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[2020] ZALCJHB 70
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National Union of Metal Workers of South Africa obo Members and Another v South African Airways (SOC) Limited (In business rescue) and Others (J424/20) [2020] ZALCJHB 70; 2020 (7) BCLR 888 (LC) (8 May 2020)
IN
THE LABOUR COURT OF SOUTH AFRICA
(HELD
AT JOHANNESBURG)
Case
no: J424/20
In
the matter between
NATIONAL
UNION OF METALWORKERS
OF
SOUTH AFRICA obo MEMBERS
First
Applicant
SOUTH
AFRICAN CABIN CREW
ASSOCIATION
obo MEMBERS
Second
Applicant
and
SOUTH
AFRICAN AIRWAYS (SOC)
LIMITED
(In Business Rescue)
First
Respondent
LES
MATUSON
N.O
Second
Respondent
SIVIWE
DONGWANA
N.O
Third
Respondent
AVIATION
UNION OF SOUTH AFRICA
Fourth
Respondent
NATIONAL
TRANSPORT MOVEMENT
Fifth
Respondent
SOUTH
AFRICAN AIRLINE PILOTS ASSOCIATION
Sixth Respondent
SOUTH
AFRICAN TRANSPORT AND ALLIED TRADE UNION
Seventh
Respondent
SOLIDARITY
Eighth
Respondent
NON-UNIONISED
EMPLOYEES
Ninth Respondent
COMMISSION
FOR CONCILIATION, MEDIATION AND ARBITRATION
Tenth
Respondent
Heard:
7 May 2020 via Zoom
Delivered:
This judgment is handed electronically by circulation to the parties'
legal representatives by email, and release to
the court's library
and SAFLII. The date and time for hand-down is deemed to be 14h00 on
8 May 2020.
Summary:
Section 189A (13) of the LRA empowers this court to intervene in
retrenchment processes and make orders to ensure that
any
retrenchment ultimately meets the requirements of fair procedure. The
applicant unions rely on s 136 (1) of the Companies Act
to contend
that the consultation process commenced by the business rescue
practitioners at SAA on 9 March 2020 is procedurally
unfair because
they issued an invitation to consult in terms of s 189 (3) of the LRA
before the presentation of a business rescue
plan. It is common cause
that no business rescue plan has been presented. The crisp issue is
whether s 136 (1) (b) of the Companies
Act permits a business rescue
practitioner to retrench employees only as part of a business rescue
plan and on presentation of
that plan, or whether a retrenchment
process may be initiated in the absence of a business rescue plan.
Held: that on a proper
interpretation of s 136 (1), a business rescue
practitioner may initiate a retrenchment process only once a business
rescue plan
that contemplates retrenchments has at least been
presented. In the absence of a business rescue plan, the issuing of
notices commencing
a consultation process over proposed retrenchments
is procedurally unfair.
JUDGMENT
VAN
NIEKERK J
Introduction
[1]
This application raises a question that
can be simply stated, but which is less easily capable of
determination. The issue is this
- can a business rescue
practitioner appointed under the Companies Act dismiss employees for
reasons related to operational
requirements before a business rescue
plan that contemplates retrenchments has been prepared and presented?
The answer to that
question depends on the meaning of a section in
the Companies Act that extends protection to workers during business
rescue proceedings.
[2]
The first respondent (SAA) and the
second and third respondents (the business rescue practitioners)
submit that there is no bar
to them retrenching SAA employees prior
to the preparation of a business plan; the applicants (the unions)
contend that any notice
of commencement of consultations in terms of
s 189 (3) of the LRA is invalid unless and until a business plan has
been presented;
alternatively, that the issuing of any notice in the
absence of a business plan is unfair. The unions seek orders to the
effect
that SAA and the business rescue practitioners withdraw the s
189 (3) notices and suspend the current consultation process until
they have prepared and presented a business rescue plan. They also
seek an order directing SAA and the business rescue practitioners
not
to terminate the services of any SAA employee in terms of s 189 of
the Labour Relations Act (LRA).
Jurisdiction
[3]
To the extent that the unions seek to
haves 189 (3) notices declared unlawful and invalid because they
contravene s 136 (1) of the
Companies Act, SAA and the business
rescue practitioners submit that this court has no jurisdiction to
consider the lawfulness
or otherwise of a party's compliance with the
provisions of the Companies Act. As a matter of law, that is correct
- generally
speaking, this court's jurisdiction is limited to
disputes arising within the scope of the LRA or some other statute
that specifically
confers jurisdiction on the court, usually in
relation to disputes between employer and employee. In any event, as
the Constitutional
Court held in
Steenkamp
and Others v Edcon Ltd
(2016) 37
ILJ
564 (CC)), in claims brought under
the LRA, this court's jurisdiction is concerned with the fairness of
employer conduct, not its
validity.
[5]
Despite much having been said on this
issue in the papers before me, the dispute about jurisdiction was
resolved on the basis of
the unions' confirmation that the present
application was filed in terms of S 189A (13) of the LRA, and that
the basis for the
relief sought was that the issuing of a notice of
invitation to consult in the present circumstances was unfair.
[6]
Section 189A (13) reads as follows:
(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.
The
preamble to s 189A (13) makes clear that the court's intervention is
limited to instances of a refusal or failure by the consulting
employer to comply with a fair procedure. What the subsection seeks
to accomplish is a real-time supervisory role by this court
over the
consultation process, with powers to intervene if and when necessary,
and to craft a remedy designed to address any procedural
shortcoming
that is found to exist.
[7]
The only question that the court need
determine, therefore, is whether the unions are entitled to relief in
terms of s 189A (13);
in other words, whether they have established
that the retrenchment process on which SM has embarked is
procedurally unfair.
[8]
Section 189A (14) provides that the
court may make any appropriate order referred to in s 158(1) (a) of
the LRA. That section confers
a broad range of powers on the court,
including the right to grant urgent interim orders, interdicts and
declaratory orders. In
the present instance, the unions have narrowed
the scope of the relief that they
seek
to an order that the issuing of the
s 189 (3) notice be declared unfair and set aside.
Factual
background
[9]
The future looks bleak for SM , to say
the least. Matters have reached a point where the business rescue
practitioners now say that
only two options remain
-
a winding-down process that involves the termination of employment of
employees by agreement, or in the absence of agreement liquidation.
It is not disputed SM has been under severe financial stress for a
number of years, a consequence that the unions say is the result
of
incompetent and corrupt management. This is not disputed by SM
or the business rescue practitioners, save that they
record that the
behaviour of the trade unions, including the applicants, has in
addition to whatever other challenges may have
befallen SAA ,
exacerbated SA's financial woes.
[10]
In recent years, SM has survived only because its sole shareholder,
the government of South Africa,
has injected vast quantities of cash
into the business. After various attempts at a restructuring of the
business and the initiation
of a retrenchment process in late 2019,
on 5 December 2019, SAA was placed under voluntary business rescue.
The second and third
respondents were appointed as business rescue
practitioners. After their appointment, they discovered that SAA was
haemorrhaging
money and took a number of steps to reduce costs,
including the closure of routes and the reduction of the number of
flights.
[11]
On 6 February 2020, the business rescue
practitioners decided to reduce flights and services on several
international, regional
and domestic routes. This measure was
intended to conserve cash and extend the availability of funds during
the business rescue
period. At that stage, the intention was to
present a business rescue plan to creditors at the end of February
2020.
[12]
In mid-February 2020, the unions filed
an urgent application in this court, contending that the decision to
reduce flights and services
was null and void because the business
rescue practitioners had failed to comply with s 189 of the LRA and
in particular, because
they had failed to issue a notice of
invitation to consult as provided in subsection (3). The application
was dismissed. My colleague
Moshoana J held that although it was
clear on the papers before him that the business rescue practitioners
had accepted that job
loss was inevitable, they had not yet
contemplated dismissals. (The 'contemplation' of a dismissal triggers
the statutory requirement
to issue as 189 (3) notice.) In effect, the
court held that the application was premature. In coming to that
conclusion, the court
had particular regard to the fact that at that
stage, the business rescue practitioners had not yet presented a
business rescue
plan.
[13]
On
9 March 2020, the business rescue practitioners issued a notice of
invitation to consult over proposed retrenchments, commonly
referred
to as a 'section189(3) notice'. The effect of that notice, given the
scale of the proposed retrenchment and the size of
SAA's business,
was to trigger a 60-day period during which consultation should take
place. In terms of s 189A, an employer issuing
a s 189(3) notice in
these circumstances is precluded from issuing any notice of
termination of employment prior to the expiry
of the 60-day period.
In the present case, that period expires today, 8 May 2020. To avoid
confusion, on 13 March 2020, the business
rescue practitioners
withdrew the s 189(3) notices issued in November 2019 and confirmed
that the process initiated by the notice
issued on 9 March 2020
initiated a new and entirely different
consultation
process.
[14]
The business rescue practitioners state
that the circulation of the first draft of their business rescue plan
was scheduled to take
place during the week commencing 16 March 2020.
That intention was overtaken by the unanticipated and game-changing
event of the
Covid-19 pandemic. On 15 March 2020, the president
declared a national state of disaster in terms of the Disaster
Management Act.
Lockdowns, prohibitions on travel and restrictions on
movement resulted in flight cancellations, the grounding of aircraft
and
the closure of airports world-wide. In consequence, the business
rescue practitioners were required to assess the implications of
Covid-19 for SAA's business, and revisit the proposed restructuring
options that they had identified.
[15]
On 20 March 2020, the business rescue
practitioners requested and were granted a further extension to 29
May 2020 for the publication
of a business rescue plan.
[16]
In its s 189 (3) notice, SAA had agreed
to the appointment of a facilitator to manage the consultation
process. Facilitators were
provided by the CCMA in the form of two
senior commissioners. The first meeting was to have taken place on 20
March 2020, but did
not proceed on account of the size of the venue
and difficulties in applying social distancing measures. The meeting
was rescheduled
to 23 March 2020. The unions refused to participate
in the meeting, because among other objections, they refused to
consult via
videoconference.
[17]
On 23 March 20 20 , the unions addressed
correspondence to the business rescue practitioners in which the
unions recorded that they
were of the view that the consultation
process was premature as the business rescue practitioners had not
yet published a business
rescue plan. The correspondence also
contained a demand for information, which the business practitioners
were prepared to disclose
through a virtual data room and subject to
confidentiality undertakings. On the same day, bilateral meetings
were held between
the CCMA commissioners and each of the consultation
parties, on an individual basis. The unions attended these meetings
subject
to the reservation of their rights. A formal consultation
meeting was scheduled for 26 March 2020. The unions indicated that
they
would not be attending that consultation. Later that day, the
unions addressed correspondence to the CCMA commissioners objecting
to the consultation continuing at all during the course of the
national lockdown. They sought to proceed only after 16 April 2020,
being the date on which it was initially envisaged that the lockdown
would be lifted. The business rescue practitioners responded
by
stating that on account of SAA's precarious financial position, it
was essential that the consultation process continue, despite
the
lockdown. After the CCMA commissioners initially took the view that
facilitated consultations could not continue during the
lockdown, the
commissioners reconsidered their position and agreed to facilitate a
meeting to be held by way of video teleconference
on 1 April 2020. In
the interim, on 30 March 2020, the unions addressed correspondence to
the business rescue practitioners emphasising
that their position was
that in the absence of a business rescue plan, the s 189 process was
premature and that they would not
proceed with the process as there
had been no proper disclosure of information to them.
[18]
As matters transpired, NUMSA did not attend the plenary session held
on 1 April 2020. Facilitated consultation
sessions continued on 13
April 2020 14 April
2020,
20 April 2020 and 22 April 2020. The unions did not attend the
sessions and withdrew from the consultation process entirely.
[19]
On 23 April 2020, the business rescue practitioners communicated
their position to all affected
parties, including employees. That
communication records that following the notification from government
on 1O April 2020 that
no further funding would be provided or made
available to the business rescue practitioners to develop and
implement a business
rescue plan which would have contemplated a
restructuring of SAA to maximise the likelihood of the airline
continuing on a solvent
basis, or at a minimum on a care and
maintenance basis, until travel bans were lifted. The practitioners
had concluded that only
two options remained available to them. As I
have indicated, the first is that in the absence of further funding,
they could develop
a business rescue plan which secures a better
return for SAA's creditors than would result from its immediate
liquidation. This
option entailed a winding down process which would
envisage the termination of employment of employees by agreement
(with severance
packages being agreed) and a sales process being
undertaken that would ultimately result in a distribution of proceeds
to affected
parties. This option was sustainable provided that
agreement could be reached with employees. Secondly, in the absence
of any agreement
with employees, the business rescue practitioners
noted that they would be unable to continue with the business rescue
process
and would have to file an urgent application for an order
placing SAA in liquidation. The business rescue practitioners
recorded
that they had presented a draft collective agreement to all
unions and representatives of non-unionised employees on 17 April
2020
and advised them that agreement needed to be reached by 24 April
2020. The date for acceptance was later extended to 8 May 2020.
[20]
In the answering affidavit, the business rescue
practitioners
recorded the current state of affairs in the clearest terms:
The current
position is, therefore, that the business rescue practitioners are
unanimously of the view that there are only two options
communicated
on 23 April 2020 which can be pursued: the development of a plan
which results in a better return for affected persons
or a
liquidation. If employees accept the first option of a better return,
the BRP's will reflect this in the plan which we intend
to distribute
to the affected parties for consultation soon.
[21]
The final version of the collective
agreement records that it is unlikely that SAA's solvency would be
restored and that the parties
agree that the termination of
employment of employees, defined to mean all employees of the
company, will be terminated by mutual
agreement, on account of SAA's
operational requirements, with effect from 30 April 2020. The
agreement makes provision for a retrenchment
package, payable on
certain conditions relating to the assets being realised at a value
capable to cover the retrenchment packages.
[22]
In further developments over the weekend
prior to the hearing, on 3 May2020, the business rescue practitioners
addressed a letter
to all trade unions and non unionised
employee representatives recording that the Minister of Public
Enterprises had indicated
that he and the Department of Public
Enterprises were exploring funding options for SAA, including
discussions with unions starting
a new competitive South African
airline in future. The minister had requested the business rescue
practitioners to afford trade
unions and non unionised employee
representatives a further extension until 11 May 2020 to confirm
their acceptance of the
retrenchment agreement. The business rescue
practitioners agreed to grant a further extension until 10:00 hours
on 8 May 2020 but
reserved their rights to offer the retrenchment
agreement to employees for individual acceptance from 8 May 2020 to
11 May 2020.
They proposed that terminations of employment for
operational reasons (where agreements had not been reached
collectively or individually)
'may take place on or after 12 May
2020. In the event that funding is obtained from the shareholder that
would permit such process
to take place, individuals who have
collectively and individually accepted the termination and severance
provisions would have
their position safeguarded by the escape clause
so that there is no prejudice in doing so. The business rescue
practitioners stated
that the deadline of 11 May 2020 would be the
last day in which the retrenchment agreement remained open for
acceptance and no
further extensions would be likely.
[23]
An email was addressed to employees on 4
May 2020 in which they were advised of the status of the draft
collective agreement. The
email records that non-unionised management
representatives had accepted the agreement in principle and that
managers would be
signing in their individual capacities, where
applicable. The non-unionised non-management representatives
declined to
sign the agreement other
unions advised that they had been afforded
insufficient
time to consider the offer and obtain a mandate from
their members. The email records that the unions party to the present
case
had refused to engage on the terms of the
agreement and had filed the present application in this
court. The business rescue practitioners noted that they would be
opposing the application strenuously because if it were to succeed,
it would further contribute to the financial and other challenges
faced by SAA and thereby prejudice all SAA employees' rights
and
benefits.
[24]
What has complicated matters somewhat is
a parallel process in which the shareholder (the government), unions
and other stakeholders
have been engaged in discussions which have
led to a framework agreement called a "Leadership Compact".
The terms of
this agreement are that the parties would in principle
cooperate with one another with the purpose of preserving SAA's
business
in one form or another. The compact has been made subject to
the agreement of the business rescue practitioners and confirmation
that the s 189 retrenchment process is suspended. The
business rescue practitioners aver that although there
has been
general agreement among the parties to the compact on the general
idea of saving the business, there are no credible or
concrete
proposals that have been put forward about how the business should be
saved, nor are there any realistic proposals as
to how this would be
funded. The business rescue practitioners aver further that in the
absence of any firm or realistic proposals,
they are not in a
position to consent to the suspension of the retrenchment process or
to incorporating any aspect of the compact
into the business plan. I
need not be concerned with this issue since it is only peripherally
related to the s 189A retrenchment
process. In the present instance,
this court is concerned only with the procedural fairness of that
process and not with any other
process or the merits of any proposals
or agreements that have emerged from it.
Relevant
legal principles
[25]
I have recorded the purpose and scope of the court's powers under s
189A (13) to intervene in
consultation proceedings. The present case
turns on an interpretation of
s 136
of the
Companies Act, 71 of 2008
.
Section 136
reads as follows:
136.
(1) Despite any provision of an agreement to the contrary-
(a)
during
a company's business rescue proceedings employees of the company
immediately before the beginning of those proceedings continue
to be
so employed on the same terms and conditions, except to the extent
that-
(i)
changes occur in the ordinary course of
attrition; or
(ii)
the employees and the company, in
accordance with applicable labour laws, agree different terms and
conditions; and
(b)
any retrenchment of any such employees
contemplated in the company's business rescue plan is subject to
section 189 and 189A of
the Labour Relations Act, 1995 (Act No. 66 of
1995), and other applicable employment related legislation.
Analysis
[26]
In Coo/
Ideas
1186
CC
v
Hubbard and Another
2014 (4) SA 474
(CC), the Constitutional Court set out the canons of interpretation
of statute in the modern era:
[28]
A fundamental tenet of statutory
interpretation is that the words in a statute must be given their
ordinary grammatical meaning,
unless to do so would result in an
absurdity. There are three important interrelated riders to this
general principle, namely:
(a)
that
statutory provisions should always be interpreted purposively;
(b)
the relevant statutory provision must be
properly contextualised; and
(c)
all statutes must be construed
consistently with the Constitution, that is, where
reasonably possible, legislative
provisions ought
to be interpreted to preserve their constitutional validity.
This proviso to the general principle
is closely related to the
purposive approach referred to in (a).
[27]
When a fundamental right is at stake, s
39(2) of the Constitution imposes an obligation on this court when
interpreting any legislation
to promote the spirit. purport and
objects of the Bill of Rights. The primary trigger for the
application of s 39(2) is thus whether
the provision in question
implicates or affects a right in the Bill of Rights. In those
instances, there is a duty to apply s 39(2).
In
Fraser
v ABSA Bank Limited
[2006] ZACC 24
;
2007 (3) SA 484
(CC), Froneman J described the import of s 39 (2) as establishing "a
mandatory constitutional cannon of
statutory interpretation" .
Therefore,
"courts must at all times bear
in mind the provisions of section 39(2) when interpreting
legislation"
(see
Makate
v Vodacom Ltd
2016 (4) SA 121
(CC)
at para 88).
[28]
The present matter implicates a right in
the Bill of Rights, namely the right to fair labour practices (see s
23 (1) of the Constitution).
As far back as 2003, the Constitutional
Court recognised that an element of that right is the right to
security of employment.
The court described it as a
"core
value"
of the LRA, the statute
that primarily gives effect to s23 of the Constitution (see
National
Education Health
&
Allied
Workers Union (NEHAWU) v University of Cape Town and Others
2003
(3) SA 1
(CC), at para 42). Section 39(2) of the Constitution is thus
of necessity implicated, and
s136
(1) of the
Companies Act must
thus
be read purposively in the light of the provisions of the
Constitution. In short, if there is an interpretation of s 136 (1)
that better promotes the preservation of work security, that
interpretation ought to be preferred.
[29]
The preamble to s 136 (1) records that
during a company's business rescue proceedings, employees employed by
the company immediately
before the beginning of those proceedings
continue to be employed on the same terms and conditions. That is the
default position.
It is a position that acknowledges that the
commencement of business rescue proceedings does not in itself
prejudice an employee's
conditions of service, including his or her
work security. Paragraphs (a) and (b) are exceptions to the default
position. The first
exception (subparagraph (i)) applies during the
course of business rescue proceedings and relates to changes that
occur
' in the ordinary course of
attrition'.
The OED (2ed) defines
'attrition' to include
'the gradual
reduction of the workforce by employees leaving and not being
replaced rather than by redundancy'.
Similarly,
Barker and Holtzhausen
South African
Labour
Glossary (Juta 1996)
'attrition of labour' to mean
' A
natural decrease in the labour force of an enterprise resulting from,
inter alia, that
is,
retirement
or voluntary resignation of employees'.
What
is common to these definitions is the exclusion of retrenchment (what
the LRA refers to as 'dismissal for a
reason
related to an employer's operational
requirements'). There is no room here, contrary to what
SAA and the
business rescue practitioners contend, to expand the scope of
attrition to include a dismissal for operational reasons.
That is a
dismissal without fault, at the initiative of the employer, and is
neither ordinary nor what is ordinarily meant by attrition.
[30]
The second exception envisaged by subparagraph (ii) is agreement on a
change to existing terms
and conditions of employment. Changes to
existing terms and conditions of employment can be effected either
through the mechanism
of a collective agreement (see s 23 (3) of the
LRA), or in terms of agreement between the company in business rescue
and the employee
concerned. What this exception envisages is a change
to terms and conditions of employment (which would include a
termination of
employment) by consent.
[31]
In short, unless an event that qualifies
as a change of terms and conditions of employment either by the
ordinary course of attrition
or by the employee's consent, there is
complete protection against employees during business rescue
proceedings.
[32]
A termination of employment on account
of operational requirements may be effected by agreement. For
example, a voluntary retrenchment
or termination by mutual consent on
agreed terms is by definition a change to terms and conditions of
employment. This then raises
the reach of paragraph (b) which makes
specific reference to retrenchment and as recorded above, regulates
'
any retrenchment of any such employees
[i.e.
those employed by the company immediately before the beginning of
business rescue proceedings]
contemplated
in the company's business rescue plan ...
(own emphasis).
[33]
Mr Ngcukaitobi SC, who appeared for the
unions, submitted that under subparagraph (b), there is no
longer a strong entrenched
protection of labour standards, as
there is in subparagraph (a). Instead, he
contended that
subparagraph (b) applies after the business
rescue proceedings have ended. When this occurs is to be determined
from
s 132
(2) of the
Companies Act, which
in this case would the
time at which a business rescue plan has been proposed and rejected
and no affected person has acted to
extend the business rescue
proceedings, or where the business rescue plan has been adopted and
the business rescue practitioner
has subsequently filed a notice of
substantial implementation of that plan.
[34]
Section 136
(1) (b) makes reference to
'
any retrenchment
...
contemplated
in the company s' business rescue plan'.
Given
that it is common cause in the present
case
that no business rescue plan has been presented to any of the
affected parties, it is not necessary for me to decide whether
the end of the business rescue process, as defined in
s
132
, triggers the right to commence a retrenchment
process. It may well be that the production of a business rescue
plan,
even in in draft form is sufficient. But I agree with counsel's
submission that the reference to contemplated retrenchments in a
business rescue plan in
s 136
(1) (b) establishes precondition
precedent for the commencement of any retrenchment process during
business rescue proceedings.
Section 136
(1) (b) requires that any
need to retrench must necessarily be rooted in the business rescue
plan. It is the contemplation at that
point that there is a prospect
that employees will be retrenched as an element of the plan that
brings
s 189
and
189A
of the LRA into play. There is no provision ins
136 (1), or anywhere else in chapter 6 of the
Companies Act, that
empowers a business rescue practitioner to retrench employees in the
absence of a business rescue plan. To the extent that Mr Redding
SC,
who appeared for SAA and the business rescue practitioners submitted
that an interpretation of
s 136
(1) as contended for by the unions
would elevate the interests of employees above those of other
stakeholders in the form of shareholders
and creditors, the unashamed
purpose of
s 136
is to protect employee interests during business
rescue proceedings. That is a purpose consistent with the
constitutional protection
of the right to fair labour practices and
in particular, the right to security of
employment. While
s 136
might not provide for an absolute moratorium
of retrenchment during business rescue proceedings, it locates the
right to retrench
in the business plan. It follows that the giving of
any notice to commence a consultation process in terms of
s 189
or
s
189A
of the LRA, given by a business rescue practitioner in the
absence of a business rescue plan, would be premature and thus
constitute
an act of procedural unfairness.
[35]
SAA and the business rescue practitioner
is urged me to apply the approach referred to by my colleague
Lagrange J in
Solidarity Obo BD
Fourie
&
Others
v Vanchem Vanadium Products (Pty) Ltd and Others; In re: National
Union of Metalworkers (NUMSA) Obo Members v Vanchem Vanadium
Products
(Pty) Ltd and Another
(J385/16
& J393/16) [2016} ZALCJHB 106 (22 March
20 1 6. ) at paragraph 35 of the judgment, Lagrange
J said:
[35]
On a proper construction of
s 136(1)
it
seems to me to consist of two distinct parts. Subsection (1)(a)
affirms the continuity of existing employees ' term s
and conditions of employment and subsection (1)(b) obliges the
business rescue practitioner to conduct any retrenchment in the
business rescue plan in compliance with the relevant provisions of
the LRA pertaining to retrenchments. It is the reference to
changes
occurring in the "ordinary course of attrition" that
might be seen as a basis for interpreting the section
to provide a
guarantee of continuity of employment and not merely the preservation
of conditions of employment. If this interpretation
is correct, what
is anomalous is why subsection (1)(b) was not worded in the form of
an exception to subsection (1)(a) rather than
simply an additional
self-standing provision preserving the rights of employees retrenched
under a business rescue plan, to be
retrenched only in accordance
with the applicable provisions of the LRA. Alternatively, subsection
(1) (a) ought to have stated
that the prohibitions it contains are
subject to subsection (1)(b). In the absence of such qualifications
to either sub clause,
the two provisions are irreconcilable unless
the phrase "ordinary course of attrition" is interpreted to
include all
forms of lawful termination, including retrenchment.
[36]
And
at paragraph 36:
[36]
Section 136(2)
permits a BRP to suspend
obligations owed by the company at that time business rescue
proceedings commenced.
Section 136(2A
) exempts employment contracts
from this power of suspension. Once again, the provisions deal with
the suspension of obligations,
but are silent on the question of the
lawful termination of obligations. Considering the section as a whole
it seems the primary
object of the section was to prevent the
unilateral variation of company obligations by a BRP, but to permit
the BRP to suspend
the performance of certain contractual
obligations except those relating to employees. It does
not seem
to be directed at preventing the lawful termination of
obligations including employment contracts. Consequently, I am not
persuaded
that the provisions of
section 136
effectively outlaws any
retrenchments taking place except in terms of an approved business
plan.
[37]
The
Vanchem
judgment was delivered in
circumstances where a
s 189A
process had commenced prior to the
employer party being placed in business rescue. It was only by means
of an eleventh hour amended
notice of motion that the union
challenged the lawfulness of the retrenchments by introducing a
completely new cause of action
based on the contention that
retrenchments could only occur in terms of an approved business plan.
The court expressly refused
to entertain the new cause of action, but
went on to note that even if it had agreed to do so, it would
nonetheless have dismissed
the claim for the reasons set out for in
the extracts from the judgment recorded above. In other words, the
passages from the judgment
on which SAA and the business rescue
practitioners rely, do not form part of the
ratio
decidendi
and the court's
observations on the interpretation of
s 136
have no binding quality
as judicial precedent. Indeed, the court said as much. Even if I were
to regard the
Vanchem
judgment
as relevant in the present circumstances, it would seem to me that
the value of the judgment is in identifying the potential
conflict
that may exist between paragraphs (a) and (b) of subsection 136 (1).
But statutes must not be construed to create absurdities,
and where
there are anomalies, they should be reconciled. For the reasons
stated above,
s 136
(1) should be construed so as to provide
continuity of employment in business rescue proceedings, subject to
natural attrition
and the variation of any conditions of employment
by agreement, and to locate the right to terminate employment for
reasons related
to operational requirements in the terms of a
business rescue plan.
[38]
There was some debate during the hearing
on voluntary separation packages. As I understand the position, there
is currently an offer
open to SAA employees to accept voluntary
retrenchment on the terms specified. Some of them have accepted. To
the extent that the
unions contended that any moratorium on
retrenchments during business rescue proceedings prohibited a
business rescue practitioner
from seeking to secure voluntary
retrenchments , there is no basis for that proposition either ins 189
of the LRA or
s 136
of the
Companies Act. Nothing prevents
an
employer from offering a voluntary severance package as a measure to
avoid retrenchment. If a voluntary severance package is
offered and
accepted as a means to avoid the need to or even contemplate
retrenchment, the contract of employment is terminated
by mutual
agreement and there is no dismissal (see R le Roux
Retrenchment
Law in South Africa
(Lexis-Nexis
2016), at p116-7). As I have indicated,
s 136
(1) (a) (ii)
contemplates a variation of terms of employment (including any
termination of employment) by mutual consent.
[39]
The unions did not seriously press the
relief sought in relation to the training lay off scheme that
was the subject of the
2019 retrenchment process, which was withdrawn
on 13 March 2020. It is not necessary for me to make any decision in
respect of
that claim.
[40]
It follows that the unions are entitled
to the alternative relief sought in paragraph 2 of the notice of
motion. The remedy I intend
to grant is one that serves to rectify
the act of unfairness complained of, i.e. the premature issuing of
s
189
(3) notices.
[41]
Neither party sought an order for costs.
I
make the following order:
1.
The second and third respondents'
conduct in issuing a189 (3) notice of invitation to consult is
procedurally unfair.
2.
The second and third respondent are
directed to withdraw the notices.
3.
Nothing in this order precludes the
second and third respondents from offering, nor any employee of the
first respondent from accepting,
any offer of voluntary retrenchment.
Andre
van Niekerk
Judge
of the Labour Court of South Africa
Appearances
For
the Applicant: T Ngcukaitobi SC
Instructed
by: Minnaar
Niehaus Attorneys
For
the first, second and third Respondents:
A Redding SC, with V Ndebele
Instructed
by: Edward
Nathan Sonnenbergs
Inc Attorneys