IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG CASE NO : J1953/98
In the matter between :
ZAPHANIAH DHLAMINI First Applicant
LAZERUS SEFALI Second Applicant
JOSEPH HLATHSWAYO Third Applicant
PHILLIP LANGA Fourth Applicant
VICTOR ZWANE Fifth Applicant
JOHANNES NGUKUZOLAK Sixth Applicant
ELPHAS SITHEBE Seventh Applicant
MICHAEL MPUNGOSE Eight Applicant
and
FARADAY WHOLESALE MEAT SUPPLY Respondent
__________________________________________________________________
JUDGMENT
__________________________________________________________________
JAJBHAY, A.J.
[1] In terms of a pre-trial conference held on the 8th day of
September 1998, between the parties' legal representatives, the
following important points were agreed upon :
“a. The Applicants were all employees of the Respondent company:
b. The Respondent ceased to trade at the time of redundancy of
Applicants.”
[2] At the commencement of the proceedings it was conceded on
the Applicants' behalf that the dismissal was substantively fair. The
only issue that remains in dispute is consequently whether the
Applicants' dismissal was effected in accordance with a fair procedure
as required by Section 189 of the Labour Relations Act 66 of 1995 (the
Act), and if not, the appropriate remedy to which the Applicants would
be entitled.
[3] Mr G D Dos Reis and Mr L Van der Merwe testified on behalf of
the Respondent.
[4] Mr Dos Reis stated that the Respondent was a partnership at all
material times. According to Mr Dos Reis, the entire workforce
consisting of approximately forty people, received notification of a
retrenchment on the 24th of June 1997. In terms of the letter
communicated, the following was stated :
"Retrenchment Notice
1. Due to the business not being profitable management has
come to the unfortunate decision to close the business and
retrench all staff as from 24th of June 1997.
2. You will receive the following severance package :
2.1 Two weeks notice pay;
2.2 All outstanding leave pay;
2.3 All outstanding wages;
2.4 One weeks pay for every completed year of service
(maximum 10 years).
3. All cheques will be ready for collection on 25th June 1997 at
12h00, at Faraday, 197 Eloff Street Extension, Selby.
4. Your UIF (blue cards) can be collected at the
abovementioned address on 30 June 1997.
Yours faithfully
GARY DOS REIS"
[5] It was common cause that at the time of the dismissal, the
workers were neither organised nor belonged to any particular union.
[6] Mr Dos Reis stated that prior to the submission of the above
letter, there were two meetings between himself and the workers, that
lasted approximately between five and ten minutes each. He testified
that it was at these meetings, that the closure of the business was
discussed and consulted upon, and in respect of which agreement was
eventually reached.
[7] According to Mr Dos Reis the Respondent was experiencing
financial difficulty for a considerable period of time. The partners
considered the possibility of transferring the business to a company to
be incorporated in the near future. However this did not materialise.
[8] Previously the entire workforce was retrenched during June 1996.
There was no dispute with regard to this particular retrenchment. At
this point in time, all the workers belonged to the union referred to as
UWUSA, who had negotiated and consulted on behalf of the
membership which constituted of the workforce. All the workers were
subsequently re-employed on a "temporary" basis.
[9] Mr Dos Reis emphasised that all his dealings with the Applicants
and the other members of the workforce were conducted verbally.
According to him "nothing was in writing". During or about June 1997,
he called all his staff members, and explained to them that he could
not carry on any further therefore the business has to close. On the
24th of July 1997, he provided each staff member with the letter that I
have referred to hereinbefore. In Mr Dos Reis' words, "Faraday was
not a small business". It was not disclosed during evidence what the
turnover of the Respondent was.
[10] Mr Dos Reis denied that there were any counter proposals raised
by the staff during the discussions that he conducted with them.
[11] It is important that during cross-examination Mr Dos Reis
explained that during the discussions, "I told them what they are going
to get". He also conceded that he has other interests in the meat
industry.
[12] Thereafter Mr Van der Merwe testified. According to this
gentleman, he was informed by Mr Dos Reis that he will be having
certain meetings with the workforce to discuss the retrenchment. He
did not have any direct knowledge with regard to the discussion
matter or the discussions. In direct contradiction to Dos Reis, this
gentleman testified that the meetings had lasted for approximately
one hour. That concluded the case for the Respondent.
[13] Mr Elphas Sithebe and Mr Zaphaniah Dhlamini testified on behalf
of the Applicants.
[14] They testified that they were employed by Mr Dos Reis. During
June 1997, Mr Sithebe was on leave. He was called by his co-workers
at his home in Kwa-Zulu, Natal, and informed that he should return,
because the workers were all retrenched, and "He should fetch his
things because the firm closed".
[15] When he arrived at the workplace, he was given his "blue card"
by a woman called Fatima. He tried to speak to Mr Dos Reis, however
Mr Dos Reis was abusive and referred him to Fatima. Since his
dismissal, he was attending to certain work in an individual capacity,
he has not been employed since the time of his retrenchment. Owing
to the discrepancy on the "blue card", and particularly an item that
had been scratched out, he has not received any payments from the
Unemployment Insurance Fund.
[16] During cross-examination, he was questioned at length as to who
the proper employer was. It was suggested that Faraday Retail Meat
Supply was his true employer. However in light of the fact that the
parties had agreed at the pre-trial stage and this agreement is
complemented with the pleadings, as to who the real employer was, I
believe that this line of cross-evidence or evidence extracted did not
believe that this line of cross-evidence or evidence extracted did not
assist the Respondent in its case. In addition, there was no application
made at the end of the case to amend either the pleadings or any of
the agreements entered into.
[17] Mr Dhlamini emphatically denied that there were any
consultations prior to the 24th of June 1997. He was driver, and he
was very seldom present at the workplace. However if there was such
a meeting, he would have been informed by his colleagues. This
simply did not happen.
[18] Both the above gentlemen stated that they had never been to
school. They did not have any formal education. Mr Hlathswayo was
unemployed since June 1997, and despite his best efforts to procure
employment, he has been unsuccessful.
[19] It is trite that the provisions of the Labour Relations Act must be
read in a constitutional context. The provisions in this respect are
clear.
Business South Africa v Congress of South African Trade
Unions and Another (1997) 5 BLLR 511 (LAC) at 512-18;
Johnson & Johnson (Pty) Limited v Chemical Workers
Industrial Union (1999) 20 ILJ 89 (LAC);
Carephone (Pty) Limited v Marcus N.O. and Others (1998)
19 ILJ 1425 (LAC).)
[20] In terms of the Constitution of the Republic of South Africa, every
person has a fundamental right to fair labour practices (Section 23(1)
(a)). In the context of the present matter, the expression is given to
this in the Labour Relations Act by ensuring that an employee has the
right not to be unfairly dismissed (Section 185) and an employer has
the right to dismiss an employee for a fair reason based on the
employer's operational requirements and in accordance with a fair
procedure (Section 188(1)(a)(ii) and (b)).
[21] In the Johnson & Johnson case supra, at paragraph 24
Froneman D.J.P. states the following :
"Section 189 regulates the exercise of the competing
fundamental rights of an employee not to be unfairly dismissed
and that of an employer to dismiss for operational reasons. It is a
provision that is inextricably linked to the fairness or otherwise of
a dismissal based on operational requirements. Apart from that
it serves no other purpose."
[22] Section 189(1)(d) sets out where there is no trade union at the
workplace, the employer when contemplating dismissal for reasons
workplace, the employer when contemplating dismissal for reasons
based on the employer's operational requirements, must consult with
the employee's likely to be affected by the proposed dismissals or
their representatives nominated for that purpose. Thereafter in terms
of Section 189(2) :
"(2) The consulting parties must attempt to reach consensus on
-
(a) appropriate measures -
(i) to avoid the dismissals;
(ii) to minimise the number of dismissals;
(iii) to change the timing of the dismissals; and
(iv) to mitigate the adverse effect of the dismissals."
[23] In terms of Section 189(3) :
"(3) The employer must disclose in writing to the other
consulting party all relevant information, including, but not
limited to -
(a) the reasons for the proposed dismissals;
(b) the alternatives that the employer considered before
proposing the dismissals, and the reasons for rejecting those
alternatives;
(c) the number of employees likely to be affected and the job
categories in which they are employed;
(d) the proposed method for selecting which employees to
dismiss;
(e) the time when, or period during which, the dismissals are
likely to take effect;
(f) the severance pay proposed;
(g) any assistance that the employer proposes to offer to the
employees likely to be dismissed; and
(i) the possibility of future re-employment of the employees
who are dismissed."
[24] There are clear obligations in terms of this section that would
dissuade an employer not to dismiss an employee unfairly. The
employer must initiate the consultation process when it contemplates
dismissal for operational reasons (FAWU and Another v National
Sorghum Breweries (1997) 11 BLLR 1410 LC). The employer must
disclose relevant information to the other consulting party, it must
allow the other consulting party an opportunity during the consultation
to make representations about any matter on which the parties are
consulting, the employer must consider those representations and, if
the employer does not agree with them, the employer must give
reasons.
[25] Froneman D.J.P. in the Johnson & Johnson matter supra, at
paragraph 27 explains :
"All these primary formal obligations of an employer are geared
to a specific purpose, namely to attempt to reach consensus on
the objects listed in Section 189(2). The ultimate purpose of
Section 189 is thus to achieve a joint consensus seeking
process."
[26] In this matter the section implicity recognises the employer's
right to dismiss for operational reasons, but then only if a fair process
aimed at achieving consensus has failed. This is also apparent from
Section 189(7) which provides that the employer must select the
employees to be dismissed on criteria either agreed to, or if that is not
possible, criteria that are fair and objective.
[27] The pragmatic rationale for the need to consult before a final
decision on retrenchment is taken, has been affirmed by the Labour
Appeal Court. In its application, one cannot rely on a mechanical
approach of interpreting whether Section 189 has been complied with.
In my view, the correct approach is to establish whether the purpose of
the section has been achieved. If such purpose has not been
achieved, the reason must thereafter be established and then the
achieved, the reason must thereafter be established and then the
Court must determine whether there is any fault to be attributed to the
parties.
(Johnson & Johnson, supra, at 1216).
[28] In the unreported matter of Malcolm Sayles v Tartan Steel
CC, case number J1384/97, Mlambo, J. stated the following :
"In my view if the employer does not contemplate dismissing
particular employees but it says the redundancy will affect them
in any way the employer must consult with them. ... One of the
main purposes of the Act is to advance economic development
and social justice. Dismissal is a drastic step that should not be
adopted lightly. Dismissal has in the past been likened to a
sentence of death. Where through no fault of the employee his
services are to be terminated, an alternative which would have
the effect of avoiding the dismissal should not be likely written
off. This applies equally to all employers and employees."
[29] In the present matter, I do not believe that the Respondent has
proved on a balance of probabilities that it consulted with the
employees at the time that it had contemplated dismissing the
employees for reasons based on its operational requirements. Mr Dos
Reis' attempt to stipulate that he had "consulted" with the staff
members on two occasions is flawed on two counts. Firstly, it is totally
inconceivable to consult in any meaningful fashion with approximately
forty people in time span that ranges between five and ten minutes.
Secondly, his evidence is directly contradicted by Van der Merwe who
stated that the consultation process lasted for approximately one hour
on each occasion.
[30] On the evidence of Dos Reis, there was no compliance of the
provisions of Section 189 of the Labour Relations Act. In my view,
there was no attempt to reach consensus on the appropriate measures
envisaged in Section 189(2)(a) of the Act. Further, there was no
opportunity during the consultation afforded to the workers to make
representations about any matter on which the parties intended to
consult. Mr Dos Reis' attempt to explain that all his negotiations were
conducted verbally, and nothing was reduced to writing, can only be
conducted verbally, and nothing was reduced to writing, can only be
described as being a poor attempt to explain the difficulties inherent in
his case.
[31] The need to consult with the employees in this particular case, by
the Respondent as soon as it had contemplated the retrenchments has
not been shown. The importance of consultations in industrial
relations is that a proper measure thereof, will have the object of
avoiding or minimising industrial conflict. In the present matter, there
is nothing to show that the nature of the purported consultation was
either an exhaustive joint problem solving measure, or a consensus
seeking process between the employer and the employees. In the
present matter, the attempt to consult by the employer can be
described as superficial.
[32] In the above circumstances, my determination is that the
dismissal of the Applicants by the Respondent was not effected in
accordance with a fair procedure as required by Section 189 of the Act.
[33] The issue that remains to be determined is the appropriate
remedy. The Applicants stated that they seek an award of
compensation. The principles regulating an award of compensation
are extensively dealt with in the Johnson & Johnson judgment
supra.
[34] In the Johnson & Johnson decision supra, the Labour Appeal
Court summarised the legal position as follows :
"If a dismissal is found to be unfair solely for want of compliance
with a proper procedure the Labour Court, or an Arbitrator
appointed under the Labour Relations Act, thus has a discretion
whether to award compensation or not. If compensation is
awarded it must be in accordance with the formula set out in
Section 194(1); nothing more, nothing less. The discretion not to
award compensation in particular cases must, of course be
exercised judicially."
[35] Section 194 of the Labour Relations Act provides :
"(1) If a dismissal is unfair only because the employer did not
follow a fair procedure, compensation must be equal to the
remuneration that the employee would have been paid between
the date of dismissal and the last day of the hearing of the
arbitration or the adjudication, as the case may be, calculated at
the employee's rate of remuneration on the date of dismissal.
Compensation may however not be awarded in respect of any
unreasonable period of delay that was caused by the employee in
initiating or prosecuting a claim.
(2) The compensation awarded to an employee whose
initiating or prosecuting a claim.
(2) The compensation awarded to an employee whose
dismissal is found to be unfair because the employer did not
prove that the reason for the dismissal was a fair reason related
to the employee's conduct, capacity or based on the employer's
operational requirements, must be just and equitable in all the
circumstances, but not less than the amount specified in sub-
section (1), and not more than the equivalent of twelve months
remuneration calculated at the employee's rate of remuneration
on the date of dismissal."
[36] In the present matter, the Applicants were dismissed on the 25th
of June 1997. The dispute was referred to the CCMA timeously, and a
certificate setting out that the dispute remains unresolved was issued
on the 13th of August 1997. It was explained to me from the Bar that
the matter was then referred to the CCMA on the 2nd of September
1997 for arbitration. The reason for a referral to the CCMA was to
enable the Applicants the opportunity of not incurring unnecessary
costs. However the Respondent did not consent to the matter being
arbitrated at the CCMA. Thereafter, the matter was referred to this
Court on the 3rd of July 1998. Save for the above admissions that
were presented by the legal representatives of the respective parties, I
did not have the benefit of listening to any additional relevant
evidence. In the circumstances, and in my judgment, it cannot be
stated with any certainty that there was an unreasonable period of
delay that was caused by the Applicants in initiating or prosecuting a
claim. In the Johnson & Johnson matter, at paragraph 42 Froneman
D.J.P. states :
"If one has regard to the rationale for compensation under
Section 194(1), namely to compensate an employee for not
receiving a procedurally proper hearing or consultation process
prior to dismissal, it seems that the intention was to recompense
an employee for the period up to the point where he or she
receives a proper hearing in the Labour Court or on arbitration."
[37] On a proper construction of the authorities stated, the Applicants
[37] On a proper construction of the authorities stated, the Applicants
are entitled to the equivalent of twelve months remuneration.
[38] I accordingly make the following order.
a. The dismissal of the Applicants was procedurally unfair.
b. The Respondent is ordered to pay each of the Applicants an
amount equal to twelve (12) months remuneration, to be calculated on
the basis of the remuneration paid to each of the Applicants on the
date of his dismissal.
c. The Respondent is ordered to pay the Applicants' costs.
______________________
M JAJBHAY
Acting Judge of the Labour Court
of South Africa
DATE OF HEARING : 30th of April 1999
DATE OF JUDGMENT : 7th of May 1999
FOR THE APPLICANTS : Clifford Levin Attorney
FOR THE RESPONDENT : P Assenmacher Attorney
MJ0004