IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN
CASE NO: C105/99
In the matter between:
W VISSER Applicant
and
SANLAM Respondent
Dates of hearing: 16, 17 and 20 March 2000
Date of Judgment: 23 March 2000
Representation: For the Applicant, Mr N F Rautenbach
For the Respondent, Mr H C Niewoudt
___________________________________________________________________
JUDGMENT
___________________________________________________________________
ARENDSE AJ:
1.This application concerns the alleged unfair retrenchment of the applicant
by the respondent with effect from 31 October 1998 following the
respondent’s preliminary decision (in February 1998) to outsource its
electronic business (“EBIZ”).
1
2.The matter comes to this Court by way of a referral in terms of section
191(5)(b)(ii) of the Act. However at the commencement of the hearing I
sought clarity in regard to allegations made by the applicant that her
dismissal was actuated by an improper motive on the part of the
respondent, alternatively that her dismissal was the result of unfair
discrimination based on gender. Following discussion and debate in
Court (and adjournments to take instructions from his client)
Mr Rautenbach, who appeared on behalf of the applicant, quite correctly
in my view, withdrew the allegations relating to improper motive and
unfair discrimination. The judgment accordingly only deals with the
dispute relating to the substantive and procedural irregularities
allegedly committed by the respondent.
3.It is common cause that the respondent had taken a preliminary business
decision (in February 1998) to outsource EBIZ to a company called BSW
(subject to certain core functions in EBIZ remaining in Sanlam). The
reason for the respondent’s preliminary business decision was that its
management was of the view (shared by applicant) that a large proportion
of EBIZ is noncore business which will function better outside of
Sanlam. The respondent’s proposal was contained in a document prepared
by its managing director, Mr Nick Christodoulou dated 2 June 1998.
Should the outsourcing of EBIZ proceed, the respondent proposed as
follows:
“4.1 All the posts in the portion of EBIZ which is outsourced, will be
abolished within Sanlam. At this date, we foresee that your employment
with Sanlam will end if you are not redeployed within Sanlam in terms of
4.4 below.
4.2 All the staff currently in these posts will be affected and therefore no
selection criteria will be applicable. However, please advise us if you
believe other employees should be included amongst the employees
(including yourself) affected by this preliminary business decision.
4.3 We are confident that we can negotiate with the new company to offer you
alternative employment with similar terms and conditions to that which
you currently enjoy. In such circumstances no severance pay will be
payable.
4.4 If for some reason you are not offered an alternative post in the new
company, we will attempt to redeploy you within Sanlam.
4.5 Severance pay is only applicable if no alternative is found for you
(within Sanlam or elsewhere (including the new company) or your refuse
alternative employment (within Sanlam or elsewhere (including the new
company))) on reasonable grounds. The applicable severance pay is two
week’s remuneration (as described in annexure “A”) for each unbroken and
completed year of service.
4.6 At this stage we do not have a proposed date when the out sourcing will
take effect and posts will be abolished. We will revert to you on this
point.
4.7 The assistance which we are able to offer you, is an undertaking to
negotiate with the new company for alternative posts, as described in
point 4.3 above. If you believe that we can offer you any other
assistance, please let us know.
Kindly let us have your written comments (Jaco Viljoen’s office x 4002)
3
on the content of this letter by no later than 12:00 on Friday 05 June
1998. We look forward to hearing from you”.
4.It is not in dispute that the respondent was commercially justified in
taking the decision to outsource EBIZ. Indeed, the applicant (a
senior manager) not only supported this decision, but was also an
integral part of the management team which was mandated to give effect
to the respondent’s decision. (The applicant’s task was confined to
dealing with personnel matters relating to the proposed outsourcing to
BSW). Importantly, the applicant testified that she was fully aware of
Christodoulou’s proposal of 2 June 1998 and in her evidence she stated
that she was aware that the respondent’s decision to outsource meant
that all posts within EBIZ (including her own) would be abolished as a
result and that the employment relationship between EBIZ personnel and
Sanlam would be terminated. The applicant however sought to qualify her
answer by stating that she was at all times under the impression that
her (new) job with BSW would be secure. She based her impression on two
things, firstly, her reading of Christodoulou’s proposal of 2 June 1998
which indicates that only certain (core) EBIZ functions would remain
within Sanlam (excluding hers) and secondly, on 27 July 1998 most of the
EBIZ staff physically moved into the offices of BSW in anticipation of
them being taken over by BSW.
5.Mr Stephanus Josias Botha gave evidence on behalf of the respondent. He
was appointed as the senior manager of EBIZ on 1 June 1998 and was
mandated by the respondent to implement the outsourcing of EBIZ to
BSW. Botha held regular weekly meetings with his management team
(including the applicant) and twiceweekly report back meetings with E
(including the applicant) and twiceweekly report back meetings with E
BIZ staff. He testified that the project which he headed was
enthusiastically received by all the affected employees (including the
applicant) presumably on the basis that those affected were under the
impression that they would be taken over by BSW and that therefore their
(new) jobs were secure. However it is clear from his evidence that all
material times he was aware that the probability existed that not all
the affected employees would be taken over by BSW. For example in a
document prepared by him dated 17 June 1998 (and discussed subsequently
with the affected group) he records under the subheading “Human
Resources” as follows:
“∙ Some of the eBiz personnel will be transferred to BSW.
∙ eBiz personnel not transferred to BSW will remain in Sanlam.
If their functions are retained, they will report to Liz é
Lamprechts. If their functions are not retained in Sanlam,
they will be treated as “oortolliges”.
∙ BSW do not have the same perks and working conditions as
Sanlam.
∙ Remuneration in BSW will be equitable to the eBiz
remuneration”.
6.On 24 July 1998, the EBIZ team (including Botha and the applicant)
discussed, inter alia , the Sanlam/BSW contract; other contractual
agreements; the proposed business structure; and other processes. At
this meeting the proposed date of the outsourcing is mentioned as 1
September 1998.
5
7.During the whole of the process up to and including 14 August 1998, the E
BIZ team was kept informed of developments regarding the contract with
BSW.
8.At an EBIZ meeting held on Wednesday 5 August 1998 (not attended by the
applicant) various matters were discussed relating to the outsourcing
project. It is recorded in the minute of that meeting that George
Holtzhausen (a senior member of the EBIZ team) said the following:
“3.1 EBiz Personeel in Nobelpark
George het dit duidelik gestel dat hy die eBiz se personeel se
frustrasie verstaan en hy wil graag net noem dat al is daar personeel
wat reeds na Nobelpark oorgeskuif het, is daar nog geen aanbod aan die
personeel gemaak nie hierdie personeel het (soos die personeel wat nog
in Sanlam is) geen idee waar hulle geplaas gaan word nie en poste moet
nog individueel met ALMAL onderhandel word”.
9.It was clearly stated at that meeting that BSW could not offer jobs to the
EBIZ personnel unless and until the contract between BSW and Sanlam was
finalised. Indeed, the following question was posed to Holtzhausen:
“Deon Albertze: Van ons het klaar oorgetrek ons s ê dus by implikasie dat ons alles
aanvaar dus het ons klaar die deure van Sanlam van ons toegemaak!
George: Die deure is nie toe nie die “deal” is nog nie gefinaliseer nie.
Deon Albertze: Hoekom kan BSW dan nie ‘n aanbod maak vir die wat reeds geskuif het
nie?
George: Die “deal” is nog nie gefinaliseer nie.
Jean Lategaan: Hoekom word die paar poste uitgesonder?
George: Sewe poste word binne Sanlam geopen die aanstellings word vir Sanlam
gedoen!
George noem dat behalwe vir die bestuurderspos, die ander poste eers die
11de sluit en dat die eBizzers ‘n aanbod van BSW VOOR 11 Augustus sal
hê om dan die verskeie opsies te oorweeg”.
10.In an email to Botha on 12 August 1998, Christodoulou (the MD) advised
Botha that he hoped to inform the staff either on the 13 th or the 14 th
(the Friday) what the outcome would be. On that same day, Botha had e
mailed to all the members of the team (including the applicant, although
she was away in Pretoria) informing them of the current problems
(“hindernisse”) which included the following:
“3. BSW het nog nie salaris aanbiedinge aan EBiz personeel gedoen nie.
Daar is reeds op 31798 gekommunikeer dat BSW in die week van 37
Augustus met aanbiedinge (onderhewig aan die outsource kontrakte) aan
personeel sou begin. Omdat selfs nie die senior personeel aanbiedings
het nie, word geen vordering gedemonstreer nie en kom BSW se bone fides
onder verdenking.
4. Die uitdienstredings proses by Sanlam vorder goed. Info tov
pensioen/medies, ensovoorts is beskikbaar. Omdat die uitdienstredings
proses gereed is, maar die indienstredings proses sukkel, lyk dit asof
die eBiz personeel sonder werk gaan sit. Die risiko is dat dit in die
lig van die Didata/Speskom aanbiedinge belangstelling ooit
persgeleerdere kan lok”.
7
11.Meetings were held on 11, 12 and 14 August 1998 where various matters were
discussed relating to the contract with BSW and during which the EBIZ
staff expressed their frustration with the process.
11.1 During this (what turned out to be crucial) week, the applicant was away
in Pretoria. It culminated on Friday 14 August 1998 in an announcement
that BSW would only be offering 12 contracts to EBIZ personnel, and not
59 as originally thought by the applicant. It was also at this meeting
that Holtzhausen walked out of Sanlam. (He also took the voluntary
severance package and with him some EBIZ staff members to join a
company called Brainware. This company subsequently offered the
applicant a job in August 1998 which was withdrawn 4 days later).
11.2 Holtzhausen had later that day telephoned Visser on her cell phone to
inform her of the decision. The applicant testified that the news came
to her as a great shock.
11.3 On the same day, Botha had emailed to all the affected staff (including
the applicant) an A, B and C list of employees. The A list contained
what is described as “ BSW job offers” ; the B list contained what is
described as “ Sanlam shared service related functions” ; and, the C list
contained a list of names which were described as “ not Sanlam shared
service related”. The applicant’s name appeared on the C list.
11.4 In his email, Botha proposed that all EBIZ personnel check and update
the list and forward any changes to Jaco Viljoen who would then update
the list further ahead of a meeting planned for the following Tuesday
(18 August 1998) when the positions would be clarified. The applicant
only received this email on the morning of Monday 17 August 1998. It
is common cause that the applicant did not communicate to either Botha
or Viljoen that she was unhappy about being placed in the C group. (The
applicant explained in her evidence that she was still under the
impression that she would remain with Sanlam having been placed in the
central Sanlam resource pool, the C group. In this regard I mention
that it is difficult to appreciate the applicant’s evidence that she was
“shocked” when Holtzhausen phoned her with the news on Friday 14 August
1998 whilst she was still under the impression on Monday 17 August 1998
that she would remain within the service of the respondent, having been
placed in the central pool of employees).
12.On Tuesday 18 August 1998, the meeting proposed by Botha took place and at
this meeting the three groupings (amended as per the request of some
employees) referred to earlier, was confirmed. The minute of the
meeting stipulates that staff in groups B and C would be redeployed
within Sanlam until the end of September and if not so redeployed, would
be declared “oortollig” ( “in excess” ) and they would have to leave the
service of Sanlam in October 1998. At the meeting those in group C were
requested to make proposals to management should they be “onseker ...
oor werk sekuriteit” .
13.It is apparent from the evidence that after the meeting of 18 August 1998,
the applicant did not forward any proposal to Botha (despite his request
to her that she do so) that she be retained in the Sanlam structure in
an alternative post. Indeed, she applied for a voluntary severance
package on 31 August 1998 and thereafter (following a discussion with
Botha) removed her name from the list (on 4 September 1998) and
instead, applied for an alternative post within Sanlam. The post
instead, applied for an alternative post within Sanlam. The post
applied for by the applicant was then upgraded and was subsequently not
9
filled. (In this regard, the applicant’s original allegation that the
respondent acted improperly, was withdrawn).
14.The main thrust of Mr Rautenbach’s argument on behalf of the applicant is
that the offer by BSW to take over only twelve of the EBIZ personnel on
14 August 1998, gave rise to a “new commercial rational e” which at that
point enjoined the respondent (having regard to the relevant provisions
of section 189 of the Act) to consult with the applicant in regard to
the various matters listed in section 189. Mr Niewoudt, who appeared
for the respondent, argued that the decision of 14 August 1998 was
indeed the culmination of a process which had commenced with the
respondent’s preliminary decision in February 1998 and which had given
rise to a process of consultation which took place in June, July and
August 1998 and which had involved the active participation of the
applicant. Mr Niewoudt contended that the applicant had perhaps naively
believed that she would be offered a job by BSW but he pointed out that
it is apparent from the minutes of various meetings (and indeed the
respondent’s initial proposal) that the possibility was mooted at an
early stage that not all EBIZ personnel would be taken over by BSW.
15.Section 189 (1) of the Act requires that an employer must consult the
affected employees or their representatives when that employer
“contemplates” dismissing the employees for reasons based on the
employer’s operational requirements. (The word “contemplates” is
defined in the 10 th Ed of the Concise Oxford Dictionary as meaning “look
at thoughtfully, think about, think profoundly and at length, have as a
probable intention” ). It is clear that prior to embarking on the
probable intention” ). It is clear that prior to embarking on the
consultation process required by section 189, the respondent had
indicated its intention (and in this regard I refer to Christodoulou’s
proposal of 2 June 1998) that “all the posts in the portion of eBiz
which is outsourced, will be abolished within Sanlam” . Thereafter
Botha was put in charge of the outsourcing project which resulted in a
number of meetings with the affected group of employees (including the
applicant), and with BSW.
16.It is apparent from the evidence that the commercial rationale which set
into motion the section 189 consultation procedure (effectively from
June 1998 onwards) did not change on, or before, or after, 14 August
1998. Indeed, on 14 August 1998, the “contemplation” (as in “probably
thought”) of dismissal became more of a reality when it was announced
that BSW was only offering 12 positions to the affected employees
instead of 59. I cannot agree with Mr Rautenbach that after the
announcement on 14 August 1998, the respondent was again required to
commence a new (or different) consultation process as contemplated by
section 189 of the Act. It does not make sense to me that an employer
is required to consult (in the context of a decision to outsource) on
the topics referred to in section 189(2) and (3) of the Act after
announcing its (initial) intention to outsource and then is again
required to do so once the outsourcing contract is concluded with the
other party (or is close to conclusion) when it becomes clear that not
all employees will be taken over by the other contracting party. Such a
double responsibility is not contemplated by either a proper reading of
section 189 of the Act, or if one has regard to the primary objects of
the Act.
17.In Kotze v Rebel Discount Liquor Group (Pty) Ltd (2000) 21 ILJ 129 (LAC)
at 132AJ to 133AG , Mogoeng AJA restates very succinctly our law in
at 132AJ to 133AG , Mogoeng AJA restates very succinctly our law in
regard to what is required (procedurally and substantively) for a
11
retrenchment process to be regarded as a “fair” process. Applying those
principles to the facts of this case, it is clear to me that:
17.1 the respondent had at a very early stage (in February 1998) identified
the retrenchment of the affected employees (including the applicant) as
a possibility;
17.2 following its proposal of 2 June 1998, the respondent appointed Botha
(the senior manager of EBIZ) to coordinate and implement the out
source project. The task team included the applicant. The task team
met regularly to report back to staff;
17.3 the applicant conceded that she was aware of the consequences of EBIZ
being outsourced, namely that her employment with the respondent would
be terminated.
17.4 the final decision of the respondent to retrench the applicant was taken
only after:
17.4.1 extensive negotiations and consultations with affected staff and with BSW,
the other contracting party. The negotiations with BSW included the
possible placement or absorption of Sanlam EBIZ personnel (including
the applicant). Implicit in these negotiations was an attempt to
achieve the object of avoiding retrenchments altogether, alternatively
reducing the number of dismissals and mitigating their consequences;
17.4.2 the applicant and all other affected EBIZ employees were given a fair
opportunity to make meaningful and effective proposals relating to the
whole process of outsourcing, including its consequences.
17.5 the announcement on 14 August 1998 served as reasonable notice to all
the affected employees concerned that their proposed retrenchment was on
the cards even though at the time those functions to be taken over by
BSW were yet to be identified. Indeed, following the announcement of 14
August 1998, Botha (albeit unilaterally) grouped the affected employees
into various categories, including an “oortollige” (in excess) category
in which the applicant was grouped. He consulted with the affected
employees requiring them to make their input in regard to their grouping
before it was finalised. Some employees gave their input, while others
did not. The applicant fell in the latter category;
17.6 the applicant had, after the announcement on 14 August 1998, applied for
a voluntary severance package on 31 August 1998 and then withdrew her
application on 4 September 1998, and instead, applied for an alternative
post within the organisation. Her application in this regard was
considered, but was not approved; and
17.7 the respondent’s final decision to retrench was informed by what had
transpired during the consultation process which took place during the
months of June, July and part of August, 1998.
18.As stated in Kotze v Rebel Discount Liquor Group , (above) at 133DE, the
requirement of consultation also serves a substantive purpose and that
purpose is to ensure that the final decision to retrench is properly and
genuinely justifiable by the operational requirements or by a commercial
13
or business rationale. Having regard to the facts in this matter, I am
satisfied that the consultation process which spanned over a period of
almost three months, achieved that purpose.
19.In conclusion therefore, I find that the retrenchment of the applicant was
not unfair (procedurally or substantively) in the circumstances of this
case. Because the applicant was under a mistaken impression that she
would be offered the same job with BSW (and because it did not happen
that way) does not make the retrenchment unfair. Indeed, even
Christodoulou (the respondent’s MD) indicated in his proposal of 2 June
1998 that “we are confident that we can negotiate with the new company
to offer you alternative employment with similar terms and conditions to
that which you currently enjoy ...” . However in determining substantive
and procedural fairness, one must have regard to the actual consultation
process as it unfolded. In this case (unfortunately) it became
increasingly clear that not all the affected employees would be
accommodated by BSW. For this, the respondent cannot be blamed, and it
can certainly not be said that the respondent acted unfairly.
20.In regard to costs, having regard to the circumstances of the matter, the
requirements of the law and fairness and the conduct of the parties, I
am of the view that each party should pay her/its own costs.
________________________
ARENDSE AJ
23 MARCH 2000
15