IN THE LABOUR COURT OF SOUTH AFRICA
(HELD AT JOHANNESBURG)
CASE NO. J 116/97
In the matter between:
NATIONAL CONSTRUCTION BUILDING AND
ALLIED WORKERS UNION AND FIVE OTHERS First to Sixth Applicants
and
NATURAL STONE PROCESSORS (PTY) LTD Respondent
J U D G M E N T
MPOFU, AJ:
[1] The first applicant is the National Construction Building and Allied Workers Union, representing 5 individual
applicants who are employees of the respondent. The applicant originally initiated the proceedings on behalf of
16 employees which number was, by agreement between the parties and during the trial, trimmed down to the
present number.
[2] Prior to 1994 the respondent operated a tombstone manufacturing factory which was described as a labour
intensive operation. The majority of the applicants were employed in the 1980's. With the opening up of
business opportunities after the 1994 elections, the respondent secured a lucrative contract with a Japanese
company for the supply of granite slabs used in the construction of buildings. This accounted for a marked
upward shift in the revenues generated by the company. While the old tombstone business generated annual
takings of approximately R1 million the new revenue generated by the new business approximated R20 million.
[3] In 1994 the company opened up a new slabbingfactory or plant in order to meet the new demand. For the
ensuing two years, this new factory was run in tandem with the “old” tombstonefactory In view of the
aforegoing and in October 1996 the company decided to close down the tombstonefactory and concentrate its
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energies towards the more profitable slabbing factory which had by then been running for two years. The
commercial rationale for this decision is patently obvious and cannot be assailed. The applicants’ representative
wisely did not attempt to do so.
[4] The original 16 applicants, all members of the first applicant, constituted the entire workforce employed in the
tombstonefactory. It remained to be decided what to do with them.
[5] The respondent shortly thereafter took a socalled “in principle decision” to retrench the entire tombstone
factory workforce. This was communicated to the union by letter dated 14 November 1996 together with an
invitation to consult. This letter contained the following portion:
"2. Selection criteria:
All employees of the tombstonefactory would be involved and therefore no selection criteria are to be used.
3. Number of employees to be retrenched:
All employees in the tombstonefactory."
[6] The union responded by letter dated 20 November 1996 in which it requested from the company inter alia the
following information: Financial information, date of last appointment of an employee and "to provide us with
a total list of employees from the top manager down with the following information: date engaged, date of
birth, qualification and position". This, the union stated, it required "in order to facilitate proper consultation
and alternatives".
[7] It is common cause that at least two consultation meetings were held between representatives of the parties on 3
and 5 December 1996. As can be discerned from the unchallenged notes taken thereat, relevant correspondence
between the parties confirming what was discussed as well as a holistic view of the evidence led in this court,
the stances adopted by the parties on the key issues, can be summarised as follows:
1. On selection criteria: The union wanted the “last in, first out” (LIFO) principle to be applied across the two
operations namely the tombstonefactory and the slabbing factory or plant. The company argued that this
would be impractical because of different skills required as between the two operations. This therefore raised
the applicability or otherwise of socalled "bumping" in the present circumstances.
2. On financial information: The union demanded full disclosure as aforestated. The company refused to furnish
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any financial information stating that such information was irrelevant because firstly, the retrenchment was "not
for financial reasons" and secondly, the company and the union were parties to a separate agreement which
contained a severancepackage formula.
3. On recall arrangements: The union suggested, and the company agreed, that when vacancies arose in the
slabbing plant the retrenchees would be given preferential treatment.
[8] In support of the company's contention the respondent called Mr Prinsloo ("Prinsloo") who was at the relevant
time chief executive officer of the respondent company. The main focus of Prinsloo's testimony was to
emphasise the differences between the operations conducted in the two plants. Prinsloo also testified on the
perceived hardships which the company would have suffered if all 16 tombstone factory employees were to
have "bumped out" an equal number of slabbing factory employees.
[9] Section 189(7) of the Labour Relations Act 1995 ("the Act") provides that:
"The employer must select the employees to be dismissed according to selection criteria
(a) that have been agreed to by the consultant parties; or
(b) if no criteria have been agreed, criteria that are fair and objective."
[10] It is trite that the LIFO principle is per se, and subject to recognised exceptions, one of the wellrecognised "fair
and objective criteria” postulated in section 189(7)(b). What does often become contentious is whether in a
given case LIFO should be applied only within a distinct department or category of employees or across the
board to include in the selection pool employees in other departments who have similar or less skills than those
who have been made redundant in the department targeted for closure, a method otherwise known as
"bumping". It is incumbent upon the employee to justify its departure from the LIFO principle.
"bumping". It is incumbent upon the employee to justify its departure from the LIFO principle.
[11] In this leading article on the subject, the learned author, H Cheadle, described “bumping” as follows:
"The LIFO principle is to retain long serving employees at the expense of those with shorter service in like or
less skilled categories of work. Accordingly LIFO would not apply to employees in a different grade if the
longer serving employee could not do the work of the employee with shorter service in that grade. The
principle, if not qualified by agreement, should apply throughout the establishment or the collective bargaining
union provided that it falls within like or lesser categories of work. In other words, should an employee with
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long service be made redundant in one department, he should be transferred to a similar post elsewhere in the
establishment, even though it may be occupied by an employee with shorter service. Should there be no such
post, the practice is to offer the longer serving employee a less skilled position occupied by employees with
shorter service. This procedure is graphically called 'bumping'. In short, one 'bumps' sideways and down. The
restriction of this principle to departments can lead to abuse. Long serving employees can be transferred to
departments where redundance is expected and thereby retrenched at a later stage. Such a practice would
clearly subvert the objective application of the principle”.
See Halton Cheadle "Retrenchment: The New Guidelines" (1985) 6 ILJ 127 at 137. The views expressed in
this article received the approval of the Labour Appeal Court in the case of Reckitt and Colman (SA) (Pty) Ltd
v Bales (1994) 15 ILJ 782 (LAC) at 796B. That case is also authority for the proposition that an employer has
a duty to consult an employee in respect of "bumping" (at 795B). A useful and summarised discussion on the
topic of “bumping” with reference to the applicable case law is contained in a useful article by Rycroft entitled
“Bumping as an Alternative to Retrenchment” (1999) 20 ILJ 1489.
[12] In the present matter it is common cause that the individual applicants who are properly before this court had
longer service than some of the employees in the slabbing plant. In fact, on a perusal of the complete list of
employees in both plants which was supplied to the union by the company, in one of the consultation meetings
all the present individual applicants (as distinct from the original 16) had longer service than any of the non
tombstonefactory employees.
[13] Prinsloo described in great detail the various jobs performed in the slabbing factory. These ranged from
slabbing, sawing, polishing, packing etcetera. It is not necessary to go into the intricate and rather technical
details of each of these functions. Of relevance are the following points which emanated from Prinsloo's
testimony as given by him in his evidenceinchief and during crossexamination:
1. Putting aside the need for training, a subject dealt with separately in the next part, there were no formal
impediments which would have prevented tombstonefactory workers from working in the slabbing factory. In
fact, the evidence was that when the slabbing plant was opened in 1994 an invitation was extended to all
tombstoneplant employees to be transferred to slabbing and the current applicants had remained in the
tombstone plant purely out of choice. Some employees accepted the invitation and had indeed moved over to
the slabbing plant.
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2. In respect of almost all the various functions performed in the slabbing plant a minimum period of three months
basic training would have been required to equalise the skills of all the employees. A major proportion of this
training related to the aspect of occupational safety. The remaining extent of the training related to the
production side in respect of each specific function.
3. Perceived hardships, including late or nondelivery of the lucrative overseas contracts which were a source of
the new boom, may have resulted if there was a wholesale transfer of all 16 tombstone plant employees, since
this would have resulted in the introduction of a 50% proportion of untrained employees into the slabbing plant
(the total number of production employees in the slabbing plant was 30). This introduction would in turn have
had the result of stalling production for the period of training these transferees.
[14] At face value it would seem that points 1 and 2 above operate in favour of the applicability of “bumping” while
point 3 negates it. There were, however, other aspects of Prinsloo's evidence which, in my view, operate to
diminish if not totally undermine the impact of point 3. Firstly, Prinsloo conceded that his postulation of a 50%
dilution of the workforce did not take into account the fact that not all the tombstoneplant employees would
have been beneficiaries of the LIFO principle. In fact, Prinsloo testified that at least two of them would still
have been retrenched. Secondly, Prinsloo's postulation did not consider the possibility of training during the
process of production which would not have involved any inherent decrease in production levels. Prinsloo
conceded under crossexamination that all the employees in the slabbing plant who were employed later than
the 1994 commencement of production, had been trained during the process of production. A quick look at the
list of employees referred to earlier reveals that at least 23 of the 30 employees fall into this category.
[15] For the sake of finality I may mention that Prinsloo also conceded that when a vacancy arose on 18 November
1996 (i.e. between the time of the “in principle decision” and the actual retrenchment) the respondent had
employed a new outsider to replace a slabbing plant employee who had resigned in that period. He further
testified that at least another two slabbing plant employees, namely Makeketa and Moshe, were unskilled
general labourers, one of them being a sweeper. Accordingly, to replace them with any longer serving
employees would not have involved any training
[16] The applicants’ only witness was Mr Letsapa. To say the least, Mr Letsapa gave evidence which can only be
described as hopeless in content. He contradicted himself on several occasions and frankly did not add much to
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the issues in this case. Insofar as whatever testimony he gave was relevant, no store can be placed on it. Any
issue on which he and Prinsloo differ, Prinsloo's evidence will be preferred. For example his evidence that the
requisite training for a transferee would take “a few months” is accepted only in so far as it accords with
Prinsloo’s estimation of approximately 3 months.
[17] Dismissal has been described as the economic equivalent of the death sentence. In addition, retrenchment is in
its nature dismissal which is not precipitated by any culpability on the part of the employee. It is for these
reasons that the legislature has seen it fit to attach stringent and peremptory requirements to be strictly followed
if a retrenchment exercise is to pass muster. This is not to take away the management prerogative to restructure
its business enterprise. That prerogative remains intact even in the present nontypical circumstances where the
retrenchment exercise seems to have been fuelled by the arrival of happy times for the company as opposed to
the usual case where the enterprise itself resorts to retrenchment to protects its own survival. It is possible
however that an employer in the happy position of the respondent should be adjudged by a reletively stricter
standard in relation, for example, to its failure to consider seemingly achievable inservice training of its long
serving employees in circumstances where, on the probabilities, it could easily have afforded to do so.
Needless to say such a standard should not be so strigent as to stray outside the already elaborate requirements
set out in section 189 of the Act.
[18] All the aforesaid factors operate to influence my conclusion that had the company been willing to consider the
question of "bumping", the present applicants may well not have been dismissed. It is an important
consideration that the union had repeatedly placed the “bumping” alternative on the table. The weight of the
evidence indicates that the respondent did not at any stage give the union’s proposals serious openminded
consideration. Consequently the respondent failed to comply with the provisions of section 189 of the Act. To
that extent, at the very least, the retrenchments were procedurally unfair.
[19] In view of the conclusion I have reached on this issue, it is not necessary to deal extensively with the question
of refusal to supply financial information. Suffice to say that an employer should not enjoy the privilege of
unilaterally determining the relevance of such information. Even where, as in the present case, the commercial
rationale for the retrenchment exercise is not disputed such information may still be of relevance, for example,
to the negotiation of severance packages which are higher than the statutory minimum. It is generally
undesirable for the employer to regard itself as the exclusive and sole arbiter of the relevance or otherwise of
the information sought.
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[20] Relief
At this stage I may just mention that the applicants before the court are all presently employed by the
respondent, having been reemployed, according to Prinsloo, some time in 1998 or 1999. Their evidence was
that these employees have been reemployed at lower categories than their preretrenchment employment. The
applicants asked for the court to make an order for their reinstatement in their employment and into their
previous conditions of employment. The “bumping” method is comfortably consistent with the engagement of
longerserving employees in ‘lower’ categories of work. It follows that employees who should have been
beneficiaries of such bumping are not necessarily entitled to the same conditions of employment as they held in
their redundant positions.
[21] Costs
As far as costs are concerned the applicants were unable to lead any evidence on the first day of the trial due to
the fact Letsapa, their only witness, had not arrived in court. On the next day Letsapa was called upon to give
an explanation to the court. In a nutshell his explanation that he had come late to the union offices because he
was tired from working on the previous day, bordered very closely on the contempt of court. Although I cannot
say with certainty that had the delay caused by the absence of any witness on behalf of the applicant on the first
day not occurred that the case would have been finalised in one day, this is a distinct possibility. I accordingly
propose to hold the applicants liable for the costs of the entire first day of the trial. The first applicant also
shared the duty to secure the attendance of the other applicants and/or their witnesses in court.
[22] In the circumstances I make the following award:
1. The dismissal of the individual applicants for operational requirements was procedurally unfair.
2. The respondent is ordered to pay the individual applicants compensation equal to the remuneration that each
would have been paid between the date of their dismissal and the date(s) of their (respective) reemployment.
3. The respondent is ordered to pay the wasted costs subject to order 4.
4. The applicants are ordered to pay the costs of the first day of the trial.
________________________
MPOFU, AJ
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: MR L S KEKANA (Union Official)
: NACBAWU
: MR D SHORT (Attorney)
: Samson, Okes, Higgins Inc
: 1 & 2 FEBRUARY 2000
: 3 FEBRUARY 2000
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