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[2018] ZALCJHB 341
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Banks v UIS Analytical Services (Pty) Ltd (JS602/13) [2018] ZALCJHB 341 (12 October 2018)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: JS 602/13
In
the matter between:
SHARON
BANKS
Applicant
and
UIS
ANALYTICAL SERVICES (PTY)
LTD
Respondent
Heard:
17, 18 and 28 May 2018
Delivered:
12 October 2018
Summary:
The retrenchment is operationally justifiable – there is proof
that there was proper consultation – claim that
the applicant
was confronted with a
fait accompli
is
untenable.
JUDGMENT
NKUTHA-NKONTWANA.
J
Introduction
[1]
In this
matter, the applicant is challenging the procedural and substantive
fairness of her dismissal on the basis that it was not
effected in
accordance with section 188 read with section 189 of the Labour
Relations Act
[1]
(LRA).
[2]
The applicant was employed by the respondent as a Business
Development Manager in August 2005. She was dismissed on 14 June
2013. At the time of her dismissal she was earning a gross monthly
salary of R 82 068.94.
Pertinent
facts
[3]
The respondent incurred substantial financial losses during the
2012/2013 financial year. As a result, it began to experience
cash
flow challenges and was unable to pay salaries and creditors that
were overdue. According to Ms Sara Pins (Ms Pins), the General
Manager, it became apparent to the respondent that the salary bill
was a burden. Comparatively, the ratio between wages and gross
revenue was above the industry norm set at 45%.
[4]
Ms Pins was adamant that had any of the loans from sister company
been recalled, the respondent would have closed its doors.
The Exxaro
Sands tender which the applicant referred to was only awarded on 19
June 2013. Even though the amount was R 7 650 229.00
only R 258 000
was invoiced against the contract for the period ending in April
2014. Therefore, that tender did not do much
dent in the respondent’s
dire financial position.
[5]
It was Ms Pins’ further evidence that nothing was untoward
about the payment of staff bonuses at 35% of monthly salaries
in
December 2013, as alleged by the applicant. The deal was consequent
to the negotiations with the trade union (CEPAWWU) for 2012/2013
financial year. The Commission for Conciliation Mediation and
Arbitration (CCMA) had ordered that 7% wage increase plus bonuses.
The deal was extended to all employees earning below R 217 000
per annum. The staff earning above R 217 000 had an option
of
receiving R7500 bonus or 5 additional leave days, subject to
performance appraisal.
[6]
On 12 and 24 April 2017, the respondent held consultation sessions
with the employees and their representatives. The respondent’s
financial position was discussed and the fact that it had
necessitated reduction of employees and job restructuring. Employees
were given an opportunity to consider the presentation and to suggest
any other means to improve the operational efficiency. It
is
instructive that the applicant did not make any suggestions at that
stage.
[7]
It is undisputed that there were other alternative measures that had
been considered to obviate retrenchments which are,
inter alia
,
reduction of the salary bill through termination of contracts,
moratorium on recruitment of new staff, optimisation of staff
complement, salary reduction of high earning staff, no salary
increase in July and unpaid leave.
[8]
The applicant’s assertion that Human Resource (HR) function
should not have been outsourced as it increased the financial
burden
and was only kept because Mr Belcher had a personal financial
interest was disputed. According to Ms Pins, the use of external
HR
was also evaluated and found not to be excessive. Nonetheless, the HR
contract was terminated in July 2013.
[9]
Also, the position of Technician in Water Laboratory that became
vacant in February 2013 due to the resignation of the incumbent
was
not suitable for the applicant hence she was not considered. That
position had the targeted salary of R350 000.00 per
annum whilst
hers was 974 532.00 per annum. In any event, the applicant was
not a qualified water technician and her involvement
in overlooking
the Laboratory for a few months in 2012 did not count.
[10]
On 2 May 2013, the applicant was served with a letter headed ‘Notice
of restructuring of Position’ from the Managing
Director, Mr
Blecher. It was mentioned that:
10.1 On 12 and 24 April
2017, the finical problems of the respondent had been discussed with
personnel and representatives;
10.2 The respondent was
not in a position to continue with the present manpower and personnel
reduction and job restructuring had
become necessary;
10.3 The applicant’s
own job had been affected and that a job of Sales and Marketing
Manager was being made redundant;
10.4 The applicant was
invited to consider a new proposed role of a Sales Executive and a
detailed job description was attached,
with turnover targets and
commission structures;
10.5 The applicant was
advised that if she chose not to pursue the opportunity in offer,
necessary retrenchment steps would be initiated.
[11]
Ms Pins had discussions with the applicant about the alternative
position that had been offered. As a result, a commission
structure
that had been offered to the applicant in the letter dated 2 May 2013
was revised twice, that is, on 9 and 13 May 2013.
The applicant
rejected all the offers. In her email dated 14 May 2013, the
applicant states:
‘
I have considered
the Sales Executive position on offer, dated 13 May 2013, and decline
such based on the following,
· The offered
position is a demotion, current position – Business Development
Manager.
· The remuneration
is less than two thirds of my current package.
· The offered
position and remuneration is subject to review after three months and
so does not offer security.
· It is envisaged
that the quarterly reviewed package be target driven. Failure to meet
set target will incur further salary
sacrifices with possible
disciplinary action resulting in dismissal for not performance.
Coupled
with the known client requirements for method accreditation and
improvement turnaround time (workflow steaming) from our
operations,
I am of the view that the tabled offer is not reasonable offer for me
to accept. Please advise whether/when my current
position will be
made redundant.’
[12]
On 15 May 2015, the applicant was served with a notice of
retrenchment with particulars of the retrenchment.
Evaluation
[13]
The applicant’s impugn on substantive fairness of her
retrenchment was not vigorously pursued. She conceded in
cross-examination
that the respondent was in dire financial position
and that her salary was too high. I, however, deem it necessary to
interrogate
the applicant’s assertion that there were other
cost saving measures that could have obviated her retrenchment.
[14]
The
determination on whether the decision to retrench was justified by
the employer’s operational
requirements
entails a finding on whether the ultimate decision arrived at was
genuine and not merely a sham and not
whether
it
was
the best decision under the circumstances. This point was aptly
expounded in
SA
Clothing and Textile Workers Union and Others v Discreto - A Division
of Trump and Springbok Holdings.
[2]
The
LAC stated:
‘
For
the employee fairness is found in the requirement of consultation
prior to a final decision on retrenchment. This requirement
is
essentially a formal or procedural one, but, as is the case in most
requirements of this nature, it has a substantive purpose.
That
purpose is to ensure that the ultimate decision on retrenchment is
properly and genuinely justifiable by operational requirements
or,
put another way, by a commercial or business rationale. The function
of a court in scrutinising the consultation process is
not to
second-guess the commercial or business efficacy of the employer’s
ultimate decision (an issue on which it is, generally,
not qualified
to pronounce upon), but to pass judgment on whether the ultimate
decision arrived at was genuine and not merely a
sham (the kind of
issue which courts are called upon to do in different settings, every
day). The manner in which the court adjudges
the latter issue is to
enquire whether the legal requirements for a proper consultation
process has been followed and, if so, whether
the ultimate decision
arrived at by the employer is operationally and commercially
justifiable on rational grounds, having regard
to what emerged from
the consultation process
.’
(Emphasis added)
[15]
With regard
to the consultation process, the crux of the applicant’s case
is that she was confronted with a ‘
fait
accompli
’.
In
SASBO
v Standard Bank of SA,
[3]
this Court, per Lagrange J, stated that:
‘
It is trite law
that when employees are confronted with a
fait accompli
any
subsequent consultations may be fatally flawed.
A fait accompli in
the context of retrenchments manifests itself typically when an
employer takes unilateral action which forecloses
the prospect of
meaningful consultation on one or more of the issues in respect of
which it ought to consult
. Under such conditions a …party
that is asked to consult where the employer has taken such action may
rightly cry "foul"’.
(Emphasis added)
[16]
I reckon the converse is true in the present case. The applicant
testified that she was part of management discussions and
consultation meetings, particularly, the staff meeting held on 17
April 2013, that discussed the respondent’s financial
challenges. She also conceded in cross-examination that there was no
firm decision on the outcome of the consultation meetings at
that
stage. The staff was also invited to come up with suggestions on how
to increase operational effectiveness and avoid retrenchments.
Regrettably, the applicant did not avail herself to this opportunity.
All the suggestions she has offered in her evidence as best
measures
that could have saved her job are too little too late.
[17]
It is instructive that the applicant acknowledged that she was part
of the consultation meetings. In her email dated 29 April
2013, she
states:
‘
In closing, from
next month (May) I would like to participate in the offer to all
staff, as presented in the second staff restructuring
consultation
meeting, of unpaid leave to ease the interim payroll burden.’
[18]
Clearly, the letter dated 2 May 2013 was preceded by several
consultation meetings. The discussions continued as the applicant
was
consulted on the alternative position in offer. The applicant
seemingly accepted that her salary was unaffordable at that time
but
was not willing to come to the party and accept a salary cut.
[19]
The applicant testified that she was willing to take any job or even
work half a day to save the situation. However, the she
rejected the
alternative position she was offered even though one of the offers
was for half day with a salary package that is
50% percent less than
what she was paid at that time. In my view, the applicant did not
give a serious consideration to the reasonable
alternative position
and proposed packages she had been offered. The respondent went out
of its way to tweak the proposed packages
in order to accommodate
her. In all instances, the applicant did not propose any
alternatives.
[20]
There was no way the parties could have reached consensus given the
applicant’s intransigent stance. Despite accepting
that there
was no business generated to justify her salary, the applicant
rejected a salary cut that would have been commensurate
to the
business generated and relieved the respondent of its financial
burden. Clearly, she proverbially wanted have her cake and
eat it
too.
[21]
The picture that emerged
from all the parties’ engagements is that the applicant’s
retrenchment was
commercially
justifiable and was preceded by a proper consultation process.
If
follows that the applicant failed to prove that she had been
confronted with a
fait accompli
.
Conclusion
[22]
All things considered, I am convinced that the applicant’s
dismissal based on the respondent’s operational requirements
is
substantively and procedurally fair.
Costs
[23]
The only
issue remaining is that of costs. It is trite that costs in this
Court do not follow the result as the requirements of
the law and
fairness are a consideration.
[4]
In my view, the applicant, like most individual litigants in this
Court, was clearly misguided in launching these proceedings.
Nonetheless, I am not convinced that she was
mala
fide
so
as to be saddled with costs.
[24]
In the circumstances, I make the following order:
Order
1. The dismissal of the
applicant based on the respondent’s operational requirements is
substantively and procedurally fair.
2. There is no order as
to costs.
___________________
P
Nkutha-Nkontwana
Judge
of the Labour Court of South Africa
Appearances:
For
the applicant: Advocate C Strydom
Instructed
by: Avery Inc.
For
the respondent: Advocate P Kirstein
Instructed
by: Couzyn Hertzog & Horak Attorneys
[1]
Act 66 of 1995 as amended.
[2]
SACTWU
and Others v Discreto (A Division of Trump and Springbok Holdings)
[1998] 12 BLLR 1228
(LAC) at para 8; see also
BMD
Knitting Mills (Pty) Ltd v SACTWU
[2001]
7 BLLR 705
(LAC) at para 19;
CWIU
and Others v Algrorax (Pty) Ltd
[2003] 11 BLLR 1081
(LAC) at paras 69 – 70
.
[3]
[2011] JOL 26928
(LC) at para 36
[4]
Section 162 of the LRA.