IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT DURBAN.
Case No. D687/98.
In the matter between :
LOUIS ALBERTO FERNANDES Applicant.
and
H.M. LEIBOWITZ
(PROPRIETARY) LIMITED
t/a THE AUTO INDUSTRIAL
CENTRE GROUP OF COMPANIES
("AIC") Respondent.
J U D G M E N T.
1.
LOUIS ALBERTO FERNANDES ("the applicant") joined H.M.
LEIBOWITZ (PROPRIETARY) LIMITED trading as THE AUTO
INDUSTRIAL CENTRE GROUP OF COMPANIES (AIC) ("the
respondent") on 1 April 1997 as a Trainee Manager. At the
time of his appointment, he was informed by JOHN FRIEL, the
Human Resources General Manager of the respondent, that
there was at the time no definite position available for him,
but that the respondent was embarking on an expansion
programme and that he would be appointed to a position
immediately one became available.
20
A position became available during June 1997 when he was
appointed as the Group Research and Development Manager
of the respondent. Two other Trainee Managers were, at
about the same time, also appointed to positions which then
became available. The applicant's appointment to the said
position became possible after the respondent had decided to
consolidate, expand and develop its research and
development capabilities at its Durban Head Office. This
function had, until then, been dealt with on a regional basis.
30
The applicant's employment was uneventful until January
1998. STEPHEN WILLIAM BALDWIN ("Baldwin"), the
Regional Director of the respondent's KwaZulu-Natal
Operations, summoned the applicant to a meeting towards
the end of January 1998. According to the applicant, Baldwin
informed him that he was investigating either markedly
enlarging the Research and Development Department, or
reverting to its original structure. Baldwin was uncertain as
to the route which was to be adopted, but indicated to the
applicant that in the event the option of reverting to the
original regional structure was adopted, that the applicant
should consider an alternative career within the ranks of the
respondent. After the applicant indicated that he might in
such event consider a career in Operations, Baldwin
suggested that he discuss this option with the Director of
Operations, JAMES NIELSON WILKES ("Wilkes"). The
meeting ended inconclusively and Baldwin informed the
applicant that they would meet again to discuss the matter
further. Baldwin's version as to what transpired at this
meeting differed in fundamental respects from the above. I
propose to revert to and deal with the respondent's version in
this regard later.
40
The applicant met with Wilkes and discussed with him a
possible alternative career in Operations.
50
During February 1998, the applicant prepared and submitted
to Baldwin a written proposal detailing the manner in which he
could be incorporated into a restructured marketing
department. Baldwin undertook to study this document and
to revert to the applicant in connection therewith.
60
On 20 February 1998, Baldwin informed the applicant that the
Research and Development Department would revert to its
original regional structures and that his position as Group
Research and Development Manager had become redundant.
Baldwin requested the applicant to consider other career
options within the respondent and indicated that he would,
over the impending management conference which had been
scheduled for that weekend (21-22 February 1998),
investigate such options with Wilkes and other Senior
Managers of the respondent who would be attending the
conference. Baldwin undertook to revert to the applicant in
this regard after the management meeting.
70
He did not do so. After the applicant approached him, he
informed the applicant that he would like to meet with him,
together with Friel. This meeting never materialised.
80
On 24 February 1998, the applicant was requested by Wilkes
to attend the respondent's SAMCOR Plant in Gauteng in order
to undertake a certain project. The applicant complied and
completed the said project. He returned to Durban on or
about 18 March 1998.
90
No discussions thereafter took place between Baldwin or the
applicant until 17 April 1998 when Baldwin informed the
applicant that no position was available for him and that he
would have "to let the applicant go". He informed the
applicant that the Salary Department would communicate
with him regarding his remuneration until the end of May
1998 and that it would not be necessary for him to render his
services with effect from 20 April 2000.
100
According to the applicant, he received the news of his
dismissal with shock, as he had not expected or anticipated
the possibility of his dismissal. He was at a total loss as to
what he should do.
110
He discussed the matter with a former girlfriend, an attorney,
SHARON GOATLEY. Based on her recommendations, he
sought advice from his present attorneys on an "informal"
basis. Consequent thereupon, he requested reasons from
Baldwin as to the reasons for his dismissal. Baldwin indicated
that he would discuss the matter with Friel and revert to him.
Baldwin failed to do so, or to respond to the applicant's
subsequent telephone calls.
120
On 5 May 1998, the applicant addressed a letter to F.D.
JANEKE, the Managing Director of the respondent, recording
Baldwin's refusal to furnish the said reasons. The letter also
records the applicant's intention to refer the dispute to the
Commission for Conciliation, Mediation and Arbitration
("CCMA").
130
Janeke telephoned the applicant upon receipt of the letter and
informed him that Friel would contact him in connection
therewith. Friel did so and invited the applicant to a meeting
which was scheduled for 8 May 1998.
140
At this meeting, Friel presented the applicant with two
options. In terms of the first option, the applicant could
pursue his legal recourse against the respondent, but in the
event that the applicant opted therefor, the respondent would
discredit his name. Friel also indicated that it was not
necessary for the respondent to have consulted formally with
him regarding his retrenchment in view of the senior position
which he held with the respondent. Friel also alluded to the
fact that he was very familiar with the provisions of the
applicable legislation.
150
The second option available to the applicant was to resolve
the dispute on the basis that Friel would endeavour to
persuade the respondent to repay to the applicant the amount
of the study loan which had been deducted from the final
cheque made out to him and ensure that the applicant was
furnished with a good reference.
160
The applicant informed Friel that he would consider his
options and revert to him in connection therewith the
following Monday.
170
The applicant's impression of the meeting with Friel was that
the respondent was endeavouring to bully him into silence.
180
During the course of his meeting with Friel, Baldwin arrived
and handed to the applicant an envelope which it later
transpired contained a letter dated 4 May 1998 recording
Baldwin's version of the events leading to the applicant's
dismissal.
190
Shortly after the meeting, the applicant prepared a Minute of
his discussions thereat. This Minute was later transcribed and
formed part of the bundle of documents.
200
The applicant elected to pursue his legal remedies against the
respondent. He established that the CCMA was not the
appropriate forum for the referral of the dispute, but that the
Motor Industry Bargaining Council ("MIBC") was. Conciliation
failed to resolve the dispute. Hence the referral to this Court.
210
Friel confirmed the applicant's testimony as to the
circumstances underlying his initial appointment. He was
aware of the programme involving the expansion of the
reconstruction and development programme in Durban.
220
He was not directly involved with the applicant regarding the
discussions which preceded his retrenchment. He
investigated the possibility of securing alternative
employment within the ranks of the respondent for the
applicant.
230
Janeke handed to Friel the letter dated 5 May 1998 written by
the applicant recording, inter alia , Baldwin's refusal to
furnish the applicant with reasons regarding his redundancy
and requested Friel to communicate with the applicant in
connection therewith.
240
He confirmed that he met with the applicant on 8 May 1998,
but disputed the applicant's version as to the events at the
meeting.
250
During the course of the meeting, he informed the applicant
that the MIBC and not the CCMA was the appropriate forum to
which the dispute should be referred to and that failing
resolution by the MIBC, the dispute should be referred to this
Court.
260
His impression of the applicant at the meeting was that he
was seeking compensation and not his employment.
270
He claimed that the respondent engaged in a consultation
process with the applicant regarding his dismissal prior to his
retrenchment and that during this period endeavours were
undertaken to secure alternative employment for the
applicant.
280
He conceded that the respondent failed to comply "to the
letter" with the requirements of Section 189 (3) of the Labour
Relations Act No. 66 of 1995
("LRA") and suggested that the reason for the respondent's
failure to do so was that it wanted to "minimise the effects" of
the respondent's dismissal.
290
He testified that as far as the vacant positions which were
advertised by the respondent on 12 July 1998 were
concerned, the applicant would not have been considered
therefor as the positions required incumbents with experience
and/or qualifications. According to him, it would have been
embarrassing for the applicant to be re-employed as a Trainee
Manager.
300
He claimed that the respondent paid to the applicant
severance pay which was calculated over a period of two
weeks' remuneration.
310
Under cross-examination, he intimated that the respondent
adopted a flexible recruitment and training policy and
undertook, within reasonable levels, to accommodate the
requirements of its staff.
320
The applicant's position was not discussed at the
management conference in February 1998.
330
Although he was unable to rebut the applicant's assertion to
the effect that he did not, until 17 April 1998, during his
discussions with Baldwin, recognise that his retrenchment was
a possibility, he claimed that the applicant was naive in the
extreme not to have done so.
340
He claimed that the applicant was unwilling to relocate to
Gauteng with a view to securing alternative employment
there.
350
He disputed the applicant's assertion that Baldwin handed the
letter of 4 May 1998 to the applicant during the course of his
meeting with the applicant.
360
Wilkes was at the relevant time the Operations Director of the
respondent. He confirmed that he was canvassed regarding
alternative employment for the applicant. He confirmed that
he had assigned the applicant to undertake a task at the
SAMCOR Plant in Gauteng. The applicant duly complied with
his obligations in this regard.
370
Baldwin was the Regional Director of the KwaZulu-Natal
Operations of the respondent. From January to May 1998, he
was the Marketing Director of the respondent. He confirmed
the evidence of the applicant and Friel to the effect that the
applicant was appointed as a Management Trainee and that
consequent thereupon he was appointed as Manager of the
Reconstruction and Development Programme. He also
confirmed the rationale underlying the proposed expansion of
the reconstruction and development structures and the
applicant's appointment as Manager to head the structure.
380
During the last week of January 1998, he consulted with the
applicant and informed him of the proposal by the respondent
to revert to the original Reconstruction and Development
Programme. During the course of his consultation with the
applicant, it became obvious that his position would become
redundant. The applicant accepted this situation and agreed
to examine alternative areas of employment within the ranks
of the respondent. He testified that the applicant recognised,
during the course of this consultation, that his job was "on the
line".
390
He diarised certain dates on which he spoke to the applicant.
He spoke to the applicant literally on a daily basis about his
retrenchment and about ways in which it could be avoided.
400
At the end of February 1998, the applicant submitted a
proposal on alternative career prospects. He promised to
look at the paper and to revert to the applicant in connection
therewith. When he did, he informed the applicant that the
persons whom he considered appointing in the Marketing
Divisions were persons who possessed an appropriate degree
or experience. As the applicant did not hold an appropriate
degree or experience, he could not be considered for
appointment to the Marketing Division.
410
He indicated that he followed a three-phase consulting
process with the applicant, the first when he explained to the
applicant the restructuring proposal and warned him of the
likely consequence of his retrenchment and when it was
decided to explore alternative areas of employment for the
applicant. The second phase was when the applicant
suggested that he had a future in marketing and produced a
written proposal in this regard. The final phase was when it
was agreed that all local options were exhausted and that the
retrenchment of the applicant was unavoidable.
420
He maintained no written record of his consultations with the
applicant. He did not consider it to be necessary to do so.
The consultations were maintained at an informal level. The
management team comprised seven or eight individuals,
including the Managing Director. It was an intimate team and
each of the members thereof were familiar with the workings
of the others and the business of the respondent.
430
He stated that the issue of the applicant's severance pay was
discussed during his first meeting with the applicant and that
he informed the applicant that he would receive payment of
what was lawfully due to him.
440
He confirmed the flexible employment approach adopted by
the respondent whereby management trainees were
recruited, put through training courses and appointed to
specific positions as and when they arose.
450
He disputed the applicant's testimony to the effect that on his
return from the management conference he informed the
applicant that he would meet with him in the presence of Friel.
460
He claimed that the marketing proposal submitted by the
applicant was not an original piece of work, but extracted from
a book on marketing. He did not find anything innovative in
the proposal and in any event was not willing to appoint the
applicant to a marketing position because he lacked the
necessary qualifications and expertise in this regard.
470
As the applicant had not been able to come up with any
meaningful employment proposals, he had no option but to
"let him go". Approximately a week after his dismissal, the
applicant requested reasons for his redundancy. He indicated
to the applicant that he would discuss the matter with Friel
and revert to the applicant in connection therewith. He
discussed the matter with Friel, who indicated that there was
no reason for not providing the said reasons. He then
prepared the letter dated 4 May 1998 and left it at the
respondent's reception for collection by the applicant. He
disputed the applicant's contention that he handed the letter
to the applicant during his meeting with Friel on 8 May 1998.
480
He disputed the applicant's version to the effect that he was
unaware, during his meeting with Baldwin, that he was likely
to lose his employment with the respondent. He claimed that
during the course of the very first meeting, the applicant's
likely retrenchment and severance package was discussed.
He also disputed the applicant's version to the effect that he
was only informed that his position had been made redundant
at the meeting on 20 February 1998. He claimed that the
applicant accepted from their first meeting that his position
had been made redundant.
490
The applicant, according to Baldwin, was ambivalent about
having to relocate to another centre to take up alternative
employment.
500
As far as the vacancies which the respondent advertised
during July 1998 were concerned, he was of the view that the
applicant would probably not have qualified for the position of
Logistics Manager or Industrial Engineer. The applicant had
already undertaken the Management Trainee Course and he
was unaware whether any position would have arisen which
the applicant could have filled.
510
The diary entries made by him did not necessarily imply that
he spoke to the applicant on the occasions referred to. They
may well have been reminders for him to speak to the
applicant.
520
He claimed that as part of an intimate management team, the
applicant was privy to the internal workings of the respondent.
530
Of the witnesses who testified, I was most impressed with the
applicant. He was subjected to relentless, thorough,
searching and sometimes repetitive cross-examination over a
protracted period. He nevertheless came through and struck
me as an honest and credible witness. I do not agree with the
submission made by Mr. Farrell, for the respondent, to the
effect that he was an appalling witness, argumentative,
evasive, contradictory or unclear in his testimony. On the
contrary, I did not consider the applicant to be an appalling,
argumentative or evasive witness. Nor, in my view, did he
contradict himself in any significant or material respects. I do
not recall any significant aspect of his testimony which was
unclear. I was also impressed by the applicant's composure,
particularly when Mr. Farrell resorted, during cross-
examination, to the use of epithets to describe his behaviour
and conduct which would ordinarily have provoked hostile
responses. By way of example, Mr. Farrell described the
applicant as a cunning and disingenuous person and a lying
witness. He also referred to a proposal prepared by the
applicant as being pathetic. Throughout his cross-
examination, the applicant maintained commendable
composure and restraint.
540
The distinct impression I was left with after listening to the
respondent's witnesses and particularly Friel and Baldwin, was
that they recognised that Mr. Baldwin had failed to properly
comply with the requirements of Section 189 of the LRA.
They sought, in my view, to gloss over and downplay the
nature and extent of such non-compliance. As is evident
from what follows, I prefer the applicant's version where it is
contradicted by the respondent's testimony.
550
It was common cause between the parties that the applicant
had been dismissed from his employment.
560
The first and fundamental question which arises for
consideration is whether the dismissal was fair. The applicant
contends that his dismissal was both substantively and
procedurally unfair.
570
In the light of the provisions of Section 192 (2) of the LRA,
both parties accepted that the onus of establishing that the
dismissal was fair, rested on the respondent.
DID THE RESPONDENT SUCCEED IN DISCHARGING SUCH
ONUS?
580
The respondent seeks to justify the applicant's dismissal as
being founded on its operational requirements. Section 213
of the LRA defines operational requirements to mean :
"Requirements based on the economic,
technological, structural or similar needs of an
employer".
590
Broadly speaking, these requirements relate to the financial
strength of the business and its continued viability, the
introduction of new equipment and reorganisation of the
enterprise to meet jobs in the market or to enhance
productivity. In National Union of Mine Workers of S.A.
v. Atlantis Diesel Engines Ltd . (1993) 14 ILJ 642 (LAC),
the Labour Appeal Court held that :
"Fairness in this context goes further than a bona
fide and commercial justification for the decision
to retrench. It is concerned, first and foremost,
with the question whether termination of
employment is the only reasonable option in the
circumstances. It has become trite for the Courts
to state that termination of employment for
disciplinary and performance related reasons
should always be a measure of last resort. That,
in our view, applies equally to termination of
employment for economic or operational reasons".
600
Du Toit et al in the Labour Relations Act of 1995, A
Comprehensive Guide, 2nd Edition, 1998, Butterworths,
at page 401, submit that important decisions, such as the
decision to retrench, should be subject to the greatest
possible degree of consultation with employees or their
representatives, not merely for reasons of procedural fairness,
but as part of establishing whether substantive grounds for
dismissal are present. Our Courts have a clear responsibility
to ensure that the provisions of the Act are complied with. In
the present context, the employer is required to prove that
such dismissals are fair (Section 192 (2) of the LRA). "Fair"
means that a reason for dismissal based on the employer's
operational requirements (as defined in Section 213 of the
LRA) is present.
610
Ms Posemann for the applicant, accepted that the respondent
had made a decision to restructure its operations and render
the position of the applicant as Manager of the Reconstruction
and Development Department redundant. This did not,
however, relieve the respondent from the obligation of
providing alternative employment for the applicant. She
argued that the respondent had maintained a flexible
approach towards employees generally and in fact recruited
management trainees who were afforded two to six months to
complete their induction or management training
programmes, whereupon they were appointed to positions as
and when they arose. The applicant's position, she argued,
was only rendered redundant on the applicant's version on 20
February 1998. However, it was only after his return from
Gauteng on 18 March 1998, that he was without a job
description.
620
Ms Posemann relied upon the judgment in Sayles v. Tartan
Steel CC (1999) 20 ILJ 647 (LC) as authority for the
proposition that the mere fact that an employee's position
becomes redundant does not mean that his services are
therefore terminated. Dismissal is not an inevitable
consequence of redundancy. The redundant employee may
be redeployed. In that case, the respondent employer failed
to consult with the applicant employee following upon the
closure of one of its divisions as it proposed to redeploy him
elsewhere. The applicant employee refused to take up the
alternative position because it did not utilise his skills and
qualifications. The dismissal was held to be unfair.
630
In Imperial Transport Services v. Stirling (1999) 3 BLLR
201 (LAC), the Labour Appeal Court held that a distinction
ought to be made between a loss of jobs brought about by
external factors such as a downturn in the economy and a loss
of jobs brought about by reason of internal factors such as
restructuring or the introduction of new technology. At
paragraph 24, Ngcobo, J.A. stated as follows:
"A distinction ought to be made between the loss
of jobs, which is brought about by external factors
such as a downturn in the economy, on the one
hand, and the loss of jobs by reason of internal
factors, such as the restructuring or the
introduction of new technology, on the other hand.
Although both these factors result in the
retrenchment of employees, there is an important
distinction which is relevant when one considers
the stage at which the duty to consult arises. In
general, in the case of a loss of jobs brought about
by internal changes, the employer is in control of
the situation and need not make hasty decisions.
Time is not crucial as it is when retrenchment is
due to an economic downturn, and where any
delay might severely prejudice the employer.
Hlongwane and Another v. Plastix (Pty) Ltd.
(1990) 11 ILJ 191 (IC) at 176 D."
640
In Stirling's case supra, the Court held that where an
employee is retrenched during a restructuring operation, the
employer is obliged to consult with him before the changes
are implemented. The appellant had not consulted with the
respondent prior to the reallocation of his functions, but
simply presented him with a fait accompli. The Court held
that the decision to terminate the employment of the
respondent was unfair for want of compliance with the
requirements of prior consultation.
650
There was no evidence of any meaningful consultations which
took place between Baldwin and the applicant after his return
from Gauteng on 18 March 1998 and until his dismissal on 17
April 1998. The evidence did not reveal any evidence of the
applicant being offered a position at a lower level or reverting
to the position of a Management Trainee until an appropriate
or suitable position arose. The fact that the respondent
advertised vacant positions for new staff in July 1998 suggests
that the management of the respondent must have known by
the stage when the decision to dismiss the applicant was
taken, of the likelihood of such positions arising in the future.
This is particularly so in an organisation such as the
respondent, which resorts to the recruitment of Trainee
Managers, their induction and appointment when positions do
become available. It is most unlikely that the applicant would
not have accepted a position at a lower level or reverting to
the position of a Management Trainee until a suitable position
arose. Had a proper consultative process taken place, such
likely would, in all probability, have been properly explored
and exploited to the applicant's benefit.
660
On the proven facts, it is most unlikely that a proper
consultation process took place between the applicant and the
respondent regarding his redeployment in an alternative
position. Had such a process taken place, it is probable that
the applicant would have accepted an appointment as a
Management Trainee or some other measure on a holding
basis until a position for which he was suited arose. It is most
unlikely that the respondent was not aware at the time it
dismissed the applicant of the fact that vacancies for which he
was likely to be suitable, would arise in the not too distant
future.
670
I am not convinced on the evidence that Baldwin's explanation
for refusing to incorporate the applicant into a restructured
marketing department was reasonable. The practice of the
respondent did not require a strict insistence or proper
qualifications or expertise. The respondent, it appears, was
willing to afford the necessary training where this was
required and there does not appear to be any reason why the
applicant could not have been appointed to a marketing
position and afforded the necessary training.
680
Furthermore, it seems that the applicant could well have been
appointed to any of the positions which were advertised in July
1998 and particularly the position of a Management Trainee.
690
The decision by the respondent to restructure its research and
development function was clearly an internal decision. On
the available facts, there does not appear to have been any
urgency in implementing the decision. To put it another way,
the decision to restructure could well have been suspended
until a suitable alternative position became available to the
applicant.
700
I turn now to consider the procedural fairness of the dismissal.
710
Section 188 of the LRA requires that a dismissal for
operational reasons must be procedurally fair. The
requirements for a procedurally fair dismissal for
operational reasons are set out in Section 189 of the LRA, read
with Schedule 8 The Code of Good Practice Dismissals
based on operational requirements and Section 41 of the
Basic Conditions of Employment Act No. 75 of 1997 ("BCEA").
720
The requirements which an employer must comply with are
the following, inter alia, namely :
(a)0 Prior consultation.
(a)1 Attempt to reach consensus over certain matters.
(a)2 Written disclosure of relevant information.
(a)3 Allow an opportunity to make representations.
(a)4 Consider representations.
(a)5 Selection of employees for dismissal.
(a)6 Severance pay.
PRIOR CONSULTATION :
730
Section 189 (1) stipulates that :
"When an employer contemplates dismissing one
or more employees for reasons based on the
employer's operational requirements, the
employer must consult ..."
740
In Atlantis Diesel Engines (Pty) Ltd. v. National Union of
Mine Workers of South Africa (1994) 15 ILJ 1247 A at
1252 F, the Appellate Division ruled that :
"The duty to consult arises as a general rule both
in logic and in law when an employer having seen
the need for it contemplates retrenchment".
The word "contemplate" indicates that the employer must
consult at the stage when a final decision to dismiss has not
yet been reached, but the possibility of dismissal has only
been foreseen. This requirement ensures that the employees
are afforded the opportunity to influence the employer in its
final decision to dismiss or not.
750
Item 3 of the Code of Good Practice states that the purpose of
consultation is to permit the parties in the form of joint
problem-solving exercise, to strive for consensus if possible.
The employer "should in all good faith keep an open mind
throughout and seriously consider proposals put forward".
This view is supported by Section 189 (2) of the LRA which
requires the parties to "attempt to reach consensus" on the
matters listed.
760
It was common cause between the parties that the party
whom the respondent was obliged to consult with in terms of
Section 189 (1) was the applicant.
770
Before proceeding to consider whether the respondent
complied with the requirements of the applicable legislation
and the Code of Good Practice, I consider it necessary to point
out that in my view an employer is obliged to apply the
relevant provisions as best as it can and justify any deviations
in the event of a dispute. I accept that in certain instances a
dismissal may be held to be fair, even though the said
requirements have not strictly been complied with.
780
The requirements of the section must be complied with. It
does not, however, follow that due compliance is a pre-
condition to a fair dismissal, or that non-compliance
necessarily invalidates the dismissal. Nor does it follow that
merely because the requirements of the section were
complied with, that a dismissal is necessarily fair. The LRA
does not stipulate any sanction or consequence which would
arise from the non-compliance with the requirements thereof.
It seems to me that this Court would be at large in such
circumstances to consider whether the dismissal is truly
unfair.
Moloi v. Aviprint Consulting CC t/a Sir
Speedy Instant Print (1998) 2 BLLR 147 (LC).
Elias v. Germiston Uitgewers (Pty) Ltd. t/a
Evalulab (1997) 18 ILJ 1346 (LC).
790
In Johnson & Johnson (Pty) Ltd. v. CWIU (1999) 20 ILJ 89
(LAC) at 97 B-E (paragraph 31), Froneman, D.J.P. stated :
"In testing compliance with its provisions by
determining whether the purpose of the
occurrence of a joint consensus seeking process
has been achieved or frustrated, a finding of non-
compliance by the employer will almost invariably
result also in the dismissal being unfair for failure
to follow proper procedure. It is difficult to
envisage a situation where the result could be
different. Non-compliance would not, however,
necessarily result in the dismissal being
substantively unfair, as the facts of this case
show".
800
The learned Deputy Judge President (as he then was) did,
however, emphasise at 96 (paragraph 29) that a
"mechanical checklist" kind of approach to determine whether
the requirements of the section have been complied with, is
inappropriate.
FAWU and Another v. National Sorghum
Breweries (1998) 19 ILU 613 (LC).
810
What would be important appears to be the nature, extent
and degree of non-compliance and the reasons therefor and
the question whether substantive grounds for the dismissal
exist. Each case would necessarily depend on its own facts.
DID THE RESPONDENT CONSULT WITH THE APPLICANT
IN THE SENSE CONTEMPLATED BY SECTION 189 (1) ?
820
I have already demonstrated that according to the
respondent, Baldwin followed a three-phase consultation
process. The first phase involved :
(a)0 notifying the applicant of the proposed
restructuring and the reasons therefor ;
(a)1 cautioning him of the likely consequences of his
retrenchment;
(a)2 a decision to look for alternative areas where the
applicant could be employed.
830
The second phase involved the communication by Baldwin to
the applicant of the decision that the applicant had no future
in marketing. During this phase, the applicant prepared and
presented Baldwin with his proposals on the manner in which
he could be incorporated into the Marketing Department.
840
The third phase arose after all local options were exhausted
and it was established that no suitable positions were
available for the applicant. The retrenchment of the applicant
was an inevitable consequence.
850
The applicant disputed the above evidence. He testified that
no meaningful consultation process was followed or adhered
to by the respondent. In any event, and more significantly,
the applicant contended that at no stage during the course of
his meetings with Baldwin until 17 April 1998 when Baldwin
notified the applicant of the decision to dismiss him, was the
applicant ever made aware of the likelihood that his
employment with the respondent was in jeopardy and/or that
he was likely to be retrenched in the event that no alternative
position or employment could be secured for him within the
ranks of the respondent.
860
According to the applicant, during his meeting with Baldwin
late in January 1998, he was informed that the respondent
was considering either markedly enlarging the Research and
Development Department, or reducing it to its original
structure. No final decision had been achieved in this regard
and he was advised to consider his options in the event that
the restructuring became a reality. During the course of this
meeting, Baldwin suggested to the applicant that he consider
his options within the proposed restructuring and whether he
was desirous of remaining with the restructured
Reconstruction and Development Department or whether he
wanted to consider alternative career options within the
respondent. The applicant informed Baldwin that he was
interested in pursuing a career in Operations and that he
would discuss this option with the Director of Operations,
Wilkes. Baldwin suggested that they meet at a later date and
discuss the issue further.
870
At his next meeting with Baldwin, the applicant was informed
by Baldwin that the Reconstruction and Development
Department would revert to its previous regional structures
and that his position as Group Research and Development
Manager had become redundant. Baldwin requested the
applicant to consider alternative employment opportunities
within the respondent and informed the applicant that a
marketing position in which the applicant had indicated an
interest, and for which the applicant had submitted a written
proposal, was not an option as the respondent required a
person with marketing experience and/or qualifications in that
position. The applicant indicated to Baldwin that Wilkes had
indicated to him that an opportunity existed for him to pursue
a career at a management level in Operations. Baldwin
undertook to discuss this position over the pending
management conference which was scheduled for 21 and 22
February 1998 and to revert to the applicant once he had
done so.
880
The next meeting between the applicant and Baldwin
occurred on 17 April 1998 when Baldwin indicated to him that
there were no employment opportunities available for the
applicant within the ranks of the respondent and that the
applicant would be retrenched. The applicant was informed
that he would be paid until the end of May 1998 and that it
would not be necessary for him to tender his services with
effect from 20 April 1998.
890
I consider it unlikely and improbable that Baldwin informed
the applicant either at their first meeting at the end of January
1998, or at any subsequent meeting prior to 17 April 1998,
that his employment with the respondent was in jeopardy and/
or that he was likely to be retrenched in the event that no
suitable alternative position could be found for the applicant.
The reasons for my finding in this regard are inter alia that :
(a)0 Had such information been imparted to the
applicant, one would reasonably have expected
that he would have pursued his quest for
alternative positions within the respondent with
greater zest and seriousness. I do not mean to
suggest that it does not appear that the applicant
pursued his quest for alternative employment
within the respondent with any zest or
seriousness. The evidence reveals that the
applicant did undertake investigations in this
regard, but it does not appear that he ever left the
comfort zone of his belief that his employment
with the respondent was secure and that it would
be a matter of time before some alternative
position was secured for him. In this regard, I
would have expected that the applicant would
have pursued more seriously and intently Wilkes'
statement that the Production Department
required management personnel and that the
applicant could be reclassified as a Management
Trainee for a posting in this regard. It is evident
that this aspect was not pursued with Baldwin or
Wilkes after the management conference.
(a)1 The applicant testified that and there is no reason
to disbelieve his evidence, that had he been
informed of or appreciated the likelihood of his
retrenchment, he would, apart from seeking
alternative positions within the respondent, have
sought outside opportunities for employment in
order to minimise the effects of his likely
retrenchment. He only did so after being
informed of his retrenchment on 17 April 1998.
(a)2 The respondent did not seek to controvert the
applicant's evidence to the effect that he was in a
state of shock after being informed of his
retrenchment. The applicant stated that this was
never mentioned as a possibility until then and
that he did not know what to do. It was only
about a week later that he commenced his
investigations for employment. I would
reasonably have expected that this reaction on
the part of the applicant would have arisen at the
meeting with Baldwin at the end of January, if
indeed Baldwin had revealed to the applicant the
likelihood of his retrenchment in the event that no
alternative position could be found for him.
900
On a proper conspectus of all the acceptable evidence, I am
unable to find that the meetings and exchanges between
Baldwin and the applicant amounted to the consultation
process foreshadowed by Section 189 (1).
910
Section 189 (2) of the LRA prescribes that the consulting
parties must attempt to reach consensus on :
(a)0 Appropriate measures :
(i)0 to avoid the dismissals ;
(i)1 to minimise the number of dismissals ;
(i)2 to change the timing of the dismissals ;
(i)3 to mitigate the adverse effects of the
dismissals.
(a)1 The method for selecting the employees to be
dismissed.
(a)2 The severance pay for dismissed employees.
920
The section does not require consensus. It requires
consultation in good faith in an endeavour to achieve
consensus on the issues contemplated thereby.
930
The employer must, in the process of consultation, explore
means of avoiding or limiting retrenchments. This would
include a moratorium on new hirings, early retirement,
redeployment, training, short time, unpaid leave, or even a
cut in pay. If the dismissals cannot be avoided, their effects
must be mitigated where this is reasonably possible. This can
be done by providing employees with testimonials, giving
them time off to search for alternative employment,
networking on their behalf in the job market, equipping them
with new skills by retraining etcetera.
940
Item 12 of the Code of Good Practice recommends that
employees dismissed for operational reasons be guaranteed
preferential consideration when suitable vacancies arise. On
being retrenched, the employee can be required to express a
desire to be re-hired and the obligation to re-hire can be made
limited in time. When vacancies arise, the employer must
take reasonable steps to let the applicable employee and the
Union know of the fact.
950
It is correct that the discussions between Baldwin and the
applicant revolved around the alternative placing of the
applicant within the ranks of the respondent. Beyond this
consideration, it does not, in my view, appear that the
discussions between Baldwin and the applicant extended to
include any of the other matters foreshadowed by Section 189
(2). No evidence was adduced by the respondent revealing
any endeavours undertaken by it to achieve consensus with
the respondent on either :
(a)0 the granting of paid or unpaid leave ;
(a)1 the training or re-training of the applicant to take
up alternative positions within the respondent ;
(a)2 seeking volunteers, other than the applicant, for
retrenchment;
(a)3 delaying the retrenchment ;
(a)4 affording the applicant an opportunity to seek
alternative employment ;
(a)5 affording the applicant any priority in the event
that future vacancies arose ;
(a)6 notifying the applicant of any new vacancies
which arose ;
(a)7 any other of the issues on which consensus could
have been achieved.
960
Even though the applicant was not entitled to any significant
amount by way of severance pay, and even though Baldwin
claimed that he notified the applicant at their initial meeting
in January 1998, that the applicant would, in the event of him
being retrenched be paid what was lawfully due to him, the
respondent did not place any evidence before me suggesting
that any endeavour was undertaken to achieve consensus on
the severance pay which would be payable by the respondent
to the applicant. Merely informing the applicant that he
would be paid what was lawfully due to him in respect of
severance pay does not, in my view, meet the requirements of
the section which foreshadows, as I have indicated, an
attempt to reach consensus. I have already indicated that in
my view the issue of the applicant's possible retrenchment
was not a subject of the discussion between the applicant and
Baldwin during January 1998. I accordingly reject Baldwin's
evidence to the effect that the applicant was informed by him
that he would be paid the severance pay that was lawfully due
to him.
970
It is also unlikely that the issue of the applicant's severance
pay was raised at the meeting between the applicant and
Baldwin on 17 April 1998. If it was raised at that meeting, I
would have expected that Baldwin would have informed the
applicant that it was the respondent's intention to pay to him
twice the amount of the severance pay to which he was
entitled. As hereinafter appears, the respondent claimed that
it paid to the applicant twice the amount of the severance pay
to which he was entitled. There was no evidence of any such
discussion.
980
It is obvious from the aforegoing that I am not satisfied that
the requirements of Section 189 (2) of the LRA were fulfilled.
990
Section 189 (3) of the LRA provides as follows :
"The employer must disclose in writing to the other
consulting party all relevant information including, but
not limited to :
(a) the reasons for the proposed dismissal ;
(b) the alternatives that the employer considered
before proposing the dismissals and the reasons for
rejecting each of those alternatives ;
(c) the number of employees likely to be affected
and the job categories in which they are employed ;
(d) the proposed method for selecting which
employees to dismiss ;
(e) the time when, or the period during which, the
dismissals are likely to take effect ;
(f) the severance pay proposed".
1000
Section 16 (5) of the LRA regulates the information which the
employer is not required to disclose.
1010
Upon the commencement of the proceedings, the respondent
conceded that it failed to comply with the "writing"
requirement of this section. In the light of such concession, it
made an open ex gratia offer of payment to the applicant in
an amount of R75 000,00 during the course of its opening
address to the Court. The respondent nevertheless
contended that it would demonstrate that it had complied
substantially with the requirements of Section 189 of the LRA
and that the applicant's dismissal was, in the circumstances,
fair.
1020
The requirement of the section that the information
contemplated thereby should be disclosed in writing is, in my
considered value, a salutary one. Such writing would serve as
a record of the disclosure of the proposed or contemplated
retrenchment by the employer and would obviate any
subsequent disputes as to the disclosures made. Indeed, as
Mr. Farrell conceded, had a written disclosure as
contemplated by Section 189 (3) of the LRA, been made by
the respondent to the applicant, it is probable that the dispute
relating to the applicant's dismissal would not have arisen.
1030
Although the section does not stipulate the stage at which the
disclosure must be made, I am of the view that the most
appropriate stage therefore, would be prior to or at the time
the retrenchments are contemplated or proposed and
certainly by the stage the consultation process commences.
Brassey in his Commentary on the Labour Relations Act,
Employment and Labour Law, Vol. 3, 1999, Juta, at
A8:48, in his comment on Section 189 (3) notes :
"The tenor of the specific paragraphs suggests that
disclosure must be made only after the alternatives to
dismissal have been employed and rejected. See for
instance paragraph (b) which talks of the alternatives
that the employer considered. But this instruction
cannot survive when seen in the light of the
introductory words, which created an obligation to
disclose all relevant information, including, but not
limited to, 'the matters listed'."
I respectfully agree.
1040
The section requires the disclosure by the employer of all such
information as is necessary to enable effective consultation to
take place.
Atlantis Diesel Engines (Pty) Ltd. v. NUMSA
(1994) 15 ILJ 1247 A at 1245 B.
Such information is not limited to the checklist provided
thereby.
1050
Whilst the available and acceptable evidence reveals that
Baldwin informed the applicant of the proposed restructuring
of the Reconstruction and Development Department and
invited the applicant to consider alternative positions within
the respondent as a consequence, it does not appear that the
applicant had any say in the decision to restructure his
department. The decision was presented to him as a fait
accompli by Baldwin. Likewise, it seems to me that the
decision to dismiss the applicant was presented as a fait
accompli at the meeting on 17 April 1998.
1060
In my considered view, the respondent did not properly
disclose to or meaningfully consult with the applicant
regarding any of the issues foreshadowed by the checklist
provided in Section 189 (3). Whilst it may be possible and
acceptable in an appropriate and proper case for the
disclosure of the information foreshadowed by the section to
be made orally and for an employer in such circumstances to
be deemed to have substantially complied with the
requirements thereof, this does not seem to be such a case. It
seems to me that the respondent has failed to establish that it
substantially complied with the requirements of Section 189
(3). The exchanges which took place between the applicant
and Baldwin in this regard related fundamentally to finding
the applicant an alternative position and did not extend to
include such information as was necessary to enable effective
consultation to take place regarding the applicant's
retrenchment.
1070
Section 89 (5) of the LRA provides as follows :
"The employer must allow the other consulting party
an opportunity during consultation to make
representations about any matter on which they are
consulting".
1080
In that the applicant was not aware of the respondent's
intention to retrench him until the decision was made, it was
not possible for the parties to comply with the requirements of
this section.
1090
Section 189 (6) of the LRA provides as follows :
"The employer must consider and respond to the
representations made by the other consulting party
and, if the employer does not agree with them, the
employer must state the reasons for disagreeing".
1100
This section follows upon the requirements of Section 189 (5)
of the LRA. For the reasons set out in dealing with the
provisions of Section 189 (5) of the LRA, I hold that the
respondent failed to comply with the requirements of Section
189 (6) of the LRA.
1110
Section 189 (7) of the LRA provides as follows :
"The employer must select the employees to be
dismissed according to selection criteria -
(a)0 that have been agreed to by the consulting
parties ; or
(a)1 if no criteria have been agreed, criteria that
are fair and objective".
1120
This requirement becomes relevant once the parties have
accepted that dismissal is necessary. I found that there was
no consultation between the parties in this regard. The
applicant was simply presented with his dismissal as a fait
accompli on 17 April 1998.
1130
An opportunity for the respondent to comply with the
requirements of this section accordingly did not arise.
1140
It follows from the aforegoing that in my view the respondent
failed to discharge the onus resting upon it of establishing that
the dismissal of the applicant was fair. I am satisfied that the
dismissal of the applicant was both substantively and
procedurally unfair.
SEVERANCE PAY :
1150
Section 41 (2) of the Basic Conditions of Employment Act
provides as follows:
"An employer must pay an employee who is
dismissed for reasons based on the employer's
operational requirements severance pay equal to at
least one week's remuneration for each completed
year of continuous service with that employer ...".
1160
It is common cause that the applicant was employed by the
respondent for the period 1 April 1997 until 31 May 1998, that
is approximately 14 months. He was accordingly entitled to
severance pay equal to at least one week's
remuneration.
1170
The respondent claimed that it paid to the applicant as
severance pay an amount equal to at least two weeks
remuneration.
1180
It claimed that such severance pay was included in the "notice
pay" amounting to R19 075,68 paid to the applicant. No
evidence was produced by the respondent as to the
computation of the said amount.
1190
The applicant testified that at the date of his dismissal he was
entitled to payment of :
(a)0 his salary for the month
of May 1998 (the notice
period) in an amount of R15 000,00
(a)1 his leave pay over a period
of 5 to 7 days amounting
to approximately R 4 000,00
(a)2 a total of approximately R19 000,00
1200
The applicant estimated that the amount which would have
been payable to him as and by way of severance pay, being
two weeks remuneration, would have approximated R7
500,00. He accordingly denied that the aforesaid amount of
R19 075,68 paid to him was inclusive of any consideration in
respect of severance pay. The respondent did not challenge
or refute the latter testimony of the applicant by way of cross-
examination. I was not surprised. It does not appear to me
that the amount of R19 075,68 paid by the respondent to the
applicant was inclusive of severance pay.
1210
I am satisfied that the respondent did not make any payment
to the applicant as and by way of severance pay.
1220
In my view, the respondent is liable to pay to the applicant an
amount equivalent to one week's remuneration as severance
pay.
COMPENSATION :
1230
The applicant seeks an Order directing the respondent to pay
compensation in terms of Section 194 (2) alternatively 194
(1) of the LRA.
1240
Section 194 of the LRA provides as follows :
"1. If a dismissal is fair only because the employer
did not follow a fair procedure, compensation must be
equal to the remuneration that the employee would
have been paid between the date of dismissal and the
last day of the hearing of the arbitration or
adjudication, as the case may be, calculated at the
employee's rate of remuneration on the date of
dismissal. Compensation may however not be
awarded in respect of any unreasonable period of
delay that was caused by the employee in initiating or
prosecuting a claim.
2. 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 12 months' remuneration calculated at the
employee's rate of remuneration on the date of
dismissal".
1250
The section affords an employee an absolute right to
compensation equivalent to back-pay when a dismissal is
procedurally and/or substantively unfair. In Johnson &
Johnson (Pty) Ltd. v. CWIU (1999) 20 ILJ 89 (LAC), the
Labour Appeal Court, in dealing with Sections 193 and 194 of
the LRA, said at 99 :
"If a dismissal is found to be unfair solely for want of
compliance with the proper procedure the Labour
Court, or an arbitrator appointed under the LRA, thus
has a discretion whether to award compensation or
not. If compensation is awarded, it must be in
accordance with the formula set out in Section 194 (1)
; nothing more, nothing less. The discretion not to
award compensation in particular circumstances of a
case must, of course, be exercised judicially".
1260
The judgment at 100 continues :
"The compensation for the wrong in failing to give
effect to an employee's right to a fair procedure is not
based on patrimonial or actual loss. It is in the
nature of a solatium for the loss of the right, and is
punitive to the extent that an employer (who
breached that right) must pay a fixed penalty for
causing that loss. In the normal course a legal wrong
done by one person to another deserves some form of
redress. The party who committed the wrong is
usually not allowed to benefit from external factors
which might have ameliorated the wrong in some way
or another ... The nature of an employee's right to
compensation under Section 194 (1) also implies that
the discretion not to award that compensation may be
exercised in circumstances where the employer has
already provided the employee with substantially the
same kind of redress (always taking into account the
provisions of Section 194 (1)), or where the
employer's ability and willingness to make that
redress is frustrated by the conduct of the employee".
1270
In resisting the applicant's claim for compensation, the
respondent contended that the applicant had mitigated the
losses and damages suffered by him and
that the applicant's claim for compensation constituted an
attempt to extort money from the respondent. Mr Farrell
argued that an award of 12 months remuneration would be
punitive. In Johnson's case (supra) the Court refused to make
an award of compensation on the grounds that
"the wrong done to the employees, namely the loss of
the right to proper procedure lasted for about 4 days.
In addition the employees received a generous
retrenchment package. The effect in this case of
awarding compensation under Section 194(1) would
be to reward the Union and the employees for their
unreasonable obstinacy, echoing their earlier refusal
to discuss anything except the need to retrench. Our
Courts have since refused to award compensation in
cases where the employee's genuine offer to redress
the procedural wrong had been "unreasonably"
rejected by the employees."
See: Burger v Alert Engine Parts (Pty) Ltd (1999) 4
LLD 90 LC and Mamabolo & Others v Manchu Consulting
CC (1999) 20 ILJ 1826 (LC).
1280
Other factors taken into account in this regard have included
the model obliquity of the employees misconduct, the
magnitude of the procedural non-compliance and other
benefits received by the employee upon dismissal.
See: De Bruin v Sunnyside Locksmith Supplies (Pty)
Ltd (1999) 20 ILJ 1753 (LC).
Buthelezi v Amalgamated Beverage Industries
(1999) 9 BLLR 907 (LC).
1290
On the facts in this case I am satisfied that there are no
circumstances which are present which would justify depriving
the applicant of the compensation to which he is entitled to.
Unlike the respondent the applicant's conduct is free from any
criticism. Furthermore the fact that the applicant was able to
mitigate the losses suffered by him by securing employment
after his dismissal is relevant. The compensation is a
solatium for the loss of the right to a fair procedure and is
punitive to the extent that the respondent (who breached the
right) must pay a fixed penalty for causing the loss.
1300
In Auf der Heyde v University of Cape Town (2000) 8
BLLR 877 (LC) at paragraph 82 Jammy, A.J. recorded that
there is a plethora of authority to the effect that the limitation
to the equivalent of 12 months remuneration prescribed in
Section 194(2) relating to substantively unfair dismissal is
equally applicable to that which will be payable in terms of
Section 194(1) where the period between the date of the
employee's dismissal and the last day of the hearing of the
arbitration or adjudication exceeds that period. That is the
position in this matter and the compensation to which I hold
that the applicant is entitled must therefore be calculated on
that basis.
1310
In all the circumstances I am satisfied that this is an
appropriate case where compensation should be awarded in
terms of Section 194(2) of the LRA and the respondent
directed to pay to the applicant compensation equivalent to
12 months remuneration calculated at the applicant's rate of
remuneration at the date of the termination of his
employment. Even if the dismissal of the applicant was found
to be unfair only for the reason that the respondent did not
follow a fair procedure I would have made a similar award of
compensation in terms of Section 194(1) of the LRA.
1320
In my view there are no circumstances which militate against
an award of costs in favour of the applicant and I consider that
such an award would accord with the requirements of the law
and fairness.
1330
In the result I make the following order :
(a)0 The dismissal of the applicant by the respondent on
17 April 1998 was unfair.
(a)1 The respondent is directed to pay to the applicant
within 14 days from the date of this judgment :
(i)0 compensation equivalent to 12 months'
remuneration calculated at the applicant's rate
of remuneration at the date of the termination
of his employment;
(i)1 severance pay equivalent to one week's
remuneration calculated at the applicant's rate
of remuneration at the date of the termination
of his employment;
(a)2 The amounts contemplated by paragraph (b)(i) and
(ii) hereof shall bear interest at the rate of 15.5% per
annum with effect from the 15th day after the date of
this judgment to the date of payment.
(a)3 The respondent is ordered to pay the applicant's costs
of suit.
.................................
V. I. GAJOO,
A.J.
DATE :
/IS/VIG.687