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[2019] ZALCJHB 60
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Valakelis v Van der Merwe and Others (JR518/16) [2019] ZALCJHB 60 (27 March 2019)
in
the labour court of South Africa, JOHANNESBURG
Reportable
case
no: jr 518/16
In the matter between
VALAKELIS,
PARIS
Applicant
and
VAN DER MERWE,
FRANCOIS
N.O
First Respondent
COMMISSION FOR
CONCILIATION, MEDIATION
AND
ARBITRATION
Second
Respondent
RENAISSANCE SECURITIES
(PTY) LTD
Third Respondent
Heard:
09 May 2018
Delivered:
27 March 2019
JUDGMENT
MAHOSI. J
Introduction
[1]
This is an application brought by the applicant in terms of section
145 of the Labour
Relations Act (LRA)
[1]
to
review
and set aside the arbitration award issued by the first respondent
(the arbitrator) under the auspices of the second respondent,
the
Commission for Conciliation, Mediation and Arbitration (the CCMA),
under case number GAJB19608-15 dated 10 February 2016. In
his award,
the arbitrator found that the applicant’s retrenchment was
fair.
[2]
The key question is whether the arbitrator’s decision is one
that a reasonable
decision-maker could not reach.
[3]
Prior to outlining the applicant’s case in detail and
considering the issues
that gave rise to the claim, it is necessary
to outline the facts that form the relevant background to the dispute
between the
parties.
Material background
facts
[4]
The third respondent operates as a stock broker that deals on the
Johannesburg Stock
Exchange and offers advice to clients. The
applicant started working for the third respondent during 2013 as a
Trainee Analyst/Associate
in its research department. From 01 January
2014 to June 2015, the applicant joined the equity sales department
after which he
re-joined the research department again as a Trainee
Analyst/Associate.
[5]
During May 2015, a business strategy proposal was made to the third
respondent’s
Head Office in Russia in terms of which two
options were made for the purpose of,
inter alia
, cost saving
and revenue increase. The first option was for the expansion of
coverage to liquid mid-cap companies which included
the use of
trainee analysts who would be mentored and developed by the Head of
Research Department, Mr Rey Wium (Wium). However,
Wium resigned on 31
July 2015. As a result, the third respondent could no longer
implement option one because it no longer had
the capacity to develop
trainees. Rather, it needed an analyst with a track record to
implement option two.
[6]
On 24 August 2015, the two trainee analysts, including the applicant
were invited
to individual meetings. At the meeting, the applicant
was informed that the third respondent contemplated his retrenchment
and
was presented with a choice whether to engage in a voluntary
retrenchment or to engage in a formal consultation process. The
applicant
considered the options and informed the third respondent on
25 August 2015, that he chose to go through a formal consultation
process.
On the same day, the applicant was presented with a formal
section 189(3) of the LRA notice.
[7]
On 26 August 2015, the applicant requested the third respondent to
provide him with
financial information, which was provided to him on
27 August 2015 after signing confidentiality agreement. On 28 August
2015,
a meeting was held between the parties and their attorneys
during which meeting the third respondent attempted to proceed with
the formal consultation process. However, the applicant was unwilling
to participate in the consultation as he had formed a view
that he
had already been dismissed or that a decision to dismiss him had
already been taken.
[8]
On the same day, the third respondent issued the applicant with a
dismissal letter.
Aggrieved by the third respondent’s decision
to dismiss him, the applicant referred an unfair dismissal dispute to
the CCMA.
The dispute was conciliated unsuccessfully and the
applicant referred the dispute to arbitration. The arbitration was
held on 1
and 2 February 2016. The arbitrator issued the award on 10
February 2016 in terms of which he found the applicant’s
retrenchment
to be fair. It is this award that is the subject of this
application.
Award
[9]
The basis on which the arbitrator found the applicant’s
retrenchment fair appears
in his award as follows:
‘
In
this particular case the motivation behind the decision to
restructure and contemplating dismissal for operational requirements
has been reasonably explained. Clearly there was a substantial loss
to the bottom line of the business. There was a managerial
decision
to change focus from an option one to option two, in which structure
the position of two trainee analysts became redundant
.
There
does not appear to be any ulterior motive behind the restructuring or
refocusing. In my view the respondent's failure to provide
more
detail concerning option two does not deserve a negative inference,
particularly because the failure to pursue option one
is reasonably
explained. Ross’ evidence that Wium was to mentor the applicant
in the mid-cap strategy was not materially
challenged. The fact that
Ross was at times augmentative does not mean that her version must
generally be rejected. In my view
it would be inappropriate in this
case to too finely analyze the appointment of more directors or the
standing of the research
department’s own revenue - it is not
for the arbitrator to tell the respondent how to run its business or
to direct what
would make the best commercial sense.’
[2]
[10]
The applicant’s case was mainly that he was dismissed on 24
August 2015. However, the arbitrator
was not convinced that the
dismissal took place on 24 August 2015. His behaviour after the 24 of
August 2015 was assessed by the
arbitrator and was found not to be
indicative of a person who had been dismissed. In any event, the
applicant conceded during cross-examination
that he was dismissed on
28 August 2015 when he was issued with a dismissal letter.
[11]
The applicant’s decision not to participate in the consultation
was based on his perception
that a predetermined decision was taken
concerning his dismissal. His perception was created because of the
drawing of a line on
the old organogram removing the employee by the
employer’s attorney during the meeting of 24 August 2015 and
the wording
of section 189(3) of the LRA letter. The applicant
further relied on a discussion which he had with his colleague,
Pretorius, and
a meeting and dinner attended by colleagues in which
he was not present. The arbitrator dismissed the applicant’s
perception,
the basis of which appears in his award as follows:
‘
26.
The starting point is the discussion at the meeting on 24 August
2015. According to Ross the scratching out of the
block was a
proposal on how the future could look should the respondent proceed
with a formal retrenchment program, whilst an off
the record
option/settlement was offered. In the transcript of the meeting of 28
August 2015, the applicant’s attorney states
that the crossing
through the block on the organogram said that the position was
redundant. The applicant conceded that he was
not told that he was to
be retrenched, but that his position had become redundant. Not much
turns on the movement of the block’s
position from one
organogram to the other.
27.
Section 189 of the labour relations act contemplates a process to be
followed” where an employer contemplates
dismissing one or more
employees…” Subsection (1) read together with subsection
(3) suggests that the employer may
already be contemplating the
dismissal for operational reasons (retrenchment) with reference to,
inter alia, a number of employees
and job categories. In my view, it
was not necessarily unfair for the employer to have taken a stance
already on 24 August that
the two trainee analysts positions would
have to go.
28.
Even if the scratching out of the applicant’s block/face may at
first sight be seen as somewhat insensitive,
the applicant had the
opportunity to think the matter over and he indicated the following
day that he was opting for a formal consultation
process.
[12]
It was on the basis of the above that the arbitrator found the
applicant’s decision not
to participate in consultation to be
unreasonable.
[13]
The arbitrator was not convinced that the applicant was unfairly
selected for retrenchment because
the other mid-cap trainee who was
also identified for redundancy was better qualified and experienced
than him; the new employee
was a senior rated analyst and Wium was
not replaced. It was on the basis of the above considerations that
the arbitrator found
that the applicant’s retrenchment was for
a fair reason. The grounds on which the applicant seeks to have the
award reviewed
and set aside are considered herein below.
Grounds of review
[14]
The applicant attacked the award on the basis that the arbitrator
failed to grapple with any
of his challenges to the third
respondent’s operational requirements in that he accepted at
face value, that the third respondent’s
loss in the preceding
financial year and the managerial decision “
to change focus
from an option one to option two
” justified his dismissal.
In so doing, according to the employee, the arbitrator failed to
interrogate the commercial rationale
of the decision to terminate his
employment.
[15]
The employer opposed this application on two grounds. The first
ground was that the case advanced
by the applicant at review and the
central focus of his attack is different from that advanced before
the arbitrator. The second
ground is that the applicant failed to
demonstrate that the arbitrator failed to consider material issues
before him.
Test for review
[16]
The test laid down in
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
[3]
is a test for the substantive reasonableness of the outcome or result
of an arbitration award, which is an outcome based enquiry,
[4]
entailing a stringent test aimed at ensuring that arbitration awards
are not lightly interfered with.
[5]
[17]
In
Bestel
v Astral Operations Ltd and Others,
[6]
the Court stated as follows:
‘
It
is important to emphasise,
as
is exemplified
from
Carephone
,
and in
Schwartz
,
supra,
that
the ultimate principle upon which a review is based is justification
for the decision as opposed to it being considered to
be correct by
the reviewing court; that is whatever this Court might consider to be
a better decision is irrelevant to review proceedings
as opposed to
an appeal. Thus, great care must be taken to ensure that this
distinction, however difficult it is to always maintain,
is
respected.’
[7]
[18]
For the applicant to succeed with the review application, he must
have established that the arbitrator’s
decision fell outside
the bounds of reasonableness on all the material that was before him,
including for the reasons not considered
by the arbitrator.
[8]
Analysis
[19]
The issue before the arbitrator was whether the third respondent had
a fair reason to dismiss the applicant
based on its operational
requirements and whether the process followed to retrench him was
fair. Section 188
[9]
read with
section 192(2)
[10]
of LRA
require an employer to prove that the dismissal was fair. In
NUMSA
obo Maifo and Others v Ulrich Seats (Pty) Ltd,
[11]
this
Court stated as follows:
‘
It
is trite that employers are entitled to dismiss employees for
“operational requirements” based on economic,
technological
or structural needs.
However, as a general principle, the
law discourages the employers from a quick resort to retrenchment if
it can be avoided.
The
essential criterion is whether the retrenchment was
bona
fide
and economically rationale.
The other principle is that in addition to showing the existence of
economic rationality for the
retrenchment, the employer has to show
that the retrenchment was unavoidable.’
[20]
The LAC restated the test to evaluate the substantive fairness of
dismissal related to operational
requirements in
Haveman
v Secequip (Pty) Ltd
[12]
as follows:
‘
A
fair reason is one that is
bona fide
and
rationally justified, 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.’
Footnote omitted
[21]
In
SACWU
and Others v Afrox Ltd,
[13]
the
court held that:
‘…
By
making fairness of the dismissal a matter of proof (section 188(1)
(a) and 192(2), the LRA has made the assessment of fairness
dependent
on the factors proved and canvassed in evidence in court. This
imposes a discipline upon the parties to the dispute and
the person
hearing the case. If an employer wishes to show that it considered
appropriate options other than dismissal it must
present evidence to
that effect and explain why it chose a particular course and not
another. If an employee wishes to challenge
that evidence it must do
so by proper cross-examination on the relevant issues and, if
considered necessary, by leading rebutting
evidence. If this shows up
the untenability of the employer's position, it will have a material
effect in the final assessment
of fairness. The presiding officer’s
assessment of fairness or otherwise of the dismissal will also be
dependent on the evidence
presented before him or her. As assessment
on "moral" considerations not based on evidence led at the
trial will be impermissible…’
[22]
In
explaining why it
chose to restructure its business,
the
third respondent presented evidence that there was substantial loss
in the bottom line, which necessitated its decision. Further
evidence
was that a proposal to save costs and to increase the revenue was
made in which two options were considered and the resignation
of the
head of research department had an effect of rendering the employee’s
position redundant as there was no longer capacity
to run a trainee
analyst strategy.
The
applicant failed to challenge that evidence by proper
cross-examination on the relevant issues or by leading rebutting
evidence.
[23]
As a result, the arbitrator found that the third respondent’s
motivation to restructure
its business was reasonably explained.
Therefore, there was nothing before the arbitrator to suggest that
the restructuring and
the possible retrenchment process embarked upon
was not based on a
bona fide
rationale, commercial and
operational need to cut costs in order to improve profits. It was on
the basis of the above considerations
that the arbitrator found that
the applicant’s retrenchment was for a fair reason.
[24]
Section 189(1) of the LRA requires the employee to consult with
affected employees prior to embarking
on retrenchment programs and
provides as follows:
‘
(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 –
(i)
a workplace forum, if the employees likely to be affected by the
proposed dismissals
are employed in a workplace in respect of which
there is a workplace forum; and
(ii)
any registered trade union whose members are likely to be affected by
the proposed
dismissals;
(c)
if there is no workplace forum in the workplace 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; or
(d)
if there is no such trade union, the employees likely to be affected
by the proposed dismissals
or their representatives nominated for
that purpose.
[25]
Section 189(2)
[14]
of the LRA
requires the parties to engage in a meaningful joint
consensus-seeking process in an attempt to agree on appropriate
measures
inter
alia,
to
avoid and minimise dismissals; to identify the employees to be
retrenched; to change the timing of the dismissal; and to mitigate
the adverse effects of the dismissal. The question is whether,
subsequent to its decision to restructure its business, the third
respondent complied with its obligations in terms of section 189 of
the LRA. It is common cause that the applicant was offered
voluntary
retrenchment, which he refused. This resulted in a formal
retrenchment process being undertaken. The evidence before
the
arbitrator was that a letter of the contemplated retrenchment was
issued to him on 25 August 2015.
[26]
It is common cause that the consultation meeting was held on 28
August 2015 and further that
prior to that meeting, the applicant
requested and was provided with the third respondent’s
financial information. However,
the applicant chose not to
participate in the consultation due to his perception that the
decision to retrench him was pre-determined
which perception was
dismissed by the arbitrator. In
Enterprise
Foods (Pty) Ltd v Allen and Others,
[15]
the
Court held that:
‘
The
phrase which is required to do the key work in this section is “
when
an employer contemplates…the employer must consult...”
In
my view, the word ‘contemplate’ does not exclude an
employer from developing a preliminary approach upon which a
decision
may be based.’
[27]
The fact that the third respondent had formed a strong view about the
possible solution did not
mean that a decision was taken to dismiss
the applicant. As such, the arbitrator’s decision to dismiss
the applicant’s
perception was reasonable. The applicant’s
refusal to participate in a joint consensus-seeking process was
self-defeating
as he deprived himself of an opportunity to reach
together with the third respondent, consensus on appropriate measures
to avoid
dismissal, minimise the number of dismissals, change the
timing of the dismissal and mitigate the adverse effects of the
dismissal.
[28]
The applicant’s submission that the arbitrator failed to
evaluate the fairness of his dismissal
objectively is not supported
by evidence that was presented before the arbitrator. It is my view
that the arbitrator was reasonable
in his assessment of the evidence
before him. He reached a conclusion that any reasonable
decision-maker could have reached on
the issue of the probabilities
of the versions placed before him. The manner in which he analysed
the evidence and the arguments,
does not support the applicant’s
version that he misconstrued the enquiry he had to conduct or that he
ignored materially
relevant facts.
[29]
The applicant further failed to establish that the arbitrator
conducted the enquiry incorrectly
because, as the award reflects, he
dealt with the issue before him correctly and he considered all the
evidence that was placed
before him. What the applicant seeks to do
in this application is to bring an appeal against the decision of the
arbitrator in
a guise of a review. This cannot be countenanced.
[30]
The applicant has not established any basis upon which the Court
could find that the award was
reviewable. As such, he failed to
discharge the
onus
of establishing that the arbitrator either
committed misconduct in relation to his duties as an arbitrator, a
gross irregularity
in the conduct of the arbitration proceedings, or
that he exceeded his powers. There is, therefore, no reason for this
Court to
interfere with his award.
Costs
[31]
In terms of section 162 of the LRA, this Court has wide discretion in
awarding costs. The Constitutional
Court has recently reiterated in
Zungu
v Premier of the Province of Kwa-Zulu Natal and Others,
[16]
that costs orders should be made in accordance with the requirements
of law and fairness. In this matter, the requirements of law
and
fairness dictate that there should be no order as to costs.
[32]
In the circumstances, I make the following order.
Order
1.
The application to review
and set aside the arbitration award under case number GAJB19608-15
dated 10 February 2016,
is hereby
dismissed.
2.
There is no order as to costs.
__________________
D. Mahosi
Judge
of the Labour Court of South Africa
Appearances
For
the Applicant:
Advocate
HM
Viljoen
Instructed
by:
Ramsay Webber Inc
For
the third Respondent:
Advocate FA Boda SC
Instructed
by:
Cliffe Dekker
Hofmeyer Inc
[1]
Act
66 of 1995 as amended.
[2]
Amended
Index: Pleadings, page 21 at para 21
[3]
[2007]
12 BLLR 1097 (CC).
[4]
Ellerine
Holdings Ltd v Commission for Conciliation, Mediation and
Arbitration and others
(2008)
29
ILJ
2899
(LAC) at 2906H-I.
[5]
Fidelity
Cash Management Services v CCMA and Others
[2008]
3 BLLR 197
(LAC) at para 100;
Herholdt
v Nedbank Ltd (Congress of South African Trade Unions as amicus
curiae)
[2013] 11 BLLR 1074
(SCA) at para 13.
[6]
[2011] 2 BLLR 129
(LAC)
at
para 18.
[7]
Id
fn 5 at para 18.
[8]
Fidelity
Cash Management Services v CCMA and Others
[2008]
3 BLLR 197
(LAC) at para 103.
[9]
‘
(1)
A dismissal that is not automatically unfair, is unfair if the
employer fails to prove -
(a)
that the reason for dismissal
is a fair reason -
(i)
related to the employee’s conduct or capacity; or
(ii)
based on the employer‘s operational requirements ; and
(b)
that the dismissal was effected
in accordance with a fair procedure.
(2)
Any person considering whether or not the reason for dismissal is a
fair reason
or whether
or not the dismissal was effected in accordance with a
fair
procedure must take into account any relevant
code of good practice issued in terms of this Act.
[10]
Section
189(2)
provides
that “
If
the existence of the dismissal is established, the employer must
prove that the dismissal is fair.”
[11]
(2012) 33 ILJ 2918 (LC) at para 30.
[12]
JA
91/2014 at para 28, delivered 22 November 2016 at para 28; See also
Johnson
& Johnson (Pty) Ltd v CWIU
[1998]
12 BLLR 1209
(LAC
)
.
Kotze v
Rebel Discount Liquor Group (Pty) Ltd
(2000)
21 ILJ 129 (LAC) at para 36;
BMD
Knitting Mills (Pty) Ltd v SACTWU
[2001]
7 BLLR 705
(LAC) at para 19 and
CWIU
and Others v Algorax (Pty) Ltd
[2003]
11 BLLR 1081
(LAC).
[13]
[1999]
10 BLLR 1005
(LAC) at para 43.
[14]
(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.’
[15]
Case
no CA13/2002 at para 23.
[16]
(2018)
39 ILJ 523 (CC);
[2018] 4 BLLR 323
(CC) at para 24.