IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN CASE NO : C312/98
In the matter between :
INSURANCE AND BANKING STAFF
ASSOCIATION (IBSA) First Applicant
HEATHER PAULSEN Second Applicant
NICHOLAS DAMANE Third Applicant
PENNY CLARK Fourth Applicant
CHANTAL STANDER Fifth Applicant
and
S A MUTUAL LIFE ASSURANCE SOCIETY Respondent
__________________________________________________________________
JUDGEMENT
__________________________________________________________________
JAJBHAY, A.J. :
[76] In this matter, I was called upon to determine whether the
dismissal of the Second, Third, Fourth and Fifth Applicants ("the individual
Applicants") was effected for a fair reason and in accordance with a fair
procedure.
BACKGROUND
[76] The individual Applicants were all employed in the Employment
Services Department which is part of the Human Resources Division of S A
Mutual Life Assurance Society ("Respondent").
[76] It is common cause that the individual Applicants were dismissed
1
by the Respondent, allegedly on the basis of the operational requirements of
the Respondent's business, on 31 May 1998. The last day of their
employment was on the 13th of March 1998, and the individual Applicants
were paid until the end of their notice period at the end of May 1998.
[76] The Respondent has operated for many years as a mutual
society, offering a range of life insurance and pension benefits, investment
products and financial services.
[76] At the time of the dismissal, the Respondent was being re-
organised from a structure which consists of divisions with various
departments in each division into a range of divisions, departments and
business units, each with its own customer segment and profit
accountability.
[76] Each division, department and business unit has specific
functions and had to provide a specific and specialised service to the
Respondent's clients, both internal and external.
[76] The Employment Services Department ("Employment Services")
is a department within the Human Resources Division. The primary function
of Employment Services was to ascertain the staff recruitment needs of the
Respondent, to advertise available posts and positions both internally and
externally, and to select and recommend suitable candidates for the filling of
any vacancies.
RESPONDENT'S EVIDENCE
[76] Prior to February 1998, several divisions, departments and
business units of the Respondent expressed dissatisfaction with the
functioning, advise and service offered by Employment Services. The
dissatisfaction included :
e. allegations that Employment Services had an inadequate
understanding of client needs;
e. allegations that Employment Services was following certain
processes and procedures in a mechanical fashion which resulted in
problems relating to the recruitment and recommendation of inappropriate
candidates for the filling of vacancies;
candidates for the filling of vacancies;
e. the furnishing of inadequate advise by Employment Services
including a failure to properly screen applicants;
e. excessive delays in the filling of vacancies by Employment
Services;
e. the failure of Employment Services to proactively anticipate
client's needs in a rapidly changing environment.
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[76] The evidence further established that the Respondent has and
continues to undergo various fundamental changes, that resulted from the
preparations for the proposed demutualisation and listing of the Respondent
as well as a concerted effort, by the Respondent to restructure itself to
achieve a greater focus on client needs (both internal and external), to
develop specific structures and capabilities to suit particular needs, to focus
on emerging sectors of the economy and to properly and adequately
compete in the global economy. The changes that I have alluded to above,
had several inevitable consequences. These included various measures,
adopted by the divisions, departments and business units, to increase their
efficiency and profitability.
[76] Consequently, several of the Respondent's divisions,
departments and business units were converted to separate companies, and
incorporated under the provisions of the Companies Act. This resulted in
their operating more autonomously.
[76] It was stated in evidence that the changes within the Respondent
were known to the Respondent's employees which included the individual
Applicants as well as the Insurance and Banking Staff Association (IBSA).
IBSA is a registered trade union and was duly authorised to represent the
individual Applicants in these proceedings.
[76] Employment Services, as a result of the dissatisfaction expressed
by its clients, lost a number of key clients including Old Mutual Properties,
Old Mutual Asset Management, Information Services Division. These clients
indicated that due to reasons such as the Employment Services' lack of
knowledge in the Information Technology Department, coupled with the time
that was taken to fill vacancies, they considered the utilisation of outside
consultants to meet their recruitment needs, or alternatively they would
employ the necessary staff themselves.
[76] The management at the Respondent's Human Resources
[76] The management at the Respondent's Human Resources
Division, informed by the circumstances set out above, formed the view that
Employment Services should be restructured as a matter of urgency. If this
was not done, the viability of the department would be at stake. As I
understood the evidence, the primary aim of such restructuring was to
provide a wider range of appropriate and efficient services in order to meet
and solve concerns raised by clients.
[76] A proposal regarding the restructuring was conveyed for the first
time to employees within Employment Services on the 13th of February
1998. The proposal entailed inter alia, that each employee in Employment
Services submit certain documentation to a selection panel which would
then interview and evaluate each employee to ascertain their suitability for
the various positions envisaged, following upon the suggested restructuring
in the Employment Services Department. Where a candidate was not
successful, such a candidate would be placed on a redeployment list with a
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view to placing the candidate in an alternate position were such a position
available, with the Respondent. Alternatively, in terms of the proposed
restructuring, the employee could elect immediately to receive the
employee's severance package.
[76] The following extract is important for the purposes of the present
matter, which is the introductory paragraph in the proposed restructuring
document
"For some time now Employment Services has received negative feedback
regarding the services that it provides. This is confirmed in both the findings
of the Perry Report of October 1995, which refers specifically to Employment
Services' inability "to meet the clients' needs", as well as the insufficient
focus on "black recruitment". More recently, this was reconfirmed by the
client survey conducted in March 1997. This survey showed that
Employment Services rated the most poorly of all the departments in Human
Resources regarding its services to clients."
"Further dissatisfaction was also expressed by the IT community, in a forum
(held in September 1997) chaired by Vic Lumby, which criticised the inability
of Employment Services to provide a value-added service."
[76] In terms of the minutes of the meeting held on the 13th of
February 1998, and in response to a question raised by the employees, as to
whether the exercise was to cut costs and "therefore have heads rolling" , it
was stated that this exercise was not a cost issue. The exercise was "to
upgrade the level of service provided by this unit, and other suggestions are
welcome".
[76] At this meeting, it was suggested as an alternative that
"sufficient training be provided to each person of this unit before going
through the suggested restructuring process" . In response to the suggested
alternative, the management delegate stated that "This would be
considered as an option and had been noted."
[76] The management delegate, had continually stressed at this
[76] The management delegate, had continually stressed at this
meeting that "the intention was not to drag the process out and therefore
traumatise and stress people unnecessarily. The issues on hand has to be
dealt with as quickly and effectively as possible."
[76] It was common cause that meetings with regard to the process
took place on the following dates up to the last day of the service of the
individual Applicants : 13 February 1998; 20 February 1998; 23 February
1998; 2 March 1998; 4 March 1998; 9 March 1998; 11 March 1998 and 13
March 1998.
[76] The employer's case then proceeded to set out that a process of
consultation thereafter occurred. The individual Applicants as well as IBSA
participated in the process of consultation, to a certain point in time. It was
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testified that the Applicants thereafter refused to further participate in the
consultation process and further refused to submit any documentation or
applications to the selection panel, or to be interviewed to enable the
Respondent to assess the positions of the individual Applicants with regard
to the restructured department.
[76] It was common cause that all the remaining employees save for
the individual Applicants in Employment Services continued to participate in
the consultation process. Such other employees submitted applications and
documentation and attended interviews which ultimately enabled the
employees to be assessed. All the employees who participated in the steps
set out by the employer, were placed within the restructured Employment
Services Department.
[76] The Respondent's case was that as a direct result of the refusal
of the individual Applicants to participate in the process of further
consultation and their refusal to take the steps as were necessary to enable
the Respondent to consider their placement within the restructured
department, Respondent was unable to determine whether the individual
Applicants should be placed in the restructured department, and if so, in
what posts. The individual Applicants were, in the circumstances, informed
that they did not have to report to work on Monday, 16th March 1999.
Pursuant to the Respondent's policy to allow a two calendar month
redeployment period, which in the case of the Applicants, ended on the 30th
of May 1998.
[76] Subsequently, the Respondent in an endeavour to settle the
dispute that existed with the individual Applicants offered to attempt to
redeploy the individual Applicants on certain terms and conditions, which
included :
"1. That the Applicants were not redeployed in the Employment Services
area but elsewhere within the organisation;
2. That there was no guarantee that such redeployment would be
successful;
2. That there was no guarantee that such redeployment would be
successful;
3. That only ad hoc access would be granted over the two month period
during which the redeployment exercise would take place;
4. The employees would be paid an ex-gratia amount equivalent to two
month's salary during the redeployment period."
[76] The individual Applicants were not prepared to accept such an
offer.
[76] The Applicants in this matter did not tender evidence nor was
any evidence led on their behalf.
5
JOB CONTENT BEFORE AND AFTER THE RESTRUCTURING
[76] From the evidence tendered on behalf of the Respondent, I make
the following observations with regard to the restructuring :
a. The "old" and "new" structures set out in the proposed restructuring
process document, are essentially the same and in my view, the jobs have
merely been renamed.
e. Of the eight incumbents who reapplied for the positions in the "new"
structure, all were reappointed. Upon a proper consideration between the
"old" and "new" jobs, it appeared that they were doing essentially the same
work after the restructuring as they had been prior to 13 February 1998.
e. In answer to a question as to how the new recruitments had acquired
new skills and managed to perform adequately after the restructuring, Ms
Griffiths who testified on behalf of the Respondent, and who was the
manager at Employment Services at all material times, replied that these
individuals were expected to fill the new roles and subsequently attended
training. With regard to Peggy Mpangela, who was employed as a
receptionist in the old structure, she received "on the job" coaching and
support.
e. Ms Griffiths conceded under cross-examination that one of the
employees who served as "clerical" recruitment specialist under the old
structure was appointed as clerical staff specialist under the new structure.
Ms Griffiths further testified that the changes in their respective roles were
that they had to work more closely together and develop a pool of
applicants; they had to further understand the clients' needs; and they had
to tap and source potential recruits. According to Ms Griffiths, Nwabisa
Muthige tapped into potential recruits by joining the Black Managers Forum.
e. Of importance was the concession on the part of Ms Griffiths that the
individual Applicants could have easily attended to all of these functions
under the new structure.
under the new structure.
e. Ms Griffiths further testified that the fundamental difference within the
new structure was "how the staff went about performing their functions".
REDUNDANCY OF JOBS
[76] Mr Alexander (who was Ms Griffiths predecessor in Employment
Services Department during the time February 1997 to October 1997)
testified that Employment Services needed to employ more recruitment
consultants to deal with the time that it took to fill vacancies. In fact two
additional staff members were appointed at the commencement of Mr
6
Alexander's management period and another at the end of his term.
[76] Employment Services was in fact employing individuals one
month before the restructuring programme was furnished to the individual
Applicants.
[76] There was not a great difference between the old and existing
jobs.
[76] Ms Griffiths further conceded that some of the new functions of
recruitment consultants in terms of the new structure, for example graduate
recruitment, affirmative action programmes and maintaining a database of
job applicants, were already being carried out by the incumbents prior to the
restructure.
[76] Ms Griffiths further confirmed that after informing the individual
Applicants that their services were not required on the 13th of March 1998,
she appointed two contractors to attend to the roles of the Fourth and Fifth
Applicants.
WORK OVERLOAD
[76] According to the evidence, there was no doubt that the
recruitment consultants were burdened with an overloaded task. At one of
the forum meetings, Ms Griffiths confirmed that the number of recruitment
consultants should increase due to the work overload in the department.
She further testified that she had recommended the appointment of four
additional recruitment consultants, and the benchmark of ten vacancies per
recruitment consultant should be the norm, as compared to the average of
nineteen. It was agreed that the Fourth and Fifth Applicants had a workload
of thirty-five to forty vacancies a month.
COMPETENCY AND TRAINING
[76] Mr Alexander who had drawn up a performance matrix agreed
that all of the individual Applicants were competent in every area in which
they were required to deliver services. It was further conceded by Mr
Alexander that the training courses for Employment Services staff members
was designed to increase the skills and competency in the jobs that they
were performing at the time. It was further common cause that after
were performing at the time. It was further common cause that after
February 1998, and after the business case was drawn up, none of the
individual Applicants were sent on training.
[76] The evidence further indicated that all of the individual
Applicants during their performance appraisal were rated as "very good" or
7
"competent". The performance appraisals were conducted during May 1997
and under the management period of Mr Alexander. Some of the
incumbents who were subsequently reappointed on the other hand, were
rated as "not yet competent".
[76] It was not disputed by Ms Griffiths that the "training costs"
envisaged in the business plan could have been used to train the team
before the individual Applicants were dismissed.
[76] Ms Griffiths was unable to say whether certain competencies
were not existent within the individual Applicants.
[76] It is important to note that the job content had not changed,
however as Ms Griffiths stated "the manner of performing was different in
terms of the new structure".
THE POSTPONEMENT ISSUE
[76] Before attempting to analyse the legal position as well as the
facts, I need to dispense with the application for postponement that was
made by Mr Oosthuizen acting on behalf of the Respondent.
a. In terms of the Notice of Set Down served on the parties on the 11th of
February 1999, the Registrar of this Court informed the parties that the trial
has been enrolled for hearing on the 10th of August 1999. The Notice of Set
Down draws the attention of the parties to inter alia the following :
"The Labour Court keeps a continuous roll. Parties are required to finalise
the hearing within the period envisaged by them in the Pre-trial Minutes. A
trial continues from the date of set down until it is complete and the parties
and their representatives must be available to complete the trial."
[76] As a result of the learned Judge who was tasked with the trial
having taken ill, this matter could not commence on the 10th of August
1999. The matter was then called on the 11th of August 1999.
[76] The parties were ad idem that the matter be set down for a
period extending over five days.
[76] At the time that the application for a postponement was made,
and after having heard Mr Oosthuizen as well as Mr Steenkamp the latter
and after having heard Mr Oosthuizen as well as Mr Steenkamp the latter
acting on behalf of the Applicants, I ordered that the application be denied
and that my reasons would be set out at a later stage. My reasons in
respect thereof follow.
[76] The principle reason for the application as I understood Mr
Oosthuizen's argument was that if this matter was not concluded within the
five day period, the legal representatives may have an availability problem.
He further anticipated certain logistical difficulties. Mr Oosthuizen argued
8
that it would be preferable to finish in one sitting as the implications would
impact directly on the records and the costs. Mr Steenkamp opposed the
application and insisted that the matter must continue.
[76] The witnesses were all prepared, and there was no other reason
that Mr Oosthuizen could furnish in addition to those already stated above.
[76] In an application for postponement, the legal principles
established in the High Court over the years apply equally in practice in the
Labour Courts. For the purpose of the present application, the following
principles apply :
a. The trial Judge has a discretion as to whether an application for
postponement should be granted or refused.
(R v Zackey 1945 AD 505;
Myburgh Transport v Botha t/a SA Truck Bodies 1991 (3) SA 310
NMSC)
e. That discretion must at all times be exercised judicially. It should not be
exercised capriciously or upon any wrong principle, but for substantial
reasons.
(R v Zackey supra;
Myburgh Transport supra;
Joshua v Joshua 1961 (1) SA 455 (GW) at 457D)
e. The trial Judge must reach a decision after properly directing his/her
attention to all relevant facts and principles.
(Prinsloo v Saaiman 1984 (2) SA 56 (O);
Johannesburg Stock Exchange and Another v Witwatersrand Nigel
Limited and Another 1988 (3) SA 132 (A))
e. An application for postponement must be made timeously, as soon as
the circumstances which might justify an application become known to the
Applicant. However, in cases where fundamental fairness and justice justify
a postponement, the Court may in an appropriate case allow such an
application for postponement, even though the application was not
timeously made.
(Myburgh Transport supra;
Greyvenstein v Neethling 1952 (1) SA 463 (C)).
e. The application for postponement must always be bona fide and not
used simply as a tactical manoeuvre for the purpose of obtaining an
advantage to which the Applicant is not legitimately entitled.
advantage to which the Applicant is not legitimately entitled.
e. "Considerations of prejudice will ordinarily constitute the dominant
component of the total structure in terms of which the discretion of a Court
will be exercised." What the Court has primarily to consider is whether any
prejudice caused by a postponement to the adversary of the Applicant for a
postponement can fairly be compensated by an appropriate order of costs or
9
any other ancillary mechanisms.
(Herbstein and Van Winsen, The Civil Practice of Superior Court in
South Africa, 3 ed. at 453;
Myburgh Transport supra)
e. "The Court should weigh the prejudice which will be caused to the
Respondent in such an application if the postponement is granted against
the prejudice which will be caused to the Applicant if it is not."
e. Where the Applicant for a postponement has not made the application
timeously, or is otherwise to blame with respect to the procedure which the
Applicant has followed, but justice nevertheless justifies a postponement in
the particular circumstances of a case, the Court in its direction might allow
the postponement but direct the Applicant in a suitable case to pay the
wasted costs of the Respondent occasioned to such a Respondent on a scale
of attorney and client. Such an applicant might even be directed to pay the
costs of the adversary before the Applicant is allowed to proceed with the
action or defence in the action, as the case may be.
(Van Dyk v Conradie and Another 1963 (2) SA 413 (C);
Tarry and Company Limited v Matatiele Municipality 1965 (3) SA
131 E;
Myburgh Transport supra)
[76] In the present matter, the application for postponement was to
meet the availability difficulty that counsel may have experienced, together
with the "logistical difficulty". I was not satisfied that these factors were in
any way sufficiently compelling or warranted a postponement of the matter.
In circumstances such as the present one, the parties as well as the legal
representatives must be prepared to attend to their duties until the matter
has been completed. The logistical difficulty alluded to, would have been on
the part of the Registrar of this Court. The Registrar would have been
terribly inconvenienced and this matter could only have been set down some
time towards the beginning of the new millennium were I to have favourably
ruled with regard to the application for postponement.
ruled with regard to the application for postponement.
[76] It was for the reasons aforesaid that the application for
postponement was denied.
[76] I now turn to the discussion of the merits with particular regard
to the evidence as I have set out hereinbefore.
THE CONCEPT OF OPERATIONAL REQUIREMENTS
[76] Section 189 of the Labour Relations Act, Act 66 of 1995 as
amended (the Act) sets out a number of substantive provisions applicable to
a dismissal for a reason that is based on the employer's operational
requirements. The term "operational requirements" is defined in Section
213 of the Act as meaning :
10
"Requirements based on the economic, technological, structural or similar
needs of an employer."
[76] It is axiomatic that the Act requires a company to consult with its
employees or their union before a final decision is taken with regard to the
employee's dismissal for reasons based on the employer's operational
requirements.
(Johnson & Johnson (Pty) Limited v Chemical Workers Industrial
Union (1999) 20 ILJ 89 (LAC);
SA Clothing and Textile Workers Union and Others v Discreto - A
division of Trump and Springbok Holdings (1998) 19 ILJ 1451 (LAC);
Section 189 of the Act.)
[76] Clive Thompson in a leading article entitled "Bargaining,
Business Restructuring and The Operational Requirements Dismissal"
(1999) Vol. 20, ILJ states as follows :
"When labour and management go into dispute over business restructuring
(at the end of whatever kind of process), on the other hand, dismissal may
unfold from the very logic of the exercise. But at the stage an employer
seriously contemplates dismissal for operational requirements, the
interaction moves from the domain of bargaining or consultation to
adjudication, from interests (power) to rights (law). And whether the
dismissal can stand depends again on whether fair grounds arising from
business needs can be demonstrated." (Emphasis added).
[76] It is not the function of this Court to decide ultimately whether
the decision made by the employer is the correct one or whether this Court
in fact agrees with that decision. This point was emphasised by Froneman,
DJP in SACTWU and Others v Discreto supra at 1230G where the
following was said :
"For the employee fairness is found in the requirement of consultation prior
to a final decision on retrenchment. This requirement is essentially a formal
or procedural one, but, as is the case in most requirements of this nature, it
has a substantive purpose. That purpose is to ensure that the ultimate
has a substantive purpose. That purpose is to ensure that the ultimate
decision on retrenchment is properly and genuinely justifiable by operational
requirements, or put another way, by a commercial or business rationale.
The function of the Court in scrutinising the consultation process is not to
second guess the commercial or business efficacy of the employer's ultimate
decision (an issue on which it is, generally not qualified to pronounce upon),
but to pass judgment on whether the ultimate decision arrived at was
genuine and not merely a sham (the kind of issue which Courts are called
upon to do in different settings, every day). The manner in which the Court
judges the latter issue is to enquire whether the legal requirements for a
proper consultation process have been followed and, if so, whether the
ultimate decision arrived at by the employer is operationally and
commercially justifiable on rational grounds, having regard to what emerged
from the consultation process. It is important to note that when determining
the rationality of the employer's ultimate decision on retrenchment, it is not
11
the Court's function to decide whether it was the best decision under the
circumstances, but only whether it was a rational, commercial or operational
decision, properly taking into account what emerged during the consultation
process."
[76] In cases such as the present one, it is the substantive and not
the procedural fairness that has to be the ultimate arbiter. Where an
employer contemplates restructuring, that would have the effect in the form
of changes to working conditions, the employer generally believes that the
business survival is dependant on a change to work conditions or practices
and procedures. Here there is no immediate attendant need or requirement
to retrench. However, a consequence of such an action would be that the
employees and their representatives will vigorously oppose such changes to
the working conditions. The views expressed by Ngcobo AJP in Imperial
Transport Services (Pty) Limited v Stirling supra (1999) at
paragraph 22 and 23 are apposite :
"The question which arises in this appeal is when does the duty to consult
arise where termination of employment is brought about by the deliberate
conduct of the employer, such as restructuring of the business or
introduction of changes in its operation. It seems to me in such a case, the
duty arises when the employer, having foreseen the need for it,
contemplates changes which might affect the job positions of certain
employees. When an employer contemplates changes in its business,
fairness dictates that the employer should, before implementing those
changes, ask the question "Are there any job positions which might be
affected by the contemplated change?" If there are job positions which
might be affected by the contemplated changes, the employees whose jobs
might be affected are, as a matter of fairness, entitled to be consulted
before such changes are implemented. The need to consult before changes
before such changes are implemented. The need to consult before changes
are implemented is obvious. Consultation provides an opportunity, inter
alia, to explain the reasons for the proposed changes, to hear
representations on possible ways and means of avoiding the loss of jobs or
minimising the effects of the changes and to discuss and consider
alternatives. Any representations made after the implementation of
changes are more likely to be met with the natural reaction to justify the
changes (SACTWU v Discreto) (supra)".
[76] Clive Thompson in his article "Operational Requirements
Dismissal" supra at page 765 continues :
"Even if the employer is convinced that operational requirements will
eventually necessitate the adoption of a particular set of employment terms
and conditions, the change process should begin with negotiation (or
consultation). The imperative to dismiss will only arise if bargaining or
consultation fails, and not before. If it does fail, and if the employer can
show that factors outside its control warrant a particular change, a case for
an operational requirements dismissal can be made. Whether dismissal is
ultimately justified depends on a judicial investigation of the underlying
12
business needs, and a policy lying call."
[76] With respect, I agree with the sentiments expressed by the
learned author.
[76] For the purposes of Section 188(1)(a)(ii), a dismissal based on
the operational requirements of the employer may pass the legislative
muster by the production of a defensible plan of business restructuring. In
cases where the dismissals are effected only to improve the employer's end
of the bargain, then this cannot be allowed. This would in effect be a matter
that is contemplated under Section 187(1)(c) of the Act. The Act simply
does not allow the employer to dismiss individuals for operational reasons in
order to entitle the employer to "boost" the employer's financial position -
the employer has to show something qualitatively more : i.e. the operational
necessity.
(See : Thompson at page 767)
[76] In cases such as the present matter, the employer's motivation
must be neither sporadic nor superficial. It is a process that the employer
has to embark upon in a diligent and conscientious fashion. The employer
must then explore ways of adjusting, coping and mitigating through an
information sharing and problem solving process.
(See : Item 12(3) of the Code of Good Practice : Dismissal, which
deals specifically with operational requirements dismissal :
"The purpose of consultation is to permit the parties, in the form of a joint
problem-solving exercise, to strive for consensus if that is possible.")
This would include an onus on the employer to show that the dismissal was
attributed mainly to the fact that the employer’s requirement for employees
to carry out work of a particular kind has ceased or diminished.
APPLICATION OF THE LEGAL PRINCIPLES
[76] The fundamental difficulties that were being experienced in the
Employment Services Division can be summarised as follows :
a. The receipt of negative feedback regarding the services that the division
provided;
a. The receipt of negative feedback regarding the services that the division
provided;
e. Dissatisfaction expressed by the IT community in a forum where the
inability of Employment Services to provide value added service was
expressed;
e. The inadequate skills level and qualifications of several of the
recruitment consultants, and their capability to deliver;
13
e. The inability of the recruitment consultants to analyse positions and
discuss potential applicants with their clients;
e. A lack of proactive recruitment initiatives.
[76] The above deficiency was summarised in the proposed
restructuring document as follows :
"In essence, the clients are requesting a sophisticated, professional service
provided by suitable qualified individuals, that is in support of their business
strategies, and which provides the expertise that they do not have. The
Employment Services Department also need to focus on what service it is
here to provide, and not get distracted by the peripheral non-recruitment
issues, such as the pre-employment medical testing and processing of
appointments that it has been currently involved in."
[76] The evidence indicated that the restructuring exercise was not
directed as a cost cutting exercise but rather a way of upgrading the level of
service that this division had to offer. In other words the procedure that was
being adopted had to be considered and changed. In my view, the
Respondent attempted to disguise a classic retrenchment exercise as
reorganisation or restructuring based on the non-delivery of services in this
division. The business strategy adopted by the Respondent in order to
achieve the desired effect, did not have the ring of a commercial rationale.
It is correct that the dismissal of the individual Applicants was not actuated
by malice, or some hidden motive, on the part of Respondent's
management. However the fundamental job content did not change, it was
the manner in which the individuals began performing that was now
different. Here, the ultimate decision arrived at by the Respondent is neither
commercially, nor operationally justifiable, on rational grounds based on
fairness.
[76] The concerns of line management, coupled with the other
fairness.
[76] The concerns of line management, coupled with the other
difficulties alluded to in the evidence e.g. the negative feedback from clients,
complaints being voiced at senior levels of management, was not discussed
with the employees in the division at any of the Friday meetings prior to the
13th of February 1998. In fact, the Human Resources operational strategy
annual report and business plan for 1998, which covers the activities during
the period 1997 potrays a very different picture of the situation prevalent at
the material time within the Employment Services Division. In terms of this
report that was settled by the manager of the Human Resources
Department, it is stated that :
"Client Satisfaction -
Area rated most poorly in satisfaction survey in March 1997. Many
complaints from clients. Since new manager appointed virtually no
complaints received. Clients who refused to use the area have been won
back and others who did not use. Two of staff have recently been given
14
special awards by client areas. Area grew from twelve to cope with work
demands. Went way over budget but very competitive against market rate."
[76] This report was finalised and circulated on the 15th of September
1997. The performance evaluation forms do not add value to the argument
that the Employment Services Division was under performing in all respects.
Mr Alexander further testified that there was an incremental improvement in
the performance of the division immediately prior to his departure during or
about October 1997. Mr West the manager of the Human Resources also
corroborated the improvement in the delivery of the services immediately
prior to the time that the decision to restructure was taken.
[76] Mr Oosthuizen referred me to the cases of Imperial Transport
Services (Pty) Limited v Stirling supra; SA Chemical Workers Union
v Afrox Limited (1998) 19 ILJ 62 (LC) ; SA Commercial Catering and
Allied Workers Union and Others v Pep Stores (1998) 19 ILJ 1226
(LC); and Van Rensburg v Austen Safe Company (1998) 1 BLLR 86
(LC).
[76] I have considered these cases and in my view they are different
from the facts in the present matter. In the above cases, it was the fairness
of the redundancy that was being determined. In the present matter, as I
understood the argument of Mr Steenkamp, it was the categorisation of the
employer's actions in the form of a restructuring exercise that was being
questioned. I have already alluded to earlier in this judgment the apparent
"differences" between the old and new structures. In my view these do not
consist of any real differences per se.
[76] The differences in the old and new structure, amounted to a
different way of delivering to clients, and not a change in the job content.
Immediately before the 13th of February 1999, there was not an iota of
suspicion within the individual Applicants that a process of restructuring was
being contemplated by the Respondent. Even if I were to be incorrect in my
being contemplated by the Respondent. Even if I were to be incorrect in my
analysis of the business decision of the Respondent, in my view the
consultative process engaged by the Respondent does not meet the muster
as envisaged in Section 189 of the Act. The manner in which Ms Griffiths
went about in collecting the information with regard to the division can be
described as questionable. With this as a starting point, it would be very
difficult to attempt to reach consensus on the objects listed in Section 189(2)
of the Act. There were no “fair grounds arising from the business needs”
that could be demonstrated. Again, the Respondent failed to show that the
particular ‘change’ was warranted: the change process did not begin with
consultation either.
[76] In all of the above circumstances, I determine that the dismissal
was not effected for a fair reason.
THE PROCEDURE FOLLOWED
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[76] A meeting was convened on the 13th of February 1998, at which
the restructuring proposal was conveyed to the affected employees. Here, it
was suggested that certain alternatives be advanced by the individual
Applicants. However there was some disagreement with regard to the time
constraints advanced by the Respondent.
[76] Thereafter, and at subsequent meetings, Ms Griffiths went to
some length to encourage all the employees in the division to participate in
the assessment exercises and the subsequent interviewing processes. She
also held individual meetings with the individual Applicants in order to try to
persuade them to participate in the assessment interviews.
[76] It is of significance that each of the employees who participated
in the process was in fact placed within the organisation subsequently. It is
possible that if the Applicants had similarly participated in the process, they
would in all probability have found a position within the department.
[76] The individual Applicants were also given the option of indicating
whether they wished to be redeployed elsewhere within the Respondent.
There is no doubt in my mind that the individual Applicants understood the
concept of redeployment. At this stage, there were acrimonious
correspondences that were being exchanged between IBSA and the
Respondent. This in fact does not detract from the fact that the Respondent
had after the 13th of February 1998 attempted to accommodate the
individual Applicants in the envisaged process. The reason set out by IBSA
for not recognising the substantive fairness of the exercise was that "the
procedures followed were fatally flawed in that the relevant sections of the
Labour Relations Act were not complied with." IBSA further stated in a letter
dated 9th April 1998 :
"The purported retrenchments were effected in bad faith and represented an
attempt to evade the provisions of the Labour Relations Act 66 of 1995
attempt to evade the provisions of the Labour Relations Act 66 of 1995
which set out the procedures and guidelines to be followed by the employers
seeking to dismiss for poor work performance."
[76] Mr Oosthuizen argued that on a procedural level, the refusal of
the individual Applicants to participate in the process precludes them from
raising complaints, at a later stage, to the fairness of the procedure followed.
I cannot find fault with this contention. However the process does not undo
the damage caused, that I have alluded to earlier in this judgment with
regard to the substantive fairness of the dismissal.
[76] In the circumstances, I am unable to find fault with the procedure
adopted by the Respondent and accordingly determine that the procedure
adopted by the Respondent was fair in the circumstances.
RELIEF
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[76] The individual Applicants do not seek reinstatement or re-
employment in this matter. I was informed by Mr Steenkamp that the
individual Applicants would seek compensation.
[76] In terms of Section 194(2) of the Act :
"The compensation awarded to an employee whose dismissal is found to be
unfair because the employer did not prove that the reason for 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."
[76] In the light of the present circumstances, I believe that it would be
just and equitable to award each of the individual Applicants an amount
equivalent to twelve month's remuneration calculated at their rate of
remuneration on the date of dismissal.
[76] Mr Steenkamp argued that the Respondent must be ordered to pay the
costs in this matter whereas Mr Oosthuizen submitted that he would leave
this particular aspect to my discretion. In terms of Section 162 of the Act,
"the Labour Court may make an order for the payment of costs, according to
the requirements of law and fairness." In this particular matter, I see no
reason why the costs should not follow the suite.
[76] In all of the above circumstances, I make the following order :
ORDER
[1] The dismissal of the individual Applicants was not effected for a fair
reason.
[4] The dismissal of the individual Applicants was in accordance with a fair
procedure.
[4] Respondent is ordered to pay the individual Applicants within 14
(fourteen) days of the date of this judgment the equivalent of 12 (twelve)
months remuneration calculated on the basis of the individual Applicants'
earning at the earning at their dismissal.
earning at the earning at their dismissal.
[4] The Respondent is ordered to pay the Applicant's costs.
---------------------
JAJBHAY AJ
ACTING JUDGE OF THE LABOUR COURT
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DATES OF HEARING : 11, 12, 13 and
17th August 1999
ON BEHALF OF APPLICANT : Mr Steenkamp: Cheadle Thompson
Haysom Incorporated
ON BEHALF OF RESPONDENTS : Advocate A Oosthuizen
Instructed by : Findlay and Tait
DATE OF JUDGMENT : 27th day of August 1999
18