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THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case No: J 50/21
In the matter between:
MENDEL RAMOLOBANE LANGA First A pplicant
JEFFREY BONGINKOSI DHLUDHLU Second Applicant
And
SMOLLAN SALES AND MARKETING (PTY) LTD Respondent
This judgment was handed down electronically by consent of the parties’ legal
representatives by circulation to them via email. The date for hand- down is
deemed 3 March 2025 .
JUDGMENT
NGWENYA, AJ
Introduction.
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[1] The Applicants, referred an unfair dismissal claim to this Court, arising from
their dismissal by the Respondent following a retrenchment process which was
initiated in terms of section 189A of the Labour Relations Act, 66 of 1995 (“LRA”).
[2] The Applicants contend that their dismissals were both substantively and
procedurally unfair and seek reinstatement or compensation in the amount of 12 months.
[3] The Respondent, has defended the claim and contends that the dismissal
was both procedurally and substantively fair. At the commencement of trial, the parties indicated that the issue of procedural fairness was no longer in dispute and the sole issue for determination was whether the dismissal was substantively fair.
[4] Before considering the fairness of the dismissal, it is appropriate to set out the
evidence which was presented
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The Evidence
[5] The Respondent presented the evidence of Melissa Amy Fourie (“Fourie”),
who is employed by the Respondent as the Human Resources Manager. The
Respondents business provides sales and marketing services to various clients.
[6] The Respondent provides such sales and marketing services to its clients in
various ways, which includes Merchandisers, who provide merchandising at various retail channels such as Pick n Pay stores.
[7] During 2020, a restructuring occurred, and the purpose was to inter alia
“remain relevant” within the industry. Because the business of the Respondent
involves responding to tenders by clients every three years, in order to remain relevant and competitive, the Respondent engaged in a section 189A restructuring,
because the contracts which employees were engaged on did not permit flexibility
and did not provide for work on weekends.
1 The summary presented is not a verbatim record of the evidence presented at trial.
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[8] According to the contracts which the employees were engaged on, employees
worked from Monday – Friday and Saturday was a half day. There was no “Sunday
coverage.”
[9] The Respondent, following research into the market, the nature and
landscape of the FMCG sector and the economic pressures of COVID -19,
considered the implementation of a 40- hour flexi contract.
[10] Ms Fourie testified that, given the need for full weekend coverage and the
reduced need for service on other lower trade days, the Respondent commenced the
Section 189A restructuring and those employees who were employed on the 45 hour contract would be impacted.
[11] Ms Fourie testified concerning the consultation process that was undertaken
which required the Respondent to conduct over 500 consultations with employees who were placed across 3000 to 4000 stores across the country. The consultations,
which took place in the “heart of Covid” took place remotely via MS Team s, where an
HR representative joined such consultation virtually and the employee being consulted would be together with their Line Manager in person.
[12] Given that Ms Fourie was the Acting HR Manager at the time, she testified
that she would be aware of who was consulting employees and also any issues of escalation that would be raised to HR to consider. [13] During the consultations, Ms Fourie explained that the business case was
presented and explained to the employee who was being consulted. The offer of the 40-hour flexi contract was discussed with the employees during the consultation and
where an employee considered the 40- hour flexi contract, he or she would be
presented with an example of the pay slip as well as the draft 40- hour contract .
[14] Ms Fourie was asked about the providing of financial statements during the
consultation process and she explained that, the main motivation for the section
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189A restructuring was to remain competitive. The flexi contract would increase
services in order for the Respondent to remain competitive.
[15] Under cross -examination, Ms Fourie confirmed that the end of month salary to
be paid to the Applicants would be different because they were working less hours under the 40 hour flexi contract. It was not viable to keep the salary the same,
because then no cost savings could be passed on to the client and this would impact on the Respondent’s intention to be competitive.
[16] Ms Fourie confirmed that there was no “drop in sales” but that there was no
coverage, based on their research on the high sale days. The clients engaged the
Respondent to ensure sales are made and the Sunday coverage is required to ensure sales are made.
[17] Ultimately Ms Fourie confirmed that the section 189A restructuring had the
purpose of Cost saving and flexibility of the business.
[18] The Respondent closed its case.
[19] The Applicants presented the evidence of Mr Mendel Ramolobane Langa
(“Langa”) . Mr Langa testified that he was employed by the Respondent as a Field
Marketer and was stationed at the Checkers Store in Waverly. [20] Mr Langa testified that the role of a merchandiser includes packing stock,
cleaning the stock and checking for expired stock. He testified that he worked 6 days a week and earned R 7800, gross , with his nett being R 7299.
[21] Mr Langa testified that during 2020, he became aware during consultations
that the Respondent intended to introduce a 40 hour week contract . He indicated
that he was not happy with a reduction in the work hours and informed his manager that such reduction will impact him negatively and as he “ has a lot to take care of”.
[22] In relation to the consultations held, Mr Langa confirmed that three
consultations were held in his case and during the consultations the 40- hour flexi -
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contract was explained to him. Mr Langa stated that the store he worked at was busy
and as a consequence it was not clear to him how the hours would be reduced.
[23] Mr Langa testified that he did not believe that the cost saving measures were
necessary and the company was “greedy” . He additionally indicated that he does not
believe that he was meaningfully consulted by the Respondent. Mr Langa testified that he seeks reinstatement.
[24] Under cross -examination, Mr Langa confirmed that Sunday was busy and
there was no cover and in relation to Sunday, there would be no way to replenish stock because there was no cover.
[25] Under cross -examination Mr Langa stated that he had no problem with the
proposed working hours or the restructuring, his issue was the reduction in his
salary.
[26] The next witness called by the Applicants was Mr Jeffrey Bonginkosi Dhludhlu
(“Dhludhlu”) . Mr Dhludhlu testified that he was employed by the Respondent as a
Field Marketer and was placed at the Checkers Hyper in Montana. [27] Mr Dhludhlu confirmed the duties as testified by Mr Langa. Mr Dhludlu
testified that he had a good working relationship at the Respondent until such time as the Respondent sought to change the hours of the contract from 45 hours to 40 hours.
[28] Mr Dhludhlu explained, as Mr Langa did, that the consultation took place with
the Line Manager and it took place via virtual platform with HR. The HR explained that the Respondent intended to move from a 45 hour to 40 hour week contract. Mr
Dhludhlu testified that during the second consultation he asked HR for the financials of the organis ation, however, the Respondent indicated that it would not be
disclosing such financials. [29] Under cross -examination, Mr Dhludhlu testified that he could have worked the
days proposed by the Respondent if his salary remained unchanged.
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Analysis
[30] Before commencing the analysis, it is helpful to set out, what the parties
agreed is common cause in the pre- trial minute.
[31] It was agreed as common cause that during 2020, the Respondent became
alerted to the fact that retail stores in the FMCG sector had increased requirement for weekend services based on the high sales over this period (being weekend). It became apparent that busiest trading days were over Thursday, Friday, Saturday and Sunday.
[32] It was also common cause that it became apparent that the Respondent had
to adapt and restructure its operations completely to have a operational workforce available over the weekends in order for the Respondent to remain sustainable within the evolving retail industry.
[33] That the Respondent was forced to review its structures due to economic
pressures in the industry which had been severely affected by the Covid- 19
pandemic and the resultant introduction of the COVID -19 regulations as per the
Disaster Management Act.
[34] It was common cause that as a result of the above- mentioned circumstances,
the Respondent was forced to review and analyse its operations within its organisation and branched. The Respondent estimated that should is not reduce costs by 18 million, this may ultimately result in the business being placed at financial risk.
[35] That as a result of the Applicants having refused all the alternatives offered by
the Respondent, and subsequent discussions between the parties, the parties having reached consensus on certain issues in terms of section 189 of the LRA, the Respondent proceeded with terminating the Applicants’ employment.
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[36] The common cause facts are important because they assist in narrowing the
issues in dispute and the determination of the main issue which is whether the
dismissal of the Applicants for operational requirements was substantively fair.
[37] The LRA defines “operational requirements” to mean requirements based on
economic, technological, structural or similar needs of an employer. This Court has explained that operational requirement s typically, involves measures adopted to cut
costs or improve profit or in order to restructure the business or alter the manner in
which employees work to meet an operational imperative.
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[38] The approach to be adopted by the Court when considering the fairness of a
dismissal for operational requirements was set out in the case of Decision Surveys
International (Pty) Ltd v Dlamini and Others3, where it held that:
“if the employer resorts to retrenchment when alternatives to retrenchment are
available, it cannot be said that the ultimate decision to retrench was necessarily fair. The court will, therefore, examine the reasons advanced for
retrenchment in order to determine whether the ultimate decision to retrench
is genuine and not a sham . However, this is not to say courts are to second
guess the commercial or business efficacy of the employer’s decision. Nor is the enquiry whether the best decision was taken… The enquiry is whether the retrenchment is properly and genuinely justified by the operational requirements in the sense that it was a reasonable option in the circumstance.”
[39] I referred to the pre- trial minute which is binding and signed between the
parties. In the pre -trial minute the parties agree on key aspects concerning the
business rationale for the restructuring. They agree that it became apparent that in the FMCG sector there was an increased requirement for weekend services based on high sales over the weekend period. [40] The parties additionally agree that it is common cause that the Respondent
had to adapt and restructure its operation completely to have an operational
2 First National Bank, A Division of First Rand Bank Ltd v CCMA [2017] 11 BLLR 1117 (LC) para 79
3 [1995] 5 BLLR 413 (LAC)
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workforce available on the weekend in order for the Respondent to remain
sustainable within the evolving retail industry. [41] While the evidence of Mr Langa and Mr Dhludhlu attempted to dispute this
aspect, there is no dispute between the parties that there was a genuine operational need for a restructuring of the Respondent’s business to have weekend coverage, given that it was the busiest sales time. Not only was this agreed to in the pre- trial
minute, but Mr Langa and Mr Dhludhlu confirmed under cross -examination that they
have no issues with the proposed working structure nor do they contest that weekend cover was necessary, it was solely the reduction in the salaries that was an
area of dispute.
[42] This agreement between the parties and the evidence is important, because
the Court must find, in relation to the first enquiry that the reasons to retrench are genuine and not a sham. The parties are bound by their agreement and there was no application or evidence seeking to resile from such agreement.
[43] Even if I am wrong, the evidence presented by the Applicants and
Respondent, accepts the changing nature of the retail industry and the need, for the purposes of sales, to have this weekend cover.
[44] I must consider the, the evidence of the Applicants, that even if there was a
commercial rationale, that the salaries could be kept the same, ie paid a 45 hour week salary for having worked 40 hours. This is in my assessment a clearly unsuitable alternative, given that it was not disputed that the Respondent was to cut costs due to the economic pressure in the industry.
[45] Considering the evidence that was presented and the common cause facts
between the parties, I find that the Respondent demonstrated a genuine operational reason for the dismissal, and the dismissal was accordingly substantively fair.
Costs
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[46] Guided by section 162 of the LRA there is no basis to depart from the
principle that costs do not follow the result in labour dispute.
[47] In the premise I make the following order:
Order:
[48] The applicants’ unfair dismissal claim is dismissed and the dismissal for
operational reasons of the applicants by the respondent was substantively fair.
[49] No order as to costs.
Z NGWENYA
Acting Judge of the Labour Court of South Africa
APPEARANCES:
For the Applicant: Mmolawa Ndumelo
For the Respondent: S Lancaster