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IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO. J1440/98
In the matter between:
K. RAJU First Applicant
B. MAHADO Second Applicant
V. GOVENDER Third Applicant
S. REDDY Fourth Applicant
M. MOODLEY Fifth Applicant
D. MOODLEY Sixth Applicant
K. MOODLEY Seventh Applicant
K. PILLAY Eighth Applicant
and
SCOTTS / SELECT-A-SHOE
a division of SOUTH AFRICAN
BREWERIES LIMITED Respondent
J U D G M E N T
VAN NIEKERK A.J.
(38)The Applicants were all formerly employed as dedicated stocktakers by
Scotts. They were retrenched on 22 April 1997. Their Union, Distributive,
Catering, Hotels and Allied Workers' Union (DICHAWU), declared a dispute with
the Respondent and referred the dispute to the Commission for Conciliation,
Mediation and Arbitration (CCMA) for conciliation. That dispute was certified as
unresolved by the Conciliator on 9 June 1997.
(38)Proceedings were instituted in accordance with Rule 6 in terms of which the
Applicants claim that the retrenchment occurred in contravention of section
189 of the Labour Relations Act of 1995. It is alleged that the Respondent -
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3.1failed to disclose in writing the matters referred to in section 189(3);
3.2failed to consult with DICHAWU on matters referred to in section 189(2);
3.3it failed to utilise fair and objective selection criteria.
(38)The Applicants also contend that the retrenchment was substantively unfair
but did not during the trial seriously contest the substantive fairness of the
retrenchment. At the commencement of the trial the Applicants' attorney filed
a notice in which he amended the relief that they sought in their Statement of
Case to claim compensation only.
THE BACKGROUND FACTS
(38)Scotts and Select-a-Shoe are run as two separate chains of stores, and they
form a division of South African Breweries. Scotts has a bargaining relationship
with DICHAWU with whom it from time to time bargains for wages and other
working conditions. DICHAWU has shop stewards in both chains of stores.
(38)Select-a-Shoe performs its stock taking in store whereas prior to the
retrenchment Scotts employed dedicated stocktakers who visited stores in the
region where they worked and performed stock taking for them. Difficulty was
encountered with this method of stock taking. Although the staff at each store
were held accountable for the loss of stock, they were not performing their
own stock take. The result is that staff complained about the accuracy of stock
taking and did not accept the results of the dedicated stocktakers.
(38)Because Scotts and Select-a-Shoe had suffered a R35 million loss at the end
of 1996 and a R17 million loss at the end of the 1997 financial year, the Board
of South African Breweries put pressure on the two chains of stores to turn
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their trading results around.
(38)One of the ways in which it was decided a saving could be achieved was to
retrench the dedicated stocktakers. It was envisaged that stock taking would
then be performed, like Select-a-Shoe, in the stores themselves. Retrenchment
of the dedicated stocktakers would save money not only on salaries and
vehicles but also on the expenses of accommodation and travelling when they
travelled away from home.
(38)The fact that their positions were vulnerable must have come to the ears of
the stocktakers because in February 1997 one of them telephoned Mrs C.A.
Atkinson who was, at the time of the retrenchment, the Human Resources
Manageress for Scotts and Select-a-Shoe. This person expressed fears that the
stocktakers were going to be retrenched. Mrs Atkinson testified that she was
not aware of this possibility and as a result of this telephone call arranged an
informal meeting with the stocktakers in the regional office. The stocktakers
expressed their concern to Mrs Atkinson at this meeting. She telephoned the
managing director and he informed her that no decision had been made
regarding retrenchment but that ways were being looked at to achieve
savings. Mrs Atkinson ended the meeting by assuring the stocktakers that if
their positions were identified for retrenchment, they would be consulted with.
(38)At about the same time that this meeting took place a substantive agreement
was concluded between Scotts and DICHAWU for the year 1 April 1997 to
March 1998. That agreement was concluded on 18 March 1997. It provided for
a 10.5% across the board increase in salaries and also set minimum wages for
stocktakers at R1,550.00 per month. The agreement also included the
following clause;
"The Company and Union agreed that it is the Company's intention not to close
any stores within the 1998 financial year for any reason other than those
outside the Company's control."
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(38)On 1 April 1997 Mrs Atkinson wrote to DICHAWU when she suggested that a
meeting be arranged,
"regarding the various rumours and concerns that the stocktakers have
expressed..."
Attached to the letter was a list of names of the stocktakers. A meeting was duly
arranged for 21 April. Mrs Atkinson again wrote to DICHAWU on 10 April 1997
in which she advised that the matters which would be discussed at the
meeting were the stocktakers in Scotts and the possible closure of three
stores.
(38)A meeting duly took place on 21 April 1997. Mrs Atkinson represented Scotts
and DICHAWU was represented by Mr Oscar Malgas. There were also a number
of shop stewards present. At this meeting, the minutes of which were kept by
Mrs Atkinson, discussion centred largely on the closure of the three stores.
After that subject had been dealt with, Mrs Atkinson raised the possible
retrenchment of the stocktakers. After she had given the Union the reasons for
the possible retrenchments she asked Mr Malgas for his response. According to
Mrs Atkinson the Union's response was the following:
"The union have nothing to say in regard to the stocktakers."
(38)According to Mrs Atkinson this response was unusual for Mr Malgas because
he is normally extremely defensive and sensitive about the closure of stores
and the retrenchment of employees. For this reason she again asked him what
DICHAWU's position was on this question. According to her he again responded
by saying that the Union had nothing to say in regard to the stocktakers.
(38)Mr Malgas' version of what was said differed to that of Mrs Atkinson.
According to him he told her that DICHAWU needed time to consider what had
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been said.
(38)The retrenchment was effected on the next day, 22 April 1997.
(38)Although Mrs Atkinson's version appears to be improbable, I am satisfied that
what she says happened is correct. This is what is reflected in the
contemporaneous minute which Mrs Atkinson kept and words to the same
effect are echoed in a letter from Mr Malgas reacting to the retrenchment
which he wrote on 23 April 1997.
(38)Mr Malgas did not in that letter state that he had told Mrs Atkinson that
DICHAWU needed time to consider what had been said. The letter does,
however, reflect DICHAWU's indignation at the retrenchment. Although it is, as
Mr Maeso who appeared for the Respondent submitted, a difficult letter to
understand, it is clear that what Mr Malgas alleges is that the consultation held
on 21 April 1997 was a sham. He further suggested that the parties should
engage themselves in bona fide consultations and that what should be
considered is whether the principle of LIFO had been fairly applied.
(38)In a further letter to Respondent dated 25 April 1997 DICHAWU revealed the
reason for its unusual response at the meeting of 21 April. Mr Malgas in that
letter stated that the Union did not take seriously the proposal to retrench
stocktakers because that would have been in breach of the wage agreement.
DICHAWU further demanded the reinstatement of the retrenched stocktakers
and proposed that negotiations start afresh. This was rejected by the
Respondent.
THE CASE OF PROCEDURAL UNFAIRNESS
(38)The case against the Respondent is essentially that no proper consultation
took place with the Applicants' representative prior to the implementation of
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the retrenchment.
(38)Much was made of the fact that the meeting of 21 April was the first
indication that DICHAWU had that the Respondent was contemplating the
retrenchment of the stocktakers. Mrs Atkinson countered this allegation by
referring to the letter of 1 April 1997 in which she recorded that there had
been telephone conversations regarding rumours concerning the stocktakers
and in which she expressed the need for a meeting in regard to those rumours.
She furthermore pointed out that a list of the stocktakers that were members
of DICHAWU was attached to that letter.
(38)I am satisfied that DICHAWU must have been aware that the retrenchment of
the stocktakers was being contemplated. Evidence by Mr Malgas to the
contrary does not withstand scrutiny. That does not, however, mean that any
consultations took place before 21 April. That was not the Respondent's case.
Indeed, it was common cause that the first meeting at which the Respondent's
proposals were to be discussed took place on 21 April. It was, however, the
Respondent's case that DICHAWU not only knew that the retrenchment of the
stocktakers was being contemplated but that it should have prepared itself
properly for the meeting so that it could meaningfully consult with the
Respondent.
(38)No doubt the Respondent is correct that DICHAWU ought to have taken a
more active interest in the fate of the stocktakers. That does not, however,
mean that the Union was obliged to prepare itself in such a way that
consultation could have been completed on or shortly after the 21st. That
would be unreasonable. The Respondent had not prior to 21 April given any
indication of the reasons for the stocktakers' retrenchment, the criteria that
would be applied and the retrenchment package that the company proposed. It
must also be borne in mind that no information required to be provided in
must also be borne in mind that no information required to be provided in
writing in terms of section 189 of the LRA was provided either prior to or during
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the meeting of 21 April.
(38)It stands to reason that DICHAWU would have been entitled to consult its
members after the meeting of 21 April and to revert to the Respondent on a
later agreed date. This did not happen for two reasons. Firstly, Mr Malgas did
not ask for time and adopted the curious attitude that he had nothing to say in
regard to the stocktakers. This was because he, in my view, misunderstood the
agreement that had been reached on 18 March 1997. From the quote in
paragraph 9 above it is clear that the Respondent was not contractually
precluded from retrenching employees. Secondly, Mrs Atkinson testified that
she understood Mr Malgas' statement that he had nothing to say as
constituting consent to the retrenchment of the stocktakers.
(38)Both persons must be criticised for their behaviour. Mr Malgas behaved
irresponsibly by not taking the Respondent seriously and participating in the
consultation process. Had he taken the trouble of explaining to Mrs Atkinson
that he considered the wage agreement to preclude retrenchments, the matter
could have been debated and, no doubt, cleared up. Mrs Atkinson, on the other
hand, should have realised that something was amiss and should not have
proceeded with the retrenchment of the stocktakers without clarifying matters
and warning Mr Malgas that she intended proceeding with the retrenchments
on the following day. An over hasty approach to the retrenchment and the
grasping of an opportunity in circumstances where something was clearly
wrong led to the retrenchment of twelve employees who all had long service
with the Respondent.
(38)That there was something amiss was conceded by Mrs Atkinson. I asked her
why she did not at least telephone Mr Malgas to again discuss the matter with
him to try to get to the bottom of his peculiar response. She responded that
she was under pressure from management to bring finality to the
retrenchment.
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(38)This also explains why the Respondent did not, when DICHAWU complained
about the retrenchments on 23 April 1997, withdraw the retrenchment notices
and continue the consultation process.
(38)Mr Maeso argued that the Respondent ought not to bear the brunt of the
blame for what occurred. He argued that had Mr Malgas not adopted the
attitude that he did, proper consultations would have taken place.
(38)I do not agree with this submission. In terms of section 189 the Respondent
bore an onus to consult with DICHAWU in such a manner that a joint consensus
seeking process occurred. See Johnson & Johnson (Pty) Ltd v Chemical
Workers' Industrial Union (1999) 20 ILJ 89 (LAC) at paragraph 27.
(38)Mr Malgas' lack of comment to the Respondent's proposals did not, in my
view, amount to consent to proceed with the retrenchment. I say so because
consent in such circumstances must constitute a waiver of the Applicants'
rights in terms of section 189. Clear evidence of a waiver is required and when
assessing the probabilities, it must be borne in mind that a party is not lightly
deemed to have waived his rights. Feinstein v Niggli 1981 (2) SA 684 (A).
(38)On the evidence before me, I am not satisfied that DICHAWU either
consented to the retrenchment or that it waived the Applicants' rights in terms
of section 189.
THE RELIEF PRAYED
(38)The claimants (excluding the Third Applicant) seek compensation from the
date of their dismissal to the last day of the hearing of this matter.
(38)Mr Maeso argued that because the Applicants did not apply to the
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Respondent for alternative employment when it became available, I should
exercise my discretion against the Applicants and not award them any
compensation.
(38)Mrs Atkinson testified that positions with the Respondent did, from time to
time, become available after the retrenchment of the stocktakers. It was
common cause that none of the Applicants were directly offered any positions
but that the Applicants could have enquired from any Scotts store or from
DICHAWU shop stewards what positions were available. Mrs Atkinson further
testified that at the conciliation hearing in June 1998 she encouraged the
Applicants to apply for vacant positions. When asked whether the Applicants
would have been given vacant positions, Mrs Atkinson replied that they
possibly could have. She stated that age would not have been a decisive factor
but that re-employment would have been important to the Respondent.
(38)The First Applicant testified that at the time of his retrenchment he was told
that if any positions became vacant he would be given preference. He was not
contacted and offered any position. He did not enquire about any position with
the Respondent because he assumed that the Respondent would be hostile to
him after he and the other Applicants had instituted proceedings against it.
(38)In my view, the Applicants cannot be criticised for not having applied for
vacant positions. Apart from the fact that no offers of re-employment were
made to them and no vacancies were directly communicated to them, I
consider it unreasonable to have expected the Applicants to apply for re-
employment in circumstances in which they were unfairly retrenched and were
in dispute with their former employer. To exercise my discretion against the
Applicants in these circumstances would, in my view, be wrong.
(38)In exercising my discretion to award the Applicants compensation I also take
(38)In exercising my discretion to award the Applicants compensation I also take
into consideration the following factors. Firstly, the Applicants all had long
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service with the Respondent. Secondly, I consider it unlikely that the Applicants
will easily find alternative employment. It was the evidence of the First
Respondent that he had tried to find other employment but because of his age
he was unsuccessful in doing so. Thirdly, the Applicants were all paid a
severance package less than the statutory minimum provided for in section
196(1).
(38)Mr Maeso also argued that the Applicants should not be awarded any
compensation in respect of the period in which there was an unreasonable
delay in the initiating of proceedings against the Respondent. He submitted
that this period was approximately one year. The Applicants instructed an
attorney in September 1997, some three months after the conciliation process,
but that attorney inexplicably did nothing until the matter was taken on by Mr
Koekemoer in May 1998. I agree that there was an unreasonable delay in
instituting these proceedings. One of the objects of the LRA is to promote the
effective resolution of labour disputes. There cannot be effective resolution of
disputes unless litigants are encouraged to avoid unreasonable delays. In my
view, it would be fair if the compensation the Applicants are entitled to is
reduced by six months.
(38)The Applicants are, in any event, only entitled to compensation for a
maximum period of twelve months. In this regard I consider that section 194(1)
should be interpreted in such a fashion that the limit of twelve months'
remuneration referred to in sub-section (2) is equally applicable to sub-section
(1). Were this not to be the case it would lead to the anomalous interpretation
that for dismissals which are substantively unfair compensation is limited to
twelve months' remuneration but in cases of procedural unfairness there is no
limit apart from the fact that compensation may not be awarded beyond the
limit apart from the fact that compensation may not be awarded beyond the
last day of the hearing of the adjudication. This could not have been intended
by the legislature. See Whall v BrandAdd Marketing (Pty) Ltd [1999] 6 BLLR
626 (LC) at paragraph 37 and Vickers v Aquahydro Projects (Pty) Ltd [1999] 6
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BLLR 620 (LC) at paragraph 26.
(38)The order that I make is that each of the Applicants (excluding the Third
Applicant) are entitled to be paid their monthly salaries as at the time of their
dismissal for a period of six months. I also order that the Respondent pays the
Applicants' costs of suit.
G.O. VAN NIEKERK SC
ACTING JUDGE OF THE LABOUR COURT
DATE OF HEARING:
10TH, 11TH AND 25TH JUNE 1999
DATE OF JUDGMENT:
7 JULY 1999
FOR THE APPLICANTS:
ATTORNEY W.H. KOEKEMOER
from WILLEM KOEKEMOER ATTORNEYS
FOR THE RESPONDENT:
MR M.G. MAESO
from SHEPSTONE & WYLIE
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GVN.99\RAJU.JUD
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