2013)
34 ILJ 108 (LAC);
[2013] 3 BLLR 255
(LAC) at para 27. See also
4Seas
Worldwide (Pty) Ltd v The Commission for Conciliation Mediation &
Arbitration & Others
(CA 15/2011)
[2013] ZALAC 30
(13 November 2013) ay para 23
[5]
Decision Surveys
International (Pty) Ltd v Dlamini and Others
[2002] ZACC 27
;
[1999] 5 BLLR 413
(LAC) at para 27; See also
Super
Group Trading (Pty) Ltd v Janse van Rensburg
(JA50/09)
[2012] ZALAC 7
(25 April 2012) at para 5, where it was
held that;
“
If the decision to make a post
redundant is set in stone and not open to revision or discussion
then the main aim of consultation
has been thwarted before it has
begun. If the decision to retrench a certain person has been
pre-decided, consultation about
whether this person should be chosen
is a sham. What remains is consultation on the mitigation of
retrenchment.”
[6]
[2016] ZALAC 53
at para 28
[7]
Pages 78 –
79 of the Respondent’s bundle
[8]
Pages 43 -
46
[9]
(2)
The
employer and the other consulting parties must in the consultation
envisaged by subsections (1) and (3) engage in a meaningful
joint
consensus-seeking process and 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
.
[10]
[2001] 5
BLLR 528 (LAC)
[11]
Pages 105 –
106 of the Respondent’s bundle
[12]
Pages 112 -
116
[13]
Woolworths (Pty) Ltd v
SACCAWU and Others
[2017]
ZALAC 54
;
[2017] 12 BLLR 1217
(LAC); (2018) 39 ILJ 222 (LAC) at para
[42]