IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN
CASE NO: C585/98
In the matter between :
MAINA SOMERS
And
FRIEDRICHNAUMANNSTIFTUNG
Applicant
Respondent
JUDGEMENT
APPEARANCES:
On behalf of Applicant: Adv Frans Rautenbach instructed by
A Silberstein & Associates
On behalf of Respondent: Mr PD Presbury, Deneys Reitz
(Cape Town)
Hearing: 9 and 10 September 1999
(Johannesburg)
Argument: 16 September 1999 (Cape Town)
CORAM : MacROBERT AJ
1. The applicant challenges the substantive and procedural fairness of
her retrenchment by the Respondent.
2. The Respondent is a Foundation funded by the German Government
(in effect by the German taxpayer) and is linked to the German Liberal
Party. It has offices throughout the world including Africa (with some seven
national offices in different countries). Its aims include political education,
fostering human rights and a market economy. Its head office is in
Germany.
3. In South Africa it has offices in Johannesburg and Cape Town. When
applicant was employed by respondent in 1996, she was a project co
ordinator and assistant to Mr Bunning, Chief Director of South Africa who,
although based in Johannesburg, was also in charge of the Cape Town
office. Also in the Johannesburg office were Dr Freier the Head of the
African Regional Office (i.e. he was senior to Mr Bunning), a Finance
Controller and other employees. The Cape Town office at that time
included an employee in charge of finances and an office
assistant/receptionist.
4. The intention was for Mr Bunning to move his base to Cape Town.
Applicant was keen to relocate to Cape Town to continue working for him.
5. She moved to the Cape Town office with effect from 1 April 1997 under
a new employment agreement, ahead of Mr Bunning, and a further
agreement of employment was entered into in February 1998 in terms of
which applicant would become Project Assistant remaining in Cape Town
and reporting to Mr Bunning.
6. It was intended that Mr Bunning would relocate to Cape Town in late
May 1998, his move to Cape Town having been delayed by the German
head office. Amongst applicant's duties was the organising of workshops
including with the Democratic Party Youth and the Association of
Liberal/Democratic Councillors, who were two of the Foundation's
"partners".
7. To complete the organisational background, Dr Freier had been
involved in a serious accident which had led to his hospitalisation. Dr
Reinert Erkens had joined the Foundation in August 1995 as Regional
Director for Latin America. He was thereafter appointed Regional Director,
Africa to take over this region with effect from 16 July 1998 from Dr Freier
who was retiring. Mr Erkens visited South Africa in February 1998,
including the Cape Town office, and again in May to enable Dr Freier to
hand over to him.
8. In the meanwhile the applicant had perchance unearthed certain
irregularities involving Mr Bunning and certain unauthorised expenses
incurred by him. She reported these to head office in Germany who sent
out a senior employee to investigate. Mr Bunning's employment then
terminated in the last days of May (whether by resignation under threat of
dismissal or otherwise is irrelevant to this matter). Coincidentally, the
events of Dr Freier's handover to Mr Erkens and the termination of Mr
Bunning's employment occurred within three days of each other at the end
of May 1998.
9. Although the applicant was thanked by the senior German investigating
employee for her efforts, she contends that the effect of her actions and
"whistleblowing" had been to rock the conservative establishment of the
Foundation, thereby creating enmity towards her by the "old guard" of
whom Mr Bunning was alleged to be an influential member.
The applicant considers this enmity to be the root cause of her subsequent
retrenchment effected by Mr Erkens on behalf of respondent, thus
rendering her dismissal substantively unfair by reason of an ulterior
motive. I will address this perception below.
10. Mr Erkens then visited the Cape Town office between 27 and 30 July
1998, prior to going on leave before taking up his new appointment.
It is common cause that a number of meetings were held during this visit
with the socalled partners of the respondent Foundation including
Democratic Party parliamentarians, and other "partners" in which he
sketched in broad terms his ideas for the functioning of the Cape Town
office. However, he had no fixed plans at that stage and wished to cogitate
whilst on holiday before finalising his thoughts.
11. The applicant wrote Mr Erkens a letter after this visit on 30 July in
which she requested inter alia clarification of her position, her area of
responsibilities and her "duties and rights". There were also certain
residual issues pertaining to her terms and conditions in respect of which
applicant was and had been unhappy, including her moving expenses from
Johannesburg to Cape Town, her salary etc (none of which are germane
to this dispute) which she also wanted to have clarified.
No response to this letter was received.
12. Then somewhat out of the blue, applicant received a letter dated 7
September from Mr Erkens dealing with the restructuring of the Cape
Town office. In this letter he states as follows:
"I have given some thoughts to the matter of the future work of the
Foundation in Cape Town. For the (Foundation) I am considering the
possibility of the restructuring of the Cape Town office. The Cape Town
office has the following functions:
representing the Foundation at the South African Parliament and providing
advice for liberal MPs on the subject of legislation;
Conception, organisation and execution of all activities of political
education in South Africa;
Advising and looking after the partners, in particular SALSA, ALDC, DPY,
FMF, SAIRR as well as planning and supervising joint activities with those
partners;
Attending to high ranking foreign visitors and execution of activities of the
"international political dialogue";
Control of finances and accounting for the whole of South Africa
I presume that the position of the German "Expatriate" in Cape Town, left
vacant by the dismissal of Mr Holger Bunning, will not be filled again.
Instead I could imagine that the Cape Town office will be managed by a
highly qualified local member of staff, who must have the necessary
professional abilities. I have Ms Barbara Groeblinghoff in mind.
Should this restructuring take place, the position of Project Assistant would
be superfluous. Your job would have to be retrenched (sic).
In consequence to the above I would like to invite you to a "consultation
meeting" on Tuesday 8 September 1998 at 14h00 at the (Foundation)
office in Cape Town. The aim of this meeting is to try to reach consensus
in the following points:
1. Whether the restructuring should take place.
2. If the position of Project Assistant should be retrenched.
3. Alternatives to the retrenchment of your position as Project
Assistant.
4. Time frame of the restructuring.
5. Possible claims for your severance package.
I want to stress again, that there has been no definite decision taken at
present regarding the restructuring and that your opinion and contribution
at the planned meeting will be of particular meaning."
Applicant responded immediately to this letter in somewhat emotive terms,
but understandably so in the light of the communication she had received.
13. Prior to the first scheduled consultative meeting on 8 September, the
applicant requested a private meeting with Mr Erkens which duly took
place. Mr Erkens regarded this meeting as being completely off the record
and not part of the consultative process, although somewhat strangely,
after the meeting and once the parties had moved immediately thereafter
into the formal consultative meeting which was also attended by Ms
Groeblinghoff, certain aspects which were raised in the off the record
meeting were tabled and taken down by Ms Groeblinghoff in a minute.
There is some dispute between the parties as to the accuracy of Ms
Groeblinghoff's minute of this meeting and there are also certain factual
disputes between the parties as to precisely what had been discussed in
the off the record meeting.
The applicant sought to correct or embroider these minutes (i.e. the
recordal of the off the record meeting and the formal meeting of 8
September 1999) together with the minutes of a second consultative
meeting which took place on 9 September 1999 in a memo which she
gave to Mr Erkens on 9 September.
14. One issue that concerned the applicant was clarification of the five
bullet points contained in Mr Erkens' letter of 7 September which sets out
the functions of the Cape Town office as Mr Erkens saw them. Applicant
took the view that the functions were not spelled out in sufficient detail to
enable her to consider what possible future role she may have and she
requested clarification in detail of these points. Mr Erkens testified that he
had revisited these functions in the off the record meeting, and to his mind
the points were made clear enough for the applicant to consult
meaningfully. She had also not come into the process as an "empty
vessel" but with a store of knowledge. When sufficient detail was not
forthcoming from Mr Erkens, she formed the view that he had a closed
mind on the issue and that further consultations would prove fruitless. She
therefore indicated after the formal consultative meeting on 8 September
in words that are disputed, that in her view the process was fruitless and
she queried whether there would be any useful purpose served in
proceeding on to the second planned consultative meeting on 9
September.
She did however attend this meeting at which her retrenchment was
finalised and a letter of termination was issued shortly thereafter.
15. As mentioned, the applicant handed Mr Erkens a typewritten document
on 9 September seeking to correct or amplify the minutes of the two formal
meetings (the first of which incorporated some of the matters that had
been discussed in the off the record meeting). She also headed this letter
with a request for a further meeting to take place on 28 September after
her return from leave. (Her leave arrangements had been made some time
before). This suggestion was somewhat strange in that it appears clear
from the minutes that the retrenchment had in fact been finalised at the
meeting on 9 September.
16. The issues raised by the applicant in challenging the fairness of her
dismissal were as follows:
that her retrenchment was a fait accompli due to her "whistleblowing" on
Bunning, leading to an ulterior motive on the part of respondent;
the failure by respondent to disclose information in regard to the five bullet
points contained in Mr Erkens' letter of 5 September which precluded her
from being able to consider and suggest viable alternatives;
that the true financial or commercial rationale of respondent which formed
an important basis for the retrenchment had not been disclosed to her
directly;
that there had been insufficient consultation on, and consideration of,
alternatives and that respondent had sought to place this obligation on
applicant alone, and that in any event that respondent had not complied
with the obligations provided in s189(3) of the LRA in terms of disclosure
both of the true reasons for the proposed retrenchment and the
alternatives the respondent had considered;
that the selection criteria had not been properly or at all consulted on by
respondent;
that respondent had failed to consult on offering any assistance to
applicant. In particular, applicant had requested a written testimonial in
favourable terms from respondent which respondent had failed to give.
the timing of the retrenchment and the package were alleged to have been
inadequately or at all consulted on, and that applicant had not been
engaged in regard to these and these had been put up again as a fait
accompli with no opportunity for discussion.
17. There is no doubt that Mr Erkens is bright, highly efficient, competent,
motivated and determined. He had thought out his new position and his
plans and had moved quickly to put these into effect. I have no doubt as to
his bona fides. He was also clearly concerned to protect the German
taxpayers money.
18. From his evidence, and indeed that of Ms Groeblinghoff , it is clear
that one of the important rationales for the retrenchment was the financial
constraints of the respondent and also the continued existence of the
Cape Town branch office. In this regard he testified that head office was
concerned about South Africa having two offices which was most unusual
in the context of the respondent's operations and that the possible closure
of the Cape Town office had been discussed at head office level. It was for
this reason that he had decided to refocus the functions of the Cape Town
office to orientate these towards Parliament, thus to justify its continued
existence.
19. There is however no mention in his letter of 7 September of the
financial constraints or the Cape Town branch's continued survival, and
indeed this rationale did not appear to have formed the basis of the
consultation process at all. Mr Erkens' view was that there had been a
conference in Zimbabwe in December 1997 at which the financial
constraints of the organisation had been discussed with a view particularly
to its African operations and it was clear that the region's budget had been
cut by 30% and a number of offices in Africa had been closed. He had
formed the view therefore that this was common knowledge and certainly
knowledge that applicant would have had having been at that conference.
20. It was also clear from his testimony that with the departure of Mr
Bunning, Mr Erkens had seen an opportunity for restructuring in such a
way that Mr Bunning need not be replaced in that he (Mr Erkens) could
assume some of Mr Bunning's functions and Ms Groeblinghoff could move
from Johannesburg to Cape Town to absorb such of the remaining
functions that Mr Bunning and the applicant combined might have had. It
does not appear as if this rationale had been properly consulted on with
the applicant either.
21. I have no doubt that there was a sound commercial rationale for
restructuring, but the problem for respondent in the context of this matter is
that this rationale was not clearly put to applicant either in writing or
otherwise. In essence, too much was assumed by Mr Erkens as being
within the knowledge of applicant and although his perceptions in this
regard were certainly genuinely held, it cannot be assumed that applicant
had the full knowledge and background leading up to his thinking and his
plans.
I will deal with the other procedural issues below.
22. On the issue of substantive fairness, there is simply no evidence
whatsoever to suggest or lead to a conclusion that respondent had an
ulterior motive in dismissing applicant. On applicant's own evidence it is
clear that respondent did not do, write or say anything after the applicant's
"whistleblowing" to indicate that it was dissatisfied with her or unhappy.
Applicant however formed this impression. One is dealing here in the
realms of perception and I accept that that perception was genuinely held.
However, the evidence does not convert that speculative perception into a
reality.
23. On the procedural aspects, the correspondence, minutes of meetings,
evidence and the argument indicate on the probabilities that what infused
this process was the following.
Mr Erkens had done some hard and careful thinking. The termination of Mr
Bunning's services presented an opportunity for cost cutting (an irony this,
inasmuch as if applicant had not reported Mr Bunning and had he come to
Cape Town as planned, she would in all likelihood not have been
retrenched – certainly not in the shorter term).
Ms Groeblinghoff had the necessary attributes to run the newly focused
Cape Town office (it was never an issue that applicant could have done
this – at best she could have managed the office as an Office Manager,
although it was the evidence of Mr Erkens that at his first private encounter
with Applicant on 8 September, she put up as an alternative that she
should do the job Ms Groeblinghoff was subsequently employed to do,
although applicant denies this).
Between Mr Erkens and Ms Groeblinghoff, they could cater for all the
increased functions of the Cape Town office (another irony in this in that
Mr Erkens foresaw increased functions of the Cape Town operation but yet
decreased the overall personnel).
Therefore, in Mr Erkens' view of matters there would simply be no room for
the applicant in the new scheme of things. The only other possible post in
Cape Town was essentially a financial one which applicant indisputably
could not fill.
Thus, in Mr Erkens' mind at least, and despite the last paragraph of his
letter of 7 September 1999 which is somewhat more gentle in tone than
the emphatic tone of the first half of the letter, there was simply no
alternative and that view clearly influenced his approach to the
consultation process.
24. It was argued by respondent's attorney that I should have regard to
the facts as they existed and although falling short of requesting the court
to reimport into our jurisprudence the socalled "no difference" principle,
(which the court indicated it would decline to do), it should take into
account the contention that there simply were no alternatives.
25. This I am not prepared to do. It is not for me to secondguess the
outcome of a joint consensus seeking process. When parties have their
backs to the wall, and after all relevant information, including the true
rationale for the proposed retrenchment, has been tabled, it is
extraordinary how creative parties can be. To give just one example by
way of illustration, the possibility of a post in Johannesburg was not
discussed or explored (although I am aware that there had been
retrenchments in the Johannesburg office). It was clear that Mr Erkens
assumed that applicant would not be interested in this even if there was a
post, bearing in mind that applicant herself had been keen to come to
Cape Town. Such assumptions may not be made.
26. The difficulty in having something of a closed mind on one issue such
as alternatives, is that this may well influence consideration of the other
important items that s189(2) requires to be addressed, such as, for
example, the timing of the retrenchment and offers of assistance. In this
regard, it is instructive to note that Mr Bunning's termination and the fact
that he would not be replaced created an immediate saving for the
Foundation – his salary had already been budgeted for the rest of the
financial year. Similarly in the case of applicant, her salary had also been
budgeted for the full financial year – consideration of these aspects and
proper consultation on them may have led to a delayed implementation of
the retrenchment.
27. Another matter which influenced Mr Erkens' approach to the process
was his perception that applicant was not a willing participant and that she
made no meaningful contribution. Indeed he was surprised at the lack of
resistance put up by applicant to his proposals and the speed at which the
process was concluded. Once again there is no doubt that his surprise
was genuine. The applicant was clearly no "pushover".
28. He subsequently formed the view (as did Ms Groeblinghoff) that the
applicant believed that respondent was not legally entitled to do what it
sought to do because she had a fixed term contract and that come what
may, she would be paid by respondent until its expiration. Some support
for this impression is to be found in a letter that applicant's attorneys wrote
after the dismissal in which, amongst others, that contention was made
(although it must be remembered the contract provided for earlier
termination, on notice, and if applicant held this view, it was incorrect).
29. Once again this is a question of perception. Applicant believed that Mr
Erkens had a closed mind and to the extent indicated above, I am of the
view that she was correct in this conclusion. Mr Erkens on the other hand
believed that applicant was not cooperative and wanted the process to be
concluded as soon as possible. He testified that he was surprised when he
tabled the proposed severance package and timing that applicant
accepted this without demur. Applicant on the other hand, testified that
these were put up as givens and not as a basis for discussion or
consultation.
30. When it comes to the crunch of loss of employment by reason of
operational requirements, an employer must be wary of assuming, without
more, anything, including any particular knowledge that an employee may
have, or, for example, that an employee has a blameworthy recalcitrant
attitude or approach to the process. If an employer believes this, the issue
must be tabled and tackled. The employer holds the initial cards. The
process is kickstarted by the employer by reason of its operational
requirements. For this reason, the initial running has to be made by the
employer to set out fully its commercial rationale, all relevant information at
that stage and what alternatives it has considered, before the employee
can engage meaningfully. This is not to say that s189(3) necessarily
means that the disclosure required need be a once off, upfront
communication. The process is by definition not static, and such written
disclosure can be supplemented along the way before the final decisions
are made, for example by way of minutes of meetings, memoranda etc.
31. However, in this case, it is common cause that applicant formed the
view at the end of the very first meeting that her employer had a closed
mind and she made this view clear. It was thus incumbent upon
respondent to allay these fears and perceptions and to engage more
proactively. What respondent in fact did was to leave it to applicant to
come up with alternatives, suggestions etc without venturing any of its
own.
32. Turning to the question of selection criteria, there was simply no
consultation on this at all. The respondent's argument is that the selection
of applicant was the only possible outcome of the restructuring exercise.
Once again, it is not for the court to decide this. The selection criteria must
be tabled and if possible, agreed. If not, then fair and objective criteria
must be set. There was simply no meaningful, if any, discussion on this. In
any event, as indicated, the true commercial rationale was not clearly
articulated or consulted on.
33. Once again, the court is not seeking to question the respondent's bona
fides. I am certain that Mr Erkens believed in his own mind that he had
thought of all possible alternatives and that there were none. However, an
employer is not entitled to take this view at the outset of the consultation
process, for the reasons given.
34. On the issue of assistance as envisaged by s189(2)(g), it appears clear
that respondent did not address this either in its letter of 7 September, or in
the truncated process that followed (as required by s189(3)). A seemingly
innocuous item such as a favourable reference or testimonial can be very
important to an employee who is about to be retrenched. In this instance,
respondent did not only not deal with this issue in consultation, but refused
to furnish a reference after dismissal after applicant's attorneys requested
this, because applicant had instituted proceedings against respondent.
A favourable reference (and in this regard there was no dispute that the
applicant had been a competent employee) coupled with suitable timing of
retrenchment can also be important. It is lore of the workplace that it is
easier for an employee to locate suitable alternative employment whilst in
employment. Hence the deferring of the termination date for as long as is
reasonable or feasible may assist an employee. This approach was not
adopted by the respondent which took the line of least resistance, i.e. that
if a termination date is proposed on a best case scenario for the employer
and the employee does not demur, then that is the end of the matter. Once
again this line of approach is not in keeping with the required joint
consensus seeking approach, nor is this in keeping with the obligations
imposed on an employer by s189(2)(e).
35. When coming to these findings, I have taken into account the
respondent's argument that the parties did not come to the table as empty
vessels but with a store of knowledge. I have also considered the
authorities put up which correctly reflect that a joint consensus seeking
approach is a bilateral one which requires input from both parties and that
one party can frustrate the process. I am not satisfied on the facts of this
matter that it was the applicant who frustrated the process, and for the
reasons given above, I believe and find as such, that it was incumbent
upon the respondent to engage constructively and positively and allay the
fears and conclusions reached by the applicant. (This would of course only
have been possible had the respondent truly had an open mind and been
willing to engage in respect of the matters that s189 requires consultation
on).
36. I have sought to reach to the quick of the aims of s189 and on the facts
of the matter have endeavoured not to place undue obligations on the
shoulders of the employer. Process is process but it has a substantive end
in mind, namely to achieve equity insofar possible. However, and over
formalistic approach to the requirements of the legislation is not what was
intended. I have taken due regard of the decisions in Johnson and
Johnson (Pty) Ltd v CWIU (1998) BLLR 1209 (LAC) and O'Doyle v All
Circles Screenprint CC (1999) 20 ILJ 191 (LC), put up by respondent's
attorney and I am satisfied that my findings fall well within their respective
purviews.
37. It will appear from the aforegoing that the termination of the applicant's
employment on the ground of operational requirements was substantively
fair but procedurally defective and thus unfair. In particular it was
procedurally defective in the regards I have outlined above, both as to
s189(2) and s189(3) of the Act, and I find accordingly.
38. When it comes to remedy, the port of call is s194 of the Labour
Relations Act. I am satisfied in all the circumstances that an order of
compensation from the day after the date of dismissal (i.e. 1 November
1998) to the date of hearing (i.e. 16 September 1999) is appropriate, such
compensation to be based on applicant's remuneration (which was not
dipsuted), her annual package including the 13 th cheque totalling R127
530, thus amounting to R10 627,50 per month. Duly prorated, the amount
of compensation in respect of September 1999 would be R5 668,00 to
which must be added the balance of the arrears period namely ten months
which, multiplied by R10 627,50, totals R106 275,00. The total amount
of compensation thus payable is the sum of R111 943,00.
39. In the premises the Order of Court is as follows:
39.1 The dismissal of applicant by respondent was procedurally unfair
within the meaning of s188(1)(b) read with s189(2) and s189(3) of
the Labour Relations Act;
39.2 The respondent is ordered to pay compensation to the applicant in
the sum of R111 943,00, such amount to be paid to applicant by
close of business on 29 October 1999, failing which interest at the
prescribed rate will accrue on this amount from that date until date
of payment;
39.3 Respondent is to pay applicant's costs of suit on the High Court
scale.
DATED AT CAPE TOWN ON THIS THE DAY OF OCTOBER 1999.
______________________________________
MacROBERT A.J.