REPORTABLE
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
Case No. J782/98
In the matter between:
Samuel Makgabo & Others APPLICANTS
and
Premier Food Industries Ltd RESPONDENT
(General Foods Industries Ltd)
JUDGEMENT
PIENAAR, A J
INTRODUCTION
1. The issue to be determined is whether the dismissal of the 270 Individual Applicants by the
Respondent for operational reasons, was procedurally and substantively unfair.
2. The Applicants were retrenched as a result of the closure of the Respondent’s bakery at Isando,
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where all the Applicants were employed in different capacities. The Applicants were at all relevant
times, during the retrenchment exercise, and prior to that, represented by the Food and Allied
Workers Union (FAWU). FAWU entered into a collective agreement (Recognition and Procedural
Agreement) with the Respondent during November 1995 and acted as the sole bargaining agent of
all the employees in the bargaining unit at Isando, in terms of this agreement.
3. The Respondent was originally cited as Blue Ribbon Bakeries (Premier Milling) as First Respondent
and Premier Milling (Pty) Limited as Second Respondent. The parties however agreed that the
correct citation of the Respondent is indeed General Food Industries Limited.
EVIDENCE
4. Mr Reid gave evidence on behalf of the Respondent and Messrs Mabatha and Mgigina on behalf of
the Applicants.
5. Mr Reid was the Respondent’s Regional General Manager (in the Gauteng area) and is no longer
employed by the Respondent. Mr Reid was personally involved in the operations of the Isando
branch.
6. Messrs Mabatha and Mgigina were employed by the Respondent at their Isando branch prior to
their retrenchment.
RESPONDENT’S CASE
7. According to Mr Reid, the Isando Branch showed increasing losses from as early as 1995. The
Respondent operated 5 other bakeries in Gauteng alone. A loss-making investigation was
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conducted during 1995/6 and the Respondent, inter alia, invested in excess of R5 million from
1996 in upgrading equipment and to improve production at this bakery. Such investigation was
conducted by the Joint Management Team (“JMT”), which was established under a Worker
Participation Agreement. The JMT consisted of both management and FAWU representatives. The
FAWU representatives consisted of both national and regional co-ordinators and were, inter alia,
flown in from as far as Cape Town and accommodated at the cost of the Respondent, to attend
such meetings. The shop stewards (trade union representatives) of the Isando branch also
attended the JMT meetings.
8. The Respondent continued to suffer losses and another loss-making investigation was conducted.
Several meetings were held by the JMT from November 1996 to February 1997 to discuss
inefficiency in production and distribution at Isando. The production averages at the Isando
branch compared to similar operations of the Respondent at Cape Town, inter alia, showed that
the Isando branch was under performing and experienced unacceptable losses. During these
meetings the FAWU representatives were warned of the consequences if financial and production
difficulties experienced by the Respondent at the Isando branch, were to continue. This was
discussed in detail with reference to specific statistics relating to damaged and lost loaves
including incidents of late deliveries.
9. After several meetings, the JMT reached an agreement in terms of which the Respondent, inter
alia, terminated all fixed term contracts and contracts of it’s casual employees at Isando. The
compliment of maintenance employees was increased to address the concerns of the employees
in respect of the maintenance of machinery at Isando. The Respondent’s national and regional
engineers also investigated alleged problem areas within the bakery.
engineers also investigated alleged problem areas within the bakery.
10.Despite an agreement at the JMT with regard to the mobility of permanent employees at Isando
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bakery, same could not be implemented at shop floor level. The employee representatives were
not constructive at these meetings and chose to address irrelevant points such as that the
manager, Mr Reid, had not yet introduced himself to the workforce, whilst Mr Reid, in fact, almost
daily moved amongst the workforce and set time aside for such meetings. The shop stewards
furthermore failed to attend some of the meetings.
11.During early-February 1997, the Respondent experienced increasing problems relating to
production, late deliveries and discipline at Isando. Such problems continued to cause a decline in
production of bread and the losses escalated on a daily basis.
12.Mr Reid was of the opinion that the representatives of the employees were not bona fide in their
attempt to constructively address the problems experienced by the Respondent at Isando and, in
fact, warned the shop stewards that the Isando bakery would be closed, if the parties could not
find solutions to the problems.
13.Despite efforts by the Respondent to secure the effective intervention of FAWU at a more senior
level, such co-operation was not forthcoming.
14.On 11 February 1997, the Respondent issued a formal notice to all relevant parties of its intention
to restructure the Isando bakery. The FAWU representatives were, inter alia, invited to consult in
respect of the proposed restructuring and advised that should the parties fail to reach an
agreement by 14 February 1997, the employer would invoke the retrenchment procedure.
According to Mr Reid, the Respondent had no intention of retrenching its permanent staff at that
stage – only casual and fixed term employees were to be affected by the proposed restructuring.
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15.The Respondent had a special meeting with its sales personnel on 14 February 1997, inter alia,
sharing with the sales personnel the poor financial and sales results. Several problems attributed
to the sales personnel were raised and discussed.
16.At the meeting of 18 February 1997 between the Respondent and the shop stewards, the
Respondent made several proposals to address the concerns raised above, which proposals were
rejected by the shop stewards. Needless to say, nothing much was achieved at this meeting.
17.The lack of co-operation from the shop stewards caused the Respondent to address a letter to the
National Co-Ordinators Chairperson of FAWU on 19 February 1997. Several complaints were
raised by the Respondent in respect of loss of customers, delays in production, go-slows, acts of
sabotage, etc. experienced at the Isando bakery. The acts of sabotage referred to foreign objects
being found in loaves of bread, i.e. cigarettes, pens, bottle tops, steel pipes, etc. The loaves being
produced per hour were still far below the required standard. The Respondent received no written
reply from FAWU to this letter.
18.On 21 February 1997, the Respondent had a meeting with the shop stewards and members of the
JMT to discuss the lack of co-operation of its Isando employees. The Respondent again expressed
its concern with regard to the problems experienced with regard to low production, lost sales, acts
of sabotage, etc. During this meeting, one of the shop stewards, Mr Thubegale, acted in an
extremely disruptive and abusive manner towards management. The Respondent again obtained
no meaningful input from the FAWU representatives and shop stewards.
19.On 24 February 1997, the Respondent wrote another letter to the National Co-ordinators
Chairperson of FAWU and FAWU Co-ordinators complaining about the lack of co-operation and
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coercive tactics by FAWU members at Isando branch. Details of problems experienced by the
Respondent were again spelt out by the Respondent in respect of acts of sabotage such as a bread
crate forcibly thrown into a cooler and the flour sock being cut with a knife.
20.The shop stewards endeavoured to explain the alleged acts of sabotage at a subsequent meeting
held between the parties on 27 February 1997. The shop stewards, inter alia, suggested that a
basket was blown into the cooler by a fan. Mr Reid explained that this suggestion was impossible
given the layout of the factory.
21.Despite the aforesaid meetings and even a subsequent meeting on 3 March 1997 with the FAWU
National Co-ordinators, the Respondent continued to suffer low volumes, late deliveries and
disruptions of its business. Losses increased daily.
22.On 3 March 1997, the Respondent issued a formal notice of the proposed closure of the Isando
branch and the pending redundancies and/or retrenchments. This notice was sent to all relevant
parties.
23.Consultations with FAWU representatives, shop stewards and some JMT members in respect of the
proposed retrenchments, commenced on 5 March 1997. During this meeting, the Respondent,
inter alia, showed exhibits of an iron rod found in the divider and tiles inserted in loaves, once
baked. FAWU responded to certain proposals made by the Respondent and the Respondent
replied thereto. The parties, inter alia, agreed that concrete proposals would be submitted at the
next meeting scheduled for 7 March 1997.
24.During the period 2 to 6 March 1997, the Respondent experienced further disruptions resulting in
late deliveries and unacceptable quality of bread.
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25.The Respondent sent an urgent letter to FAWU dated 6 March 1997 referring to the above,
including several alleged acts of sabotage by its employees. Given the difficulties experienced by
the Respondent, it, inter alia, suggested a temporary transfer of the Isando business to other
bakeries.
26.At a subsequent meeting between the Respondent, shop stewards and members of the JMT
Committee on 7 March 1997, the Respondent, inter alia, complained about the drivers refusing to
comply with a specific instruction although having agreed to same earlier.
27.Apart from the alleged sabotage and late deliveries experienced by the Respondent, some
employees at the branch also refused to follow instructions in respect of the loading of bread for
customers. In this regard, the employees specifically refused to firstly load the vehicles of a
particular hawker and customer of the Isando branch, AA Distributors, as instructed by the
Respondent.
28.The sales personnel alleged that AA Distributors was given preference to other customers and
took their business away and, more in particular, AA Distributors interfered with their customers.
The Respondent, on the other hand, contended that AA Distributors was its largest customer who,
at that time, purchased approximately 20 % of its product, and conducted its business outside the
areas allocated to its sales personnel. No disciplinary action was instituted against such sales
personnel and the branch eventually lost, not only the business of other major customers, but also
that of AA Distributors. It is noted that the Applicants’ representatives were warned of the risk of
losing AA Distributors as a customer as a result of late delivery and poor product as early as
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January 1997.
29.The Applicants’ representatives alleged that management sabotaged the business as an excuse to
close the Isando bakery. The Respondent denied these allegations.
30.Further meetings were conducted between the Respondent and the various FAWU representatives
at the branch on 10 and 11 March 1997. In the meantime the incidents of sabotage continued and
the Department of Health threatened to close the bakery unless there was a dramatic
improvement in the cleanliness of the bakery. Losses also continued to escalate.
31.During such consultations, the parties exchanged ideas to prevent the closure of the Isando
branch. Details of such proposals and the Respondent’s response thereto are dealt with in detail
in the various minutes.
32.Mr Reid dealt in detail with such proposals and explained why the proposals submitted by the
FAWU representatives, could not be implemented. No agreement could, however, be reached
between the parties to prevent the proposed retrenchments.
33.The losses suffered by the Isando branch, however, continued to increase up to approximately
R100 000,00 per day, which eventually forced the Respondent to issue a notice on 12 March 1997
to close the business with effect from 14 March 1997. The FAWU Representatives were, inter alia,
advised that the continued operation at the Isando bakery was jeopardising not only the other
bakeries in Gauteng, but also the continued viability of the Respondent. The FAWU
Representatives were, however, informed that the Respondent would continue with consultations
relating particularly to the implementation of the retrenchment.
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34.Some employees were also requested to be transferred to other bakeries and the FAWU
representatives were invited for further consultations relating to the implementation thereof.
35.The Respondent held another meeting with the shop stewards and the JMT members on 12 March
1997. At this meeting, the Respondent requested to maximise the retention of drivers, who were
to be transferred to other branches and the possibility of production employees be given an
opportunity to move to the other bakeries. These proposals were, however, rejected.
36.Another meeting was held with the sales personnel on the 12 th of March 1997, where the
Respondent again explained and requested their transfer to other branches. This proposal of the
Respondent was rejected.
37.The Respondent closed its Isando operation on 14 March 1997 and several further meetings were
held between the parties, inter alia, resulting in an agreement on severance pay. The Respondent
paid an amount of approximately R16 million towards severance pay, which was more than double
of what the Applicants were entitled to in terms of the minimum prescribed by the Basic
Conditions of Employment Act No 75 of 1997.
38.During the aforesaid consultation process, the Respondent again offered alternative positions to
some of its employees at other branches, which the representatives of the employees rejected out
of hand. A few employees eventually took up positions at other branches, although the Applicants
disputed this.
39.Mr Reid conceded that the Respondent did not comply with the 60-day notice period required in
terms of the retrenchment procedure, which formed part of the Collective Agreement between the
Respondent and FAWU. In terms of clause 14.2.1 of the retrenchment procedure, the Respondent
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was obliged to give 60 days notice to FAWU before the proposed implementation date of a
planned retrenchment, however “subject to conditions that may arise at particular operations”.
40.Mr Reid explained that it was not possible for the Respondent to comply with the aforesaid
provision due to loss of production, increased losses and acts of sabotage. He furthermore
referred to the contents of the various meetings between the parties prior to the notice being
issued, which addressed various factors considered during a normal retrenchment exercise.
41.The parties agreed on the contents as well as accuracy of all the minutes of such meetings,
including the minutes pertaining to the consultations with regard to retrenchment, referred to
above.
42.Mr Reid made a good impression on the Court and his evidence was hardly contested – in fact, no
witness was called to contest his evidence on the procedures followed with regard to the
consultation process.
APPLICANT’S CASE
43.The Applicants called two witnesses in support of their case. Mr Mabasa, the first witness, worked
in the Production Line and the second witness, Mr Mgigina as a Sales Supervisor at Isando. None
of the two witnesses were either shop stewards or union officials and, as such, did not represent
the Applicants at the consultations with the Respondent.
44.According to Mr Mabasa, the Isando Branch was managed poorly. The mechanics and/or
maintenance people employed by the Respondent could not address the constant failure of
machines and the employees did not receive training to operate the new mixer that was installed.
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The Respondent disputed this.
45.Mr Mabasa furthermore testified that the Respondent deliberately sabotaged the premises, in
order to close the Isando branch. This allegation was disputed by the Respondent insofar as there
was no reason to close a branch, where it recently invested more than R5 million, and which
branch was a flagship of the Respondent.
46.Mr Mabasa explained the allegations of sabotage, particularly with regard to the cutting of the
flour sock and the forcing of a crate into the prover. These explanations were, however, never
passed on to the shop stewards or FAWU representatives despite the Respondent’s request to the
shop stewards to obtain instructions and feedback from its members in respect of the alleged
sabotage. In fact, on the report back from the shop stewards, different versions or explanations
were given to the Respondent regarding the alleged incidents of sabotage.
47.Mr Mabasa did not make a good impression on the Court and failed/refused to answer some
questions put to him during cross-examination.
48.Mr Mgigina, the second witness for the Applicants, was employed as a Van Sales Supervisor and in
essence dealt with the dispute the employees had with AA Distributors. Mr Mgigina could,
however, not indentify specific incidents where AA Distributors interfered with the routes and
customers of the sales representatives and his evidence was based on general allegations.
49.Of more importance was Mr Mgigina stating that the problems which the Respondent experienced
in the production line, i.e. sabotage etc. was as a result of the Respondent giving preference to AA
Distributors.
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50.Both Mr Mabasa and Mr Mgigina introduced new evidence and versions which were never put to
the Respondent’s witness, Mr Reid, and which apart from its improbabilities, are rejected by this
Court on this basis.
51.Neither Mr Mabasa nor Mr Mgigina could explain why their evidence did not correspond with the
contents of the minutes of the various meetings held between the Respondent and the employees’
representatives.
52.It is significant that no shop steward or union official testified on behalf of the Applicants, despite
one shop steward, Mr Thubegale being present in Court during the proceedings.
FINDING
53.The onus rests on the Respondent to show that the retrenchment was both procedurally and
substantively fair.
54.The Court should, in essence, determine whether the purpose of section 189 of the Act has been
complied with, which in itself is not a mechanical exercise.
55.As a general rule, the Court should not lightly interfere or second-guess the decision of an
employer to retrench its employees, or to close down a branch, as was the case here. Even if the
Court would not come to the same decision as the employer, the Court should not ordinarily
question the commercial imperatives that underlie the decision to retrench as long as it is bona
fide and based within the framework of the Act. (See S A Clothing & Textile Workers Union &
others v Discreto a division of Trump and Springbok Holdings (1998) 19 1451 (LAC ) and Mamabolo
v Manchu Consulting CC (1999) 20 ILJ 1826 (LC) at 1831 B - D).
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56.An employer should however not be allowed to abuse a retrenchment process to penalise its
employees for misconduct or substitute same for discipline, unless that in itself becomes an
operational issue.
57.Although the Court is of the opinion that the Respondent’s business was not, at all times,
especially prior to the arrival of Mr Reid, properly managed, such poor management should not be
seen in isolation, particularly where it was clear that the employees had no or little intention of co-
operation with management.
58.Where an employer experiences acts of sabotage, it is generally difficult to discipline, although not
always impossible. Unidentified acts of sabotage may, in certain circumstances, give rise to
dismissals based on the operational requirements of an employer. In this particular case, the
employees’ failure to follow instructions with regard to the loading of the bread of AA Distributors
was a matter for discipline, which the Respondent could and failed to institute. The Court is,
however, satisfied that such incident alone, could not alter the whole chain of events, which led to
the Applicants’ retrenchment.
59.I am furthermore satisfied that this particular case can be distinguished from the employer’s
approach in the matter of Chauke v Lee Service Centre CC t/a Leeson Motors (1998) 19 ILJ 1441
(LAC), inter alia, given the process followed by the employer to deal with the alleged incidents of
sabotage and, in particular, the poor product and late delivery, which led to the Respondent losing
customers. The Applicants furthermore, at no stage suggested in their pleadings or otherwise that
discipline should have been implemented as an alternative to retrenchment, but chose to blame
management for the sabotage. I am satisfied that the decision of the Respondent to retrench and
the circumstances leading thereto falls within the framework of the definition of operational
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requirements as envisaged in terms of the Act.
60.The Applicants’ contention that the Respondent deliberately sabotaged its own business, as an
excuse to close the Isando branch, is not only highly improbable, but does not tie in with the
evidence accepted by the Court. These allegations of the Applicants are rejected.
61.The Court therefore finds that the Respondent had a valid reason to close its Isando bakery and
that it furthermore properly considered the alternatives put forward by the Applicants’
representatives during the consultation process. It is, in any event, generally left to the employer
to decide whether the alternatives proposed on behalf of the employees are viable and the sole
issue essentially to be determined is whether the proposal, which had been suggested, has been
given bona fide consideration. (See Chemical Workers Industrial Union v Lennon Limited [1994]
10 BLLR 1 (LAC).
62.The case before this Court was different, in one respect, from the normal retrenchment disputes to
be determined by this Court. In this regard, the Court refers to the closure of the business, before
exhausting the full consultation process.
63.Generally, parties exhaust the full consultation process with regard to the decision-making as well
as implementation phase, before the business is closed and notice is given to employees. The
Respondent in this matter gave notice of closure of its business, after conclusion of the
implementation phase, and then continued with consultation on implementation.
64.I am of the view that nothing in the Act prohibits or limits an employer’s right to close its business,
after conclusion of consultations on the implementation, and especially given the circumstances,
such as sabotage, increased losses, etc. experienced by the Respondent in this matter. This view
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should, however, not be seen as the ideal situation, particularly given the probabilities that
employees may, even during the phase of implementation, make viable alternative proposals to
the decision to implement a retrenchment or close the business of an employer.
65.Insofar as the Respondent failed to give the 60 days notice of its intention to retrench, as required
in terms of the Retrenchment Agreement, the Respondent relied on the general rule that such
agreements only operate as a guideline, and in particular, that the relevant clause in the
Recognition Agreement specifically provides for exceptions, which were present at the time the
notice to retrench was issued.
66.I am in agreement with the Respondent that the circumstances the Respondent was faced with,
warranted non-compliance of the particular clause.
67.The whole retrenchment exercise should furthermore not be seen in isolation, insofar as the
events preceding the retrenchment, inter alia, the loss making exercises addressed many issues
normally canvassed during retrenchment consultations.
68.No witness was called by the Applicants to contest the procedures and Mr Reid was hardly cross-
examined in this regard.
69.I, therefore, accept Mr Reid’s evidence with regard to the procedures and, in particular, find that
the Respondent complied with the procedures as envisaged in the Act, read with the Code on
Dismissal for Operational Reasons.
70.Lastly, I refer to the failure of the Applicant to call Mr Thubegale, the shop steward who was
present at Court, as a witness, to deal with the evidence given by Mr Reid. In this regard I make
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an adverse inference from the Applicant’s failure to call this witness in line with the decision of the
Appeal Court in Munster Estates (Pty) Ltd v Killarney Hills (Pty) Ltd 1979 (1) SA 621 (A).
71.I, therefore, find that the dismissal of the Applicants was both procedurally and substantively fair.
COSTS
72.There is no reason why the costs of the matter should not follow the result. It would, however, be
unfair towards the Applicants to also award costs in respect of the interlocutory applications.
FAWU withdrew as the Applicants’ representative prior to the matter being heard without
tendering costs and it was up to the Respondent to address same with FAWU at the appropriate
time.
ORDER
73.The Application is dismissed with costs, excluding costs of the interlocutory applications.
CASE LAW REFERRED TO:
74.The following cases were referred to in the above judgement:
74.1.S A Clothing & Textile Workers Union & others v Discreto a division of Trump and Springbok
Holdings (1998) 19 1451 (LAC);
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74.2.Mamabolo v Manchu Consulting CC (1999) 20 ILJ 1826 (LC) at 1831 B - D );
74.3.Chauke v Lee Service Centre CC t/a Leeson Motors (1998) 19 ILJ 1441 (LAC );
74.4.Chemical Workers Industrial Union v Lennon Limited [1994] 10 BLLR 1 (LAC );
74.5.Munster Estates (Pty) Ltd v Killarney Hills (Pty) Ltd 1979 (1) SA 621 (A).
ACTING JUDGE PIENAAR
12 September 2000
PARTIES APPEARING BEFORE THE COURT:
APPLICANT:
Mr Tsatsi
Doe Tsatsi Attorneys
RESPONDENT:
Adv Paul Kennedy
(Instructed by Bell, Dewar & Hall Inc)
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