About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2019
>>
[2019] ZALCJHB 81
|
|
Sampson v Truvelo Manufacturers (Pty) Ltd (J 1483/17) [2019] ZALCJHB 81 (18 April 2019)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: J 1483/17
In
the matter between:
MARK
ANTHONY SAMPSON
Applicant
And
TRUVELO
MANUFACTURERS (PTY) LTD
Respondent
Heard:
8 – 9 November 2018
Submissions:
28 November 2018
Delivered:
18 April
2019
Summary:
Section 189A is applicable - no jurisdiction to deal with procedural
challenge.
Dismissal
for operational requirements – retrenchment was not
operationally justifiable on rational grounds – selection
criteria not applied fairly – no proper consideration of
alternatives.
JUDGMENT
NKUTHA-NKONTWANA.
J
Introduction
[1]
The
applicant, Mr Mark Anthony Sampson, was employed by the respondent,
Truvelo Manufacturing (Pty) Ltd, as a Gunsmith. He was dismissed
on
account of the respondent’s operational requirements. In this
action, the applicant is challenging the procedural and
substantive
fairness of his dismissal, asserting that it was not effected in
accordance with section 189 of the Labour Relations
Act
[1]
(LRA). The respondent disputes this and maintains that the dismissal
was fair in all respects.
Background
facts
[2]
The facts in this matter are
mostly common cause. The respondent is a family business that has
been trading since 1974. At the time
of the applicant’s
retrenchment, it had 53 permanent employees. The business consists of
Electronic and Armoury Divisions.
The Electronic Division specialises
in the design, development, manufacturing and marketing of speed
enforcement equipment locally
and internationally; while the Armoury
Division specialises in design, development, manufacturing and
marketing of precision refiles
commonly known as sniper guns.
[3]
The
applicant commenced his employment with the respondent on 2 April
2007 on fixed term basis in the Armoury Division. On 1 October
2007,
he was appointed to a permanent position of an Assistant Gunsmith. On
1 September 2010, he was certified as a Gunsmith by
the Department of
Labour in terms of the Manpower Training Act
[2]
read with the Skills Development Act
[3]
.
[4]
According
to the applicant’s undisputed evidence, he was issued with a
competency certificate to conduct business as a Gunsmith
in terms of
section 10 of the Firearms Control Act
[4]
for the period between 26 September 2012 to 25 September 2017. The
respondent utilised the applicant as a fit and proper individual
legally responsible for its operations as the gun manufacturing
entity in terms of the Firearms Control Act for the period between
24
April 2014 to 20 May 2016. Thereafter, the applicant refused to
perform this responsibility and the respondent has since utilised
the
services of a contracted Gunsmith.
[5]
On 27 March 2017, the respondent
commenced a retrenchment process by calling a meeting with its
employees in the Armoury Division.
It was in that meeting where all
the employees in the Armoury Division were issued with a section
189(3) of the LRA notice. Mr
Gebert, the respondent’s Managing
Director, explained to the employees the reason for the retrenchment
as being the negative
growth in the Armoury Division order book due
to the pricing that was non-competitive in the international markets
and as a result
there was little or no interest. The local commercial
and military markets also showed little interest due to economic
constraints,
so he further explained. The employees were requested to
suggest alternatives to retrenchment by 3 April 2017 and the
respondent
had contemplated to conclude the process by the end of
April 2017.
[6]
Mr Gebert testified that the respondent
had considered retrenchments in 2015 but did not proceed with the
process at that time.
However, at the beginning of 2017 the
respondent resolved to proceed with the retrenchments as it became
clear that the profits
which were generated by the Electronics
Division were drained by the costs and overheads in the Armoury
Division because of cross
funding.
[7]
On 6 April 2017, a second meeting was
held with all the employees in the Armoury Division. It is common
cause that the meeting was
very brief and was facilitated by the
respondent’s attorney, Ms Isa Voster from Stegmanns
Incorporated Attorneys (Stegmanns).
Stegmanns was briefed to assist
the respondent with the section 189 process. The employees were
informed that no one came forth
with alternative suggestions to
retrenchment as requested. Not so long after that meeting, the
applicant was called to a meeting
with Ms Dekker, the respondent’s
Financial and HR Director. It was in that meeting that he was
informed for the first time
that he had been selected for
retrenchment and was issued with the termination letter.
Issues
to be decided
[8]
The issues that I must decide are:
8.1
Whether the respondent had a
bona fide
operational rationale
to retrench the employees and in particular the applicant;
8.2
Whether the retrenchment of the applicant was substantively fair;
8.3
Whether the respondent followed a fair procedure in terminating the
applicant’s services;
and
[9]
If the Court finds that the termination of the applicant was indeed
unfair, whether
the applicant is entitled to compensation, and if so,
the amount of compensation to be awarded.
Whether
the respondent had a
bona fide
operational
rationale to retrench the employees and in particular the applicant
[10]
Mr Gebert testified that the respondent had been contemplating
retrenchments since 2015 and the main
driver was cost saving. In this
regard, he relied on the Management Accounts compiled for the period
between 2013 and 2017 to show
that the Armoury Division experienced
losses since 2013. He was adamant that the biggest contributor to the
losses was salaries.
[11]
A close inspection of the figures contained in the Managements
Accounts shows that the losses were
on a downward spiral from R13,6
million in 2013 to R1,4 m in 2016 and R2,8m in 2017. By the same
token, the turnover also grew
significantly. Contrary to Mr Gebert’s
explanation, these figures clearly show that there was a growth in
the Armoury Division’s
order book during the period under
review as correctly submitted by the applicant.
[12]
In fact, the applicant testified that the respondent secured the
biggest order in 2016 and that was
confirmed by Mr Gebert during the
year end Christmas party. Mr Gebert conceded that this order was
received at the end of 2016
but was only finalised after the
retrenchment of the applicant. Even if this order was only effected
after the retrenchments, in
my view, the mere fact that it was
secured in 2016 and was still being serviced to date put to question
the rationality of the
retrenchments.
[13]
It is also strange that, whilst the respondent had been contemplating
retrenchments as early as 2015,
the very same year it commenced with
an international recruitment drive. Mr Gebert testified that he went
on a skill hunt abroad
and recruited Mr Simon Temmel (Mr Temmel), an
Austrian citizen. In the letter supporting Mr Temmel’s
application or a work
visa dated 30 July 2015, Mr Gebert asserts the
following:
‘
Truvelo
currently has 56 full-time employees and envisages increasing to 80
employees with our planned expansion programmes with
our products
being distributed across Africa, Europe, Far East, Middle East and
North America.
Truvelo’s
innovative technical and product development focus on a niche
markets, with a provision of backup and repairs, maintenance
and
calibration support, coupled with a total service excellence package
to customers, thereby placing the at a competitive advantage
within
the sector.’
[14]
Clearly, according to these representations, the respondent was not
only doing well, but was contemplating
expansion. When Mr Gebert was
confronted about the contradictions, his response was that he always
hoped that things will improve.
I am not convinced by Mr Gebert’s
explanation. Mr Temmel’s recruitment in September 2015
increased the operational
costs exponentially as his monthly salary
was almost R80 0000.00. As such, it is highly implausible that
retrenchments were ever
considered in 2015.
[15]
Similarly, in 2016 retrenchments could not have been on the cards as
the respondent further increased
operational costs by appointing Mr
Gebert’s son who had just qualified as a Gunsmith abroad and
was paid a monthly salary
of almost R70 000.00. The respondent
unashamedly paid the applicant a monthly salary of R16 261.88
despite him being
a qualified Gunsmith with 27 years’
experience. The applicant correctly submitted that the cumulative
effect of these appointments
is that the respondent increased its
operational cost by almost 2 million per annum, a figure that is very
close to the overall
losses the respondent incurred since their
appointments.
[16]
While I accept that employees with international exposure may be
sourced at a premium, in this instance
it is inconceivable that the
respondent could have drastically increased its costs when it was
contemplating retrenchments. Particularly,
since Mr Gebert conceded
that the applicant’s skills could not be faulted. Clearly, the
salaries of the two highly paid employees
ought to have been the
first consideration in an attempt to avoid retrenchments,
particularly, the applicant’s.
[17]
In the recent Constitutional Court judgement in
South
African Commercial, Catering and Allied Workers Union and Others
v
Woolworths (Pty) Limited,
[5]
the
test set out
in
SA
Clothing and Textile Workers Union and Others v Discreto - A Division
of Trump and Springbok Holdings
[6]
was
endorsed. In
Discreto
,
the Labour Appeal Court (LAC) held as follows:
‘
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)
[18]
In the present case, the respondent failed to meet the above
threshold. It failed to prove that the
applicant’s retrenchment
was operationally justifiable on rational grounds. Therefore, the
dismissal of the applicant is
substantively unfair.
Whether
the respondent applied the selection criteria in a fair manner
[19]
It is common cause that the applicant had longer service compared to
Mr Temmel and Mr Gebert’s
son. According to Mr Gebert,
Last-In-First-Out (LIFO) criterion was never considered at all
despite being referred to in the section
189(3) notice. Retention of
critical skills was the primary method of selection that was
effected.
[20]
The applicant testified that he was never informed that he had been
identified for retrenchment during the
two consultation meetings. The
selection criteria were never discussed during the meeting of 27
March 2017. Mr Gebert promised
to discuss the retention of skills
during the next meeting, a meeting that was held on 6 April 2017. It
is common cause that the
meeting of 6 April 2017 did not discuss any
of the skills set required for the position of a Gunsmith. The
applicant testified
that, as a result, he was not expecting to be
retrenched because he had long service and requisite skills as a
Gunsmith. It came
as a shock to him when he was issued with a
retrenchment letter, so he further testified.
[21]
Mr Gebert was adamant that the respondent was justified in retaining
his son and Mr Temmel as they both had
been trained and qualified
from Ferlach Institute in Austria, an internationally recognised
training institute for Gunsmiths. Even
though there is no equivalent
qualification in South Africa, Mr Gebert conceded that the applicant
had more experience than Mr
Temmel and his son. In fact, he also
conceded that these internationally qualified employees were assisted
by the applicant in
their activities.
[22]
The respondent submitted that the said qualification made their
skills, or at least their potential, more
critical for the Armoury
Division than the applicant’s skill set. It would seem that the
respondent had forgotten its obligations
in terms of Mr Temmel’s
general work visa approval. In the letter from the Immigration and
Civic Services in the South African
Embassy Austrian,
[7]
the following is stated:
‘
Dear Mr Temmel
Please be advised
that the Department of Home Affairs has waived certain requirements
of your general work permit which include:
[8]
·
A Certification from the Department of Labour.
·
Poof of qualification to be evaluated by SAQA.
However, you are required
to submit a confirmation from your prospective employer in South
Africa confirming the following:
·
That the company will ensure that it has a skills transfer plan in
place.
·
That training of South Africans will be a concerted effort and that
proof
will be available on request.
·
And that proof of jobs for South African citizens are available on
request.’
[23]
Clearly, the respondent had an obligation to ensure that the job
security of its South African employees
and citizens in general is
not jeopardised by the recruitment of Mr Temmel. In the event there
were skills gaps identified, the
training of local employees was
imperative.
[24]
In this instance, however, it would seem that the applicant’s
skills experience was superior to that
of Mr Temmel. It is common
cause that at some stage he was appointed as Head of Department with
employees reporting to him. The
applicant testified that he was not
only assisting Mr Temmel and Mr Gebert’s son in their jobs, he
also spent most of his
time fixing their mistakes. This evidence was
not disputed.
[25]
The respondent seemingly only considered the international
qualification as a selection criterion. However,
such a consideration
was never discussed with the applicant. Most importantly, the
international qualification in question was
never evaluated by SAQA
due to the exemption by the Department of Home Affairs. Therefore, Mr
Gerber’s testimony about its
superior worth as compared to the
applicant’s qualification is obviously subjective.
[26]
In my view, in instances where a company contemplates retrenchments
and has in its employ foreign employees,
the selection criteria must
be informed by the visa conditions of its foreign employees. In the
present case, it is clear that
Mr Temmel’s skills set was not
as critical as it was alleged and given the slow global appetite in
the area he was meant
to assist with, he was supposed to be released
in order to protect the applicant’s job as a South African
citizen.
[27]
It follows accordingly that the respondent failed to apply the
selection criteria fairly and that rendered
the dismissal of the
applicant substantively unfair.
Consideration
of alternative positions
[28]
The applicant’s alternative challenge is that the respondent
ought to have applied LIFO and bumped out the
employees who were less
senior from the positions he had identified. Both Mr Gebert and Ms
Dekker conceded that the alternative
positions were never considered
because they, firstly, thought that the applicant would not be
interested in lower positions; and
secondly, they were not aware that
he had the skills to perform other duties. This was disputed by the
applicant. He was adamant
that he could have accepted any alternative
position. Also, as a Gunsmith, he could perform almost all the
functions in his department,
a fact Mr Gerber was aware of.
[29]
It is clear that there was no proper consideration of alterative
positions in order to avoid the applicant’s
retracement. The
respondent ought to have been better advised of the applicable legal
requirements since it was assisted by a firm
of attorneys during the
retrenchment process.
[30]
It follows accordingly that the dismissal of the applicant was
substantively unfair because the respondent
failed to properly
consider alternatives to retrenchment.
Whether
the respondent followed a fair procedure in terminating the
applicant’s services
[31]
The applicant submitted that the respondent ought to have invoked the
provisions of section 189A of
the LRA as it had 53 employees in its
employ and contemplated to retrench 10 of them.
[32]
Section 189A provides:
‘
(1)
This section applies to employers employing more than 50 employees if
–
(a)
the employer contemplates dismissing by reason of the employer’s
operational requirements,
at least –
(i)
10 employees, if the employer employs up to 200 employees;
(ii)
20 employees, if the employer employs more than 200, but not more
than 300, employees;
(iii)
30 employees, if the employer employs more than 300, but not more
than 400,
employees;
(iv)
40 employees, if the employer employs more than 400, but not more
than 500,
employees; or
(v)
50 employees, if the employer employs more than 500 employees; or
(b)
the number of employees that the employer contemplates dismissing
together with
the number of employees that have been dismissed by
reason of the employer’s operational requirements in the 12
months prior
to the employer issuing a notice in terms of section
189(3), is equal to or exceeds the relevant number specified in
paragraph
(a).
…
(13)
If an employer does not comply with a fair procedure, a consulting
party
may approach the Labour Court by way of an application for an
order –
(a)
compelling the employer to comply with a fair procedure;
(b)
interdicting or restraining the employer from dismissing an employee
prior to complying
with a fair procedure;
(c)
directing the employer to reinstate an employee until it has complied
with a fair
procedure;
(d)
make an award of compensation, if an order in terms of paragraphs (a)
to (c) is not
appropriate.
…
(18)
The Labour Court may not adjudicate a dispute about
the procedural
fairness of a dismissal based on the employer’s operational
requirements in any dispute referred to it in
terms of section
191(5)(b)(ii).’
[33]
Indeed, section 189A is applicable and the procedural challenge ought
to have been dealt with in accordance
with section 189A(13). As such,
in terms of section 189A(18), this Court lacks jurisdiction to deal
with the procedural fairness.
Conclusion
[34
In all the circumstances, I am satisfied
that the applicant’s retrenchment was substantively
unfair. The
respondent failed to prove that the applicant’s retrenchment
was operationally justifiable on rational grounds;
or that it fairly
applied the selection criteria; or that it properly considered
alternatives to retrenchments.
Remedy
[35]
The applicant is not interested in reinstatement.
In
determining what is just and equitable compensation that can be
awarded under s194(1) of the LRA
, I have considered the
following:
35.1
There was no business rationale for the applicant’s
retrenchment;
35.2
The respondent had vacant positions after the applicant’s
retrenchment but none was offered to him;
35.3
The applicant has not secured employment despite his active search;
and
35.4
The
respondent failed to fulfil its obligations in terms of the Mr
Temmel’s general work visa which mainly enjoined it to
train
and protect its South African employees.
[9]
[36]
To my mind, it is, therefore, just and equitable to award the
applicant compensation equivalent to 12 months’ salary.
Costs
[37] The applicant is an individual litigant who had to incur
legal costs in order to vindicate his rights. Even though it
is
trite that in this Court costs do not follow the result, I am
convinced that this case presents an exception.
[38]
In the circumstances, I make the following order:
Order
1. The
dismissal of the applicant, Mr Mark Anthony Sampson, is substantively
unfair.
2.
The respondent, Truvelo Manufactures (Pty) Ltd, is to pay the
applicant, Mr Mark Anthony Sampson, compensation
equivalent to 12
months’ salary within two weeks from the date of this order.
3. The
respondent, Truvelo Manufactures (Pty) Ltd, is ordered to pay the
costs of suit.
___________________
P
Nkutha-Nkontwana
Judge
of the Labour Court of South Africa
Appearances
For
the applicant: Mr DJ
Coetsee
From: Dirk
Coetsee Attorneys
For
the applicant: Advocate DJ
Withaar
Instructed
by: Stegmanns
Inc.
[1]
Act 66 of 1995 as amended.
[2]
Act
56
of 1981 which has since been repealed.
[3]
Act 97 of 1998 as amended.
[4]
Act
60
of 2000 as amended.
[5]
(CCT275/17)
[2018] ZACC 44
at para 25.
[6]
See:
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
.
[7]
See page 118 of the bundle of documents.
[8]
In terms of
Immigration Act 13 of 2002
Regulation 18(3)
, an
application for a general work visa must be accompanied by-
‘
(a)
a certificate from the Department of Labour confirming that-
(i)
despite a diligent search, the prospective employer has been unable
to find a
suitable
citizen or permanent resident with qualifications or skills and
experience
equivalent
to those of the applicant;
(ii)
the applicant has qualifications or proven skills and experience in
line with the
job
offer;
(iii)
the salary and benefits of the applicant are not inferior to the
average salary and
benefits
of citizens or permanent residents occupying similar positions in
the
Republic;
and
(iv)
the contract of employment stipulating the conditions of employment
and signed
by
both the employer and the applicant is in line with the labour
standards in the
Republic
and is made conditional upon the general work visa being approved;
(b)
proof of qualifications evaluated by SAQA and translated by a sworn
translator into
one
of the official languages of the Republic…’
[9]
ARB
Electrical Wholesalers (Pty) Ltd v Hibbert
[2015] ZALAC 34
;
[2015] 11 BLLR 1081
(LAC); (2015) 36 ILJ 2989 (LAC)
at paras 23 to 25.