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[2019] ZALCJHB 184
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National Union of Metalworkers of South Africa and Others v Bravo Span 119 CC (JS211/17) [2019] ZALCJHB 184 (30 July 2019)
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
Not reportable
Case no: JS 211/17
In the matter between:
NATIONAL UNION OF
METALWORKERS
OF
SOUTH AFRICA
First
Applicant
COOL
NTULI AND 35 OTHERS
Second to Further Applicants
and
BRAVO
SPAN 119 CC
Respondent
Heard: 23
May 2019
Delivered: 30 July 2019
JUDGMENT
NKUTHA-NKONTWANA, J
Introduction
[1]
In
this matter, the first applicant, National Union of Metalworkers of
South Africa (NUMSA), referred a dispute pertaining to an
unfair
dismissal based on operational requirements in terms of section 189
of the Labour Relation Act
[1]
(LRA), on behalf of its members, the second to further applicants
(applicant employees). The applicants are challenging the procedural
and substantive fairness of the retrenchment.
[2]
The respondent, Bravo Span 119 CC (Bravo
Span) is defending its decision to retrench the applicant employees.
Factual background
[3]
The applicant employees commenced their
employment with Bravo Span, a construction company, in May 2015.
However, it is common cause
that they were initially employed by a
company called Hilo Trading (Pty) Ltd (Hilo Trading) at different
intervals respectively.
[4]
On 7 November 2016, Bravo span issued NUMSA
with a notice in terms of section 189(3) of the LRA wherein it
communicated its intention
to embark on a retrenchment process. The
reason given for the contemplated retrenchment was that the
construction contract between
Bravo Span and Four Arrows, its main
developer, was ending at the end of November 2016.
[5]
At that stage Bravo Span indicated that it
intended retrenching all its employees. On 10 November 2016, Bravo
Span proposed to hold
a consultation meeting with NUMSA on 16
November 2016. Indeed, the first consultation meeting sat on 16
November 2016.
[6]
During the consultation meeting of 16
November 2016, NUMSA officials requested the following information:
6.1 A
list of all Bravo Span employees, including dates of engagement,
rates of pay and positions;
6.2 The
names of sub-contractors used by Bravo Span, including the list of
their employees by position and department.
[7]
The above request for information was
confirmed by an electronic mail (email) dated 18 November 2016. Bravo
Span responded by an
email dated 21 November 2016 with a document
attached thereto containing requested information pertaining to its
employees’
rate of pay, position and date of commencement.
Also, the applicants were given the names of Bravo Span
sub-contractors.
[8]
The next consultation meeting was held on 2
December 2016. What transpired during this meeting is in dispute.
However, it is common
cause that NUMSA demanded the outstanding
information, being the list of Bravo Span sub-contractors’
employees and their
positions. Bravo Span was adamant that the
information requested was irrelevant. The meeting was abandoned
because it degenerated
into a swearing brawl.
[9]
There was no further consultation between
the parties. On 5 December 2016, Bravo Span issued the applicant
employees with the retrenchment
letters and stated that they would be
paid as follows:
9.1
Payment up to and including 5 December
2016;
9.2
Notice Pay;
9.3
Statutory leave pay outstanding; and
9.4
Severance pay of one week for every
completed year of service.
[10]
It is common cause that each applicant
employees received payment of one week for each completed year of
service based on the calculation
that they had been in the employ of
Bravo Span as from May 2015.
[11]
It is also common cause that the document
headed Bravo Span Employees attached to the statement of case
correctly reflects the dates
of engagement of the applicant employees
with Hilo Trading. Even though Bravo Span disputed the details of Mr
Moses Mngomezulu,
applicant employee number 11, the applicants
successfully proved that he had always been in the employ of Hilo
Trading.
Issues for
determination
[12]
The Court is called upon to determine the
following issues:
12.1
Whether there was a need to retrench;
12.2
Whether Bravo Span supplied all the
relevant information to the applicants for purposes of a meaningful
consultation;
12.3
Whether there was a meaningful
consultation; and
12.4
Whether the applicant employees’
severance packages ought to have included the period of employment
under Hilo Trading.
Was there a need for
retrenchment?
[13]
Bravo Span led uncontested evidence that
phase 1 of the construction contract with Four Arrows was about to
come to an end. Mr Gerhard
Knoetze (Mr Knoetze), Bravo Span’s
Managing Member, testified that Four Arrows was not happy with Bravo
Span’s performance
and put them
in
mora
whilst reserving its right to
accept the repudiation and terminate the contract. That contract was
completed and as a result, Bravo
Span retrenched all its employees as
of 15 December 2016. Mr Knoetze further testified that Bravo Span
signed a new contract in
the middle of January 2017. He did offer
employment to some of the retrenched employees, particularly Mr
Ntuli. However, it was
on fixed term contract basis. The offer to
re-employ all of the applicant employees on fixed term contract basis
still stands because
they were good employees, so Mr Knoetze further
testified.
[14]
The applicants, on the other hand, dispute
the reason for the retrenchment and state in the pre-trial minute
that there was no reason
for retrenchment because soon thereafter,
Bravo Span employed new employees. Mr Cool Ntuli (Mr Ntuli),
applicant employee number
four and NUMSA shop-steward at that time,
testified that there were employees that remained to complete the
work and are still
employed to date. However, he conceded during
cross-examination that all Bravo Span employees were served with
retrenchment letters
on 5 December 2016. Also, Mr Abraham Makame (Mr
Makame), employee applicant number six and also a NUMSA shop-steward
at that time,
conceded that he had no detailed knowledge of the
circumstances that led to the re-employment of some of the retrenched
employees.
[15]
It is clear that the applicants’
impugn on the rationale for the retrenchment lacks merit. Mr Makame
testified that even though
Phase 1 Project came to an end there was
Phase 2 that was about to commence. Bravo Span’s evidence that
Phase 1 ended on
15 December 2016 and that the new contract was only
sourced in the middle of January 2017 was never challenged. As such,
subsequent
to 15 December 2016, there was no work for all Bravo
Span’s employees, including the sub-contractors.
[16]
It
is trite that the determination of the commercial rationality of the
decision to retrench entails an enquiry ‘as to whether
a
reasonable
basis exists on which the decision, including the proposed manner, to
dismiss for operational requirements is predicated’.
[2]
[17]
In the present case, it is clear that Bravo Span was
confronted with operational challenges at the end of the building
project with
Four Arrows and had to rationalise its business and all
its employees in that project were affected. In my view, the decision
to
retrench the applicant employees was operationally justifiable.
Was there was a
meaningful consultation?
[18]
The applicants’ second peg to its
case is that there was no meaningful consultation. It is common cause
that only two consultation
meetings took place. On 16 November 2016,
NUMSA requested information for purpose of further consultation. Mr
Knoetze testified
that all the relevant information was accordingly
provided, which was all its employees’ details in relation to
pay rates,
date of engagement and positions they held; and the names
of the subcontractors. However, it is common cause that the details
of
the sub-contractors’ employees’ rates of pay and date
of commencement was never provided. That became the source of
the
quarrel that ensued between the parties during the second
consultation meeting on 2 December 2016. It is alleged that the
F-word was used but both parties are pointing fingers at each other
as to who started the quarrel and used the F-word.
[19]
The consultation meeting of 2 December 2016
was abandoned as parties could not agree on the relevance of the
outstanding information.
[20]
Mr Knoetze testified that Bravo Span was
within its rights to proceed with the retrenchments on 5 December
2016 as NUMSA had refused
to be consulted as they insisted on being
provided with the information that was irrelevant and was not in the
possession of Bravo
Span. However, NUMSA was adamant that the
information relating to the subcontractors’ employees’
contracts of employment
was relevant because they wanted to compare
their years of service in order to meaningfully consult on the
selection criteria.
[21]
In
Association
of
Mineworkers and Construction Union (AMCU) and Others v Shanduka Coal
(Pty) Ltd
,
[3]
this Court as per Lagrange J, pertinently stated:
‘
[27]
It is well established that the consultation process envisaged under
section 189 is intended to be
a joint goal orientated problem solving
process. It is one in which the parties ought to try and reach a
common understanding on
the need for and extent of any retrenchments.
In examining the need for retrenchment the parties must, as a matter
of logic, and
in terms of sections 189(2)(a)(i) and (ii), explore if
there are ways of addressing the operational need without shedding
jobs,
or at least by minimising job losses. If job losses cannot
reasonably be avoided there is a need to look at what can be done to
ameliorate the position of those who will be affected and how they
will be selected for retrenchment. Ideally, the logical progression
of discussions would follow the sequence of issues set out in section
189(2). However, discussion on these issues often proceed
in tandem,
so that selection criteria might be discussed even though parties
have not yet agreed on the need or extent of any retrenchments.
Nothing prevents this happening but to avoid misunderstandings
parties would be well advised at each round of consultations to
review what has been agreed, what is still unresolved but requiring
further consultation, and what is unresolved but where neither
party
has anything new to suggest which might break the impasse on an
issue.
[28]
Because it is supposed to be a problem
solving process, the process is not advanced if it consists
of
mechanically running through a checklist of items without any
engagement between the parties.
Likewise,
the process is not advanced if obstacles are constantly placed in the
way of consultation on the substantive issues taking
place
.
(Emphasis added)
[22]
It was further stated that:
‘
[34]
If the consultation process did not achieve its purpose, the question
that needs to be asked is whether
the employer can be blamed if it
was not.’
[4]
[23]
In the present case, Bravo Span was
categorical in the section 189(3) notice to NUMSA that all its
employees’ would be affected.
It was not disputed that the
total number of its employees was 52 as opposed to 32 as stated in
the section 189(3) notice. As such,
I agree with Bravo Span that
there could not have been a discussion of the selection criteria in
the circumstances. In my view,
it was ill-conceived of NUMSA to
insist on the disclosure of information that related to Bravo Span
sub-contractors’ employees
when they did not challenge the fact
that the building project was concluded on 15 December 2016. In
essence, it stands to reason
that even the sub-contractors and their
employees were affected as there was no work to be done after 15
December 2016. Clearly,
that information was irrelevant as correctly
contended Bravo Span.
[24]
Even though NUMSA was insistent in its
request for the information pertaining to the sub-contractors’
employees, both parties
could have handled the consultation meeting
of 2 December 2016 civilly. Both parties are to be blamed for the
degeneration of the
meeting and its abandonment. It is not clear to
me whether a meaningful consultation could have been pursued
subsequently as NUMSA
was not willing to budge in its demand for the
disclosure of information pertaining to the sub-contractors’
employees. In
fact, both Messrs Ntuli and Makame testified that it
would have been difficult to continue with the consultation after the
meeting
of 2 December 2016.
[25]
Since Bravo Span was not the only party to
be blamed for the collapsed consultation process, it cannot be said
that the retrenchment
process was procedurally unfair.
Severance pay
[26]
The applicants’ third peg of their
case is that Bravo Span incorrectly calculated the severance pay and
ought to have included
the period of employment under the Hilo
Trading. Mr Knoetze testified that he was employed by Hilo Trading as
a Foreman. Hilo Trading
was liquidated in 2015 and he was never paid
any severance pay by Hilo trading. He founded Bravo Span in 2015 and
decided to employ
Hilo Trading employees, including the applicant
employees. There was no connection between Bravo Span and Hilo
Trading.
[27]
Mr Ntuli, conversely, testified that the
applicant employees knew nothing about the liquidation of Hilo
Trading. However, he readily
conceded that they were made aware of
the liquidation of Hilo Trading for the first time during the
proceedings at the Commission
for Conciliation Mediation and
Arbitration (CCMA). Strangely, he retracted this evidence, asserting
that he made a mistake as they
were never informed of the liquidation
of Hilo Trading. This evidence was corroborated by Mr Makame.
[28]
Even though Mr Ntuli retracted his evidence
that they were informed for the first time at the CCMA that Hilo
trading had been liquidated,
I understood that evidence to mean that
they were not aware of any liquidation before those proceedings.
Nothing much turns on
his retraction as the applicant employees were
adamant that they were never made aware that Hilo Trading was being
liquidated.
In fact, Mr Makame testified that nothing changed after
Bravo Spsn took over other than the name of the company. The
applicant
employees knew Mr Knoetze to be their employer as he was
the one who sourced their services when they were initially employed
by
Hilo Trading.
[29]
Bravo
Span did not submit any proof that Hilo trading was indeed liquidated
in a form of a final court order or any other form of
documentary
evidence. In the absence of any evidence that Hilo Trading was indeed
liquidated, this Court cannot accept Mr Knoetze’s
say-so. I
accordingly accept the applicants’ evidence that they were
taken over by Bravo Span which, in essence, automatically
stepped
into the shoes of Hilo Trading in accordance with section 197
[5]
of LRA. Hilo Trading business remained the same but in different
hands. Mr Knoetze testified that Bravo Span took over Hilo Trading’s
employees and carried on with the same business. Also, it would seem
that the customers are the same. With all these factors present,
Hilo
Trading’s business was transferred to Bravo Span as a going
concern in terms of section 197(2) of the LRA.
[6]
[30]
Even
if the liquidation order had been granted, section 197A
[7]
of the LRA would apply. Section 197A(2)(d) provides that ‘
the
transfer does not interrupt the employee’s continuity of
employment and the employee’s contract of employment continues
with the new employer as if with the old employer’.
[31]
It follows that the applicant employees’
continuity of employment was never interrupted by the transfer of the
business in
terms of section 197(2) or alternatively in terms of
section 197A. Bravo Span is clearly responsible for the severance pay
for
the years when the applicant employees were still in the employ
of Hilo Trading.
Conclusion
[32]
In the circumstances, I am satisfied that
the dismissal of the applicant employees was both substantively and
procedurally fair.
Bravo Span, however, must pay the applicant
employees severance pay for the completed years of service whilst
they were still in
the employ Hilo Trading as reflected in the
document headed Bravo Span Employees attached to the statement of
case.
Costs
[33]
I am disinclined to award costs in the
light of the circumstances of this case. In any event, the parties
are partially successful.
[34]
In the circumstances, I make the following
order:
Order
1.
The dismissal of the second to
further applicants (applicant employees) is substantively and
procedurally fair.
2.
Bravo Span (Pty) Ltd shall pay the
applicant employees severance pay for the completed years of service
whilst they were still in
the employ of Hilo Trading (Pty) Ltd.
3.
There is no order as to costs.
_________________
P Nkutha-Nkontwana
Judge
of the Labour Court of South Africa
Appearances:
For
the Applicant:
N Masutha (Union Official)
For
the Respondent:
A.P Brandmullers from Brandmullers Attorneys
[1]
Act 66 of 1995 as amended.
[2]
See:
BMD
Knitting Mills (Pty) Ltd v SACTWU
[2001]
7 BLLR 705
(LAC) at para 19; see also
CWIU
and Others v Algrorax (Pty) Ltd
[2003] 11 BLLR 1081
(LAC) at paras 69 to 70.
[3]
[2013] JOL 29787
(LC) at paras 29 to 28.
[4]
Supra
at para 34.
[5]
‘197. Transfer of contract of employment
(1)
In this section and in section 197A –
(a)
‘business’ includes the whole or a
part of any business, trade, undertaking or service; and
(b)
‘transfer’ means the transfer of a business by one
employer (‘the old employer’)
to another employer (‘the
new employer’) as a going concern.
(2)
If a transfer of a business takes
place, unless otherwise agreed in terms of subsection
(6) –
(a)
the new employer is automatically substituted in the place of the
old employer in respect of all contracts
of employment in existence
immediately before the date of transfer;
(b)
all the rights and obligations between the old
employer and an employee at the time of the transfer continue
in
force as if they had been rights and obligations between the new
employer and the employee;
(c)
anything done before the transfer by or in relation to the old
employer, including the dismissal
of an employee or the commission
of an unfair labour practice or act of unfair discrimination, is
considered to have been done
by or in relation to the new employer;
and
(d)
the transfer does not interrupt an employee’s
continuity of employment, and an employee’s contract
of
employment continues with the new employer as if with the old
employer.’
[6]
See
National
Education Health and Allied Works Union v University of Cape Town &
Others
[2002]
ZACC 27
;
2003 (3) SA 1
(CC);
2003 (2) BCLR 154
(CC). See also
Aviation
Union of South Africa & Another v South African Airways (Pty)
Ltd & Others
2012
(1) SA 321
(CC);
2012 (2) BCLR 117
(CC);
[2012] 3 BLLR 211
(CC);
(2011) 32 ILJ 2861 (CC) at para 44.
[7]
‘197A Transfer of contract of employment in
circumstances of insolvency
(1)
This section applies to the transfer of a business –
(a)
if the old employer is insolvent; or
(b)
if a scheme of arrangement or compromise is being entered into to
avoid winding up sequestration
for reasons of insolvency.
(2)
Despite the
Insolvency Act, 1936
(Act No. 24 of 1936), if a
transfer of a business takes place in the circumstances contemplated
in subsection (1), unless otherwise
agreed in terms of section
197(6) –
(a)
the new employer is automatically substituted in the place of the
old employer in all
contracts of employment in existence immediately
before the old employer’s provisional winding up or
sequestration;
(b)
all the rights and obligations between the old employer and each
employee at the time
of the transfer remain rights and obligations
between the old employer and each employee;
(c)
anything done before the transfer by the old employer in respect of
each employee
is considered to have been done by the old employer;
(d)
the transfer does not interrupt the employee’s continuity of
employment and the
employee’s contract of employment continues
with the new employer as if with the old employer.
(3)
Section 197(3), (4), (5) and (10) applies to a transfer in terms of
this section any reference
to an agreement in that section must be
read as a reference to an agreement contemplated in section 197(6).
(4)
Section 197(5) applies to a collective agreement or arbitration
binding on the employer
immediately before the employer’s
provisional winding up or sequestration.
(5)
Section 197(7), (8) and (9) does not apply to a transfer in
accordance with this section.’