CASE NO. P86/98
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT PORT ELIZABETH
DATE 14.6.1999
In the matter between:
B. Louw Applicant
and
Micor Shipping Respondent
J U D G M E N T
MLAMBO, J :
[1] The applicant was given notice of her dismissal on
18 September 1997 effective from 30September 1997. In
papers before this court she challenges the fairness of
her dismissal on substantive and procedural grounds. At the
commencement of the trial the respondent argued a point in limine
objecting to the jurisdiction of this court to adjudicate this dispute.
After hearing argument the court dismissed the point in limine. The
court's reasons are set out in the following paragraphs.
[2] The nature of the point in limine as articulated in the
heads of argument provided by Dr van Zyl, appearing for
the respondent, was briefly that this Court lacked
jurisdiction to adjudicate the dismissal dispute as
a result of the non-compliance by the Commission for
Conciliation, Mediation and Arbitration,(the Commission)with
section 135(2) and section 135(5)of the Labour Relations Act No. 66
of 1995 (“the Act”). Dr Van Zyl submitted that these sections are
peremptory and that the Commission must comply with them. The
point made was that the Commission lacked jurisdiction to
unilaterally extend the 30 day time period within which it could hold
a conciliation meeting, and to conciliate the dispute. He argued
further that the Commission could not issue avalid certificate in terms
of Section 135(5)after holding a conciliation meeting after the thirty
day period provided for in Section 135(2).
[3] Section 135(2) reads as follows:
"The appointed commissioner must attempt to
resolve the dispute through conciliation
within 30 days of the date the Commission
received the referral. However, the parties
may agree to extend the 30 day period.”
[4] Section 135(5) reads as follows:
"When conciliation has failed or at the end
of the 30 day period or any further period
agreed between the parties -
(a) the commissioner must issue a certificate
stating whether or not the dispute has been resolved."
[5] In this case there is no dispute that the referral by
the applicant was received by the Commission on 16 October
1997. There is also no dispute that no conciliation meeting took
place within the thirty
day time period specified in section 135(2). It is also common
cause that no certificate as envisaged in
section 135(5) was issued when the thirty day time period
expired.
[6] The Commission convened a conciliation meeting on
2 March 1998 which was attended only by the applicant. After
this meeting (on the same date), a certificate envisaged in
section 135(5) was issued, confirming that the dispute
remained unresolved.
[7] Having considered those provisions the court agreed that
section 135(2)is peremptory as regards the convening of a
conciliation meeting within the thirty day period from the date of
receipt of the referral. That this provision is peremptory is
confirmed by the requirement of the consent of the parties
concerned to extend that period. The court agreed that the
Commission could not unilaterally extend the thirty day period set
out in section 135(2). Where there is no consent the Commission's
hands are tied and it cannot extend that period. In the court’s view
therefore, the conciliation meeting held on 2 March 1998, was a
nullity.
[8] Section 135(5) is also peremptory. If no resolution of a dispute
is achieved within the thirty day period, a certificate must be issued.
For purposes of this case the court was prepared to find that it is
after the thirty days had expired that the section 135(5) certificate
should be issued. Having looked at that provision again, it is also
clear that no time period is provided within what period is the
certificate to be issued. The only notable factor in this provision is
that the certificate must be issued after the thirty day time period
has expired. In line with the reasoning that a section 135(5)
certificate can be issued at any time after the thirty day time period,
it was the court’s view that the certificate issued on 2 March 1998
confirmed the situation that existed at the end of the thirty day
period i.e. that the dispute remained unresolved. The Commission
was empowered to issue the certificate at any time after thirty days.
[9] In my view the fact that the Commission held a
conciliation meeting on 2 March 1998 which it was not
empowered to hold, has nothing to do with the jurisdiction
of this Court. The court derives its jurisdiction in disputes of this
nature only from certain factors and those factors are the
referral of a dispute timeously i.e. within thirty days and the
issuing of a certificate of non-resolution after the second thirty
day period has elapsed. This Court does not derive its
day period has elapsed. This Court does not derive its
jurisdiction from the fact that a conciliation meeting was or was
not held. Only those jurisdictional factors that the court has
mentioned are necessary to found jurisdiction for this court to
adjudicate disputes that come to it for adjudication.
[10] It is clear that the applicant desired to see progress in
the resolution of her dispute which she had referred
to the Commission. This appears from the correspondence
her legal representative, at the time, sent to the Commission. In
the court’s view, therefore the fact that the Commission held a
conciliation meeting in March 1998 which it was not legally
empowered to do, had nothing to do with the jurisdiction of this
Court. Any conceivable challenge that could have been lodged or
launched by the respondent, could only be launched at the
Commission's holding of a conciliation meeting, not at the issuing of
the certificate. This is so because the certificate could have been
issued even before the conciliation meeting of 2 March 1998. As
already stated, the issuing of the certificate in March 1998 confirmed
the situation that already existed even before that conciliation
meeting was held. The only conceivable consequence of the delay in
the issuing of the certificate can only affect any compensatory award
that the applicant might be awarded if she was successful in her
unfair dismissal claim. In this regard the provisions of Section 194(1)
are relevant.
[11] For the aforegoing reasons the point in limine was dismissed
with no order as to costs.
Background circumstances:
[12] The applicant was employed on 9 November 1995 as a
sales executive. At the time of employment she was
responsible for both East London and Port Elizabeth.
According to her she was told and was aware that the
East London branch, in particular, was in financial dire
straits. At some stage she was removed from servicing
the Port Elizabeth branch and only concentrated on East London.
On 10 June 1997 a meeting took place at the East London branch
attended by Garth Edwards, Lionel Kritchmann, Darren Nicholls, as
well as the applicant. There is a dispute as to who called this meeting
but that is neither here nor there. What is common cause about that
meeting is that the performance of the East London branch and the
applicant’s performance in general was discussed. It was apparently
mentioned that the deterioration of the financial situation of the
mentioned that the deterioration of the financial situation of the
branch continued unabated and the possibility of closure of that
branch was mentioned. It is common cause that retrenchment was
not mentioned by anyone at that meeting.
[13] There is no dispute that until then, the applicant as sales
executive had met her targets. On 11 September 1997, i.e three
months after the June meeting, Lionel Kritchmann, who it is common
cause was the most senior employee at the East London branch, was
flown to Johannesburg by the Respondent’s senior management.
Apparently the purpose of flying Mr Kritchmann to Johannesburg was
to discuss the overall performance of the East London branch. At
these proceedings no-one who was at that meeting testified about
what was discussed. Marianna Coetzee, the Human Resources
Director, who was also not present at that meeting testified that after
that meeting it was decided that nothing much could be done to
reverse the downward trend in East London and the possibility of
retrenchment had to be considered. The Court must approach her
evidence as regards that meeting with caution in view of the fact that
she was not present and she relied on hearsay as to what
happened. It is common cause, however, that
Lionel Kritchmann came back from the said meeting and said
nothing to the East London employees, including the applicant.
[14] On 17 September 1997 Marianna Coetzee and Garth Edwards
flew to the East London branch and it is common cause
that a meeting was convened in the afternoon at about
three or three-thirty. It is common cause, that none of the East
London employees, including the applicant had been given any
warning that this meeting was going to take place. All the
applicant knew about the coming down of Coetzee was that she was
coming for some staff training. That meeting was attended by the
applicant, and the driver, and Coetzee as well as Garth Edwards. The
applicant and the driver were given a letter and it is proper to cite
the contents of this letter in full. The letter dated 17 September 1997
states:
"General Notice of Possible Retrenchment.
Regrettably the company has to announce its
intention to retrench approximately two
employees in Micor Shipping, East London. The
company intends implementing the retrenchments
on or about 30 September 1997 at which date it will
take effect. The substantive reasons for the retrenchment are
as follows:
1. There has been a distinctive change in
market the (sic) over the last 18 months
which in turn has had a severe impact
on revenue, resulting in the company
incurring substantial losses.
2. The above has necessitated a complete
incurring substantial losses.
2. The above has necessitated a complete
change in the business strategy of the
company whereby we will only maintain
a presence in the region.
To counter the above:
(a) vacancies within the Group have been
closely monitored to see whether any
suitable positions arise. The company
has already looked towards various ways
of avoiding or minimising retrenchment
and in this regard will be consulting
with yourselves during the course of
this week to discuss the underlying
reasons why the following alternatives
are unsuitable:
. limitations on hiring new employees;
. control of overtime work (where
it exists);
. the transfer of employees to
any vacancies within the establishment;
. the implementation of an early
retirement scheme;
. the reduction of the workforce
by natural attrition;
. the training or retraining of
employees;
. granting extended unpaid leave
or temporary lay-off.
We will be advising you at the consultations
during the course of the week which
job categories/employees stand to be
affected by the retrenchment. We will
also be discussing the timetable of the
retrenchment programme and proposed further
consultations with the employees
affected and will inter alia further
consider:
. preferential re-employment;
. severance pay;
. assistance with unemployment
insurance.
The purpose of these consultations is of
the utmost importance in that the company
would like to hear representations from
individuals in this regard. Should an
individual not avail themselves of the
opportunity to attend consultations the
retrenchment programme will continue not-
withstanding.
Furthermore the objective of the consultations is to consider
reasonable selection criteria for the employee who stands to
be retrenched. The principle of last-in-first-out (LIFO) will not
apply exclusively and it is the company's intention that the
criteria should be reasonable enough to meet the demands of
its operational requirements. The company accepts the duty
to assist its employees and will consider inter alia the
following:
. time off to search for alternative
employment; and
. preferential re-employment in the
future; and
. unemployment insurance assistance;
and
. certificates of services; and
. severance benefits.
In terms of the retrenchment programme it
is the company's intention to confirm
retrenchment with the employee that stands
to be retrenched by letter by no later
than 22 September 1997. Thereafter the
individual employee may avail him/herself
of the opportunity to approach the company's
Human Resources Manager at Head
Office for an individual consultation
and to raise difficulties which he/she
might have which require assistance. The
retrenchee may not be required to work
until the end of his/her notice period.
It must be stressed that during the
period 19 September 1997 to 30 September
1997 the company is not closing the door
on the retrenchee and it remains open to
him/her to avail him/herself of our offer
to consult with our Human Resources
Manager at Head Office in the event of
his/her requiring assistance of whatever
kind."
[15] It is common cause that the applicant and the driver
were requested at the conclusion of that meeting to
think and come up with any suggestions during the next morning.
It is also common cause that the applicant did not dispute or
challenge anything during the meeting on 17 September 1997 and
that she never requested a
postponement or an opportunity to seek legal advice.
Her statement that she could not say much at that
meeting because she was shocked is also unchallenged. It is also
common cause that the discussions at the meeting of 17 September
1997 revolved around the letter with each particular item being
discussed in detail by Marianna Coetzee.
[16] The next day, 18 September 1997, a meeting took place
between the applicant, Marianna Coetzee and Garth Edwards at
nine o' clock in the morning. They went through the letter again and
no suggestions were forthcoming from the applicant. The only issue
she raised was a query regarding the details of the severance
package she would receive if she was dismissed. The details about
her severance package were telefaxed from head office and a
her severance package were telefaxed from head office and a
printout was given to her. At the conclusion of that meeting the
applicant was given notification of her dismissal which reads as
follows:
"Subject: Advance of Termination of Employment
as a Result of Retrenchment.
Previous communications to you and discussions in
the abovementioned respect refer. It has become
necessary for the
company, due to reorganisation of the business, to
consider retrenchment as a consequence. The
company has attempted to avoid the situation but
unfortunately, no other alternatives exist. This
decision was, as you know, also arrived at after an
extremely thorough investigation and after all possibilities to
avoid it had been explored.
You are hereby notified that your employment will
be terminated on 30 September 1997. You may
discuss your situation with the undersigned, who
will endeavour to accommodate you as far as
practically possible regarding any requests or
advice that you may seek.
You will not be required to be at your work station
after 18 September 1997. You will be
given the necessary time off to search for alternative
employment and to attend to your personal affairs. It must
be repeated that the above decision has not been lightly
taken.
Should re-employment opportunities arise within
the next six months you will be given first option
of tendering your services with the company.
You can be assured that the selection criteria
adopted in choosing you were pursuant to a
thorough consideration by the company of all
applicable
criteria in your favour.
May we take this opportunity of thanking you for
the services you have rendered to the company
and wish you the best of luck for the future."
[17] It is correct that on the same day, that is 18 September
1997, the applicant sought legal counsel and went to attorneys
Marshall & Kaplan in East London. A letter on her behalf was
addressed to the respondent, challenging the fairness of her
dismissal. Correspondence was thereafter exchanged between the
applicant's attorneys as well as the respondent's attorneys. A
dominant feature of the correspondence from the applicant's
attorneys contained a settlement proposal of six months.
[18] On the suggestion of the applicant’s attorneys a
settlement meeting was arranged for the 2 March 1997 at the
Respondent’s premises. It was agreed that no lawyers were to
be present at that meeting. The applicant testified that in
her mind she was attending a settlement meeting whereas the
Respondent’s view was that it was a further consultation
meeting. At that meeting the applicant secretly recorded the
entire meeting, a fact unknown to the other people in
attendance. The retrenchment of the applicant was again
discussed and the applicant made a number of concessions
about her understanding of the situation that necessitated her
retrenchment. It is common cause that at the end of the
meeting the applicant had agreed to revert to the respondent
regarding how the matter was to be taken further. The
applicant in her evidence states that she reverted to the
respondent who denies this. What is clear, however, is that no
agreement could be reached in terms of which the matter could
be settled. The applicant then referred the dispute to the
Commission for conciliation and when there was no resolution
in that forum she referred it to this Court for adjudication.
[19] The respondent's case is that it complied with section 189
of the Act and that the applicant's dismissal was fair, substantively
and procedurally. The applicant's case is that her dismissal was
procedurally unfair. Although she challenged the substantive fairness
of her dismissal in her pleadings she subsequently abandoned this
stance during the proceedings. I am therefore satisfied that I only
have to look at the procedural fairness of her dismissal.
[20] Section 189 in context provides for a three stage process.
The first stage is that notice must be given by the employer of the
possibility of retrenchment and the reasons thereof. The second
stage is that there should be a discussion which takes place
between the employer and those likely to be affected and their
representatives. Thereafter a decision must be taken taking into
account the discussions that took place and the input from
those likely to be affected.
[21] It is common cause that the respondent gave the
applicant no notice whatsoever of her pending retrenchment.
The respondent simply convened a meeting without informing
the applicant what the purpose of the meeting was. It is
common cause that it was only at that meeting that she was
told for the first time that her job was on the line. It is also
correct that the respondent has not provided this Court with
any reason
why it had to adopt that approach. Marianna Coetzee
testified that she thought it was humane that she inform the
people face to face without either telephoning them or giving them
prior notice by way of a letter. It is correct that the applicant did not
ask for a postponement to seek advice or request an opportunity to
consider further suggestions. In my view her failure cannot cure
what the respondent should itself have done. Section 189 does not
envisage a process where the employer is absolved if the employee
consulted fails to point out the employer’s omissions.
[22] A dismissal based on operational requirements is a
no-fault dismissal in the sense that it does not come about as a
result of anything committed by the employee. Therefore the
courts have emphasised in many decisions that the decision to
dismiss must be taken with utmost care in that it must be fair
in all respects. As the decision originates from the employer
who runs and has the prerogative to manage the enterprise the
employer therefore has an obligation to provide appropriate
and proper information to the employee and must follow the
elaborate steps set out in Section 189. There is a good reason
for this. It is to ensure that unnecessary dismissals are
prevented. A dismissal has elsewhere been likened to a
sentence of death. This is as a result of the disastrous
consequences to the individual and his immediate family as
well as the serious impact on the economy of the country.
Dismissals also create a further burden on unemployment
insurance funds. Dismissals always, if they are disputed, give
rise to unfair dismissal claims which have to be adjudicated in
courts involving time and expense. All the above can be
avoided if the decision to dismiss, especially if it is as a result of
no fault on the part of the employee are not lightly taken.
[23] In my view, the failure to give timeous notice to enable
the applicant time to ponder her situation and to come up with
suggestions on alternatives, was a fatal one. The whole structure of
section 189 is that there should be a notification period which
enables those to be consulted to prepare and be ready to
meaningfully take part in the discussions envisaged in that
section. The section envisages meaningful participation. There can
only be meaningful participation if those consulted have had enough
time to ponder on the reasons provided as well as to prepare
themselves to ask for information and to make informed suggestions.
An employee who does not get the benefit of a notification period is
in no position to meaningfully take part in a proper consultation
process as he or she is given no notice and he attends that meeting
unprepared. In my view, therefore, the dismissal of the applicant was
procedurally unfair.
[24] In terms of the judgment in JOHNSON AND JOHNSON v
CHEMICAL WORKERS INDUSTRIAL UNION AND OTHERS
(1998) 12 BLLR 1209 (LAC), this court is empowered to consider
(1998) 12 BLLR 1209 (LAC), this court is empowered to consider
whether it should award the applicant compensation. Dr van Zyl
urged the court that should it find the dismissal procedurally unfair it
should award the applicant no compensation. The reasons set out in
the JOHNSON AND JOHNSON case are very clear and they, in a
sense, can be ascribed to something or some conduct on the part of
the employee. In that case the court found that the employees had
prevented or taken steps that prevented the respondent from
complying with section 189 or from remedying its failure to comply
with section 189.
[25] In this case, the failure to afford the applicant
a proper and enough opportunity to prepare herself and
to ponder possible suggestions cannot be ascribed to
anything done by her. It cannot also be argued that the respondent
was lulled into a false sense of security by the responses of the
applicant in
stating that she understood why she had to be retrenched and in not
challenging anything. If at all, the applicant's unchallenged evidence
that she was
shocked should be taken seriously. If a person was
shocked, as she says she was, which this Court accepts,
then it is conceivable that she was in no position to
say anything. In my view, the applicant has made out a
case for her to be awarded compensation. This Court, however,
will not award her compensation for the period from the expiry of the
thirty day period that the Commission had to resolve her dispute to
the time when she referred the dispute to this Court.
[26] The order of the court is therefore:
1. The dismissal of the applicant was procedurally unfair.
2. The Respondent is ordered to pay the applicant compensation
amounting to 14 months salary calculated at the applicant’s rate of
pay at the time of her dismissal.
3. The Respondent is ordered to pay the applicant’s legal costs.
MLAMBO J
Date of judgment: 05 August1999.
For the applicant: Mr R.K Jardine of Mathie Meyer & Granett Attorneys,
East London.
For the respondent: Dr Van Zyl instructed by Van Zyl’s
Incorporated.