IN THE LABOUR COURT OF SOUTH AFRICA
(HELD AT BRAAAMFONTEIN) CASE NO J4064/98
In the matter between:
NATIONAL EDUCATION, HEALTH AND
ALLIED WORKERS UNION First Applicant
AND OTHERS Second and Further Applicants
and
THE UNIVERSITY OF PRETORIA Respondent
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JUDGMENT DELIVERED ON 25 FEBRUARY 2002
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1. INTRODUCTION
1.1 The Respondent, the University of Pretoria (“The University”) terminated
the employment of approximately 600 of its support services employees on
about 30 June 1998 and thereafter on about 31 July 1998, for alleged
operational reasons. These employees were drawn almost entirely from
Category C3, which is the lowest category in the University’s employment
hierarchy . They are the individual Applicants (or “the employees”) in this
matter, represented by the First Applicant, NEHAWU (or “the union”).
Almost all the employees in question were employed in the University’s
Campus Control, Technical Services, Estate Services, Building and
Cleaning Services and, Residence Cleaning Services. In short, these
employees worked in the University’s support system.
1.2 The employees were advised of the termination of their services in letters
addressed to them, signed by the principal of the University, dated 29 May
1998 and 26 June 1998.
1.3 The retrenchments resulted from the University’s decision to outsource its
Support Services on an extensive scale.
1.4 The outsourcing and retrenchment exercise was conducted over a
considerable period, from February 1997 to May 1998 in two phases. The
first phase involved an investigation of the cost effectiveness of certain
Support Services departments. The second phase was a stage during
which consultations were held and which was initiated with a “Notice of
Consultation in accordance with Section 189, Labour Relations Act, 1995
(“Operational Requirements”).
1.5 The investigation phase was conducted by an external management
Consultancy known as Strategy Partners headed by Mr Herman Marais
who was directly involved in setting up the management structures to
control the process.
1.6 A decision to contract with strategy partners had been decided upon in
principle on 18 February 1997 and had been minuted by the “Rektoraat”.
The Consultancy was formally appointed during April 1997 to investigate
and make recommendations regarding the improvement of cost
effectiveness. The formal parameters of the appointment were confirmed
on 7 May 1997 in a letter from the University’s VicePrincipal to the
Consultant.
1.7 The investigation was known as the Support Services Development
Project. During the investigation, workshops and steering committees
were established in each of the Support Services under investigation. An
investigation was conducted into the Support Service in question.
Shortcomings in the provision of the services and the underlying problems
were identified, certain restructuring alternatives were raised, discussed
and evaluated and recommendations were then made to the University.
The recommendations were contained in several reports produced by
Strategy Partners between September and November 1997. By and large
the recommendations proposed far reaching rationalisation and extensive
outsourcing, the implementation of which inevitably led to large scale
retrenchments, including the retrenchments of the employees in this
matter.
1.8 On 25 May 1998 the University formally announced its final decision on the
question of outsourcing in a document entitled “University of Pretoria
Support Services Development Project Management Decisions”.
1.9 The Applicants contend that the retrenchment of the individual Applicants
was procedurally and substantively unfair in that it was not justified by
operational requirements and did not conform to the requirements laid
down by Section 189 of the Labour Relations Act 66 of 1995 (“The Act”).
1.10 At this stage, it is the only the issue of fairness that is before me. By
agreement, the question of relief has been held over for determination at a
later date.
1.11 The attack on the dismissal of the individual Applicants, is a three pronged
attack.
1.12 At first there is a preliminary issue being an ultra vires argument relating
to the competence or otherwise of the decision that led to the
retrenchments at issue. During the crossexamination of Professor de
Beer, the VicePrincipal of this University, the question of authority arose.
The Applicants then filed a notice of amendment to their statement of case
to the effect that the decisions to outsource and which resulted in the
retrenchment of the individual Applicants, were taken by a committee
known as Hoofbestuur alternatively by an officer of the Respondent, being
its ViceChancellor or Principal. It was contended that neither the
committee nor the officer were empowered or duly authorised in terms of
the provisions of the University of Pretoria (Private) Act No. 106 of 1990
read with inter alia the provisions of Section 34 of the Higher Education Act
No. 101 of 1997, to take the decisions which were in the premises, so it
was argued, null and void.
1.13 The main thrust of the Applicants’ case on the merits was presented at two
levels, the first being that there was a priori commitment by the University
to outsourcing and the requirements of Section 189 were not fulfilled;
secondly that the conducting of the Support Services Development
Project, preempted and rendered impossible the carrying out thereafter, of
a proper process in terms of Section 189 of the Act.
1.14 On the evidence of Professor De Beer Hoofbestuur met on 24 May 1998
and took the decision to outsource Support Services. On 22 May 1998
according to Professor De Beer, Hoofbestuur had held a special meeting
and took certain inprinciple decisions about the Support Services Project
that included outsourcing. The documentation relating to this decision
was prepared and approved on Sunday afternoon, 24 May 1998.
According to Professor De Beer, even though the University spoke of
Hoofbestuur, it was in fact Professor Van Zyl who took the decisions, in his
capacity as the Principal.
1.15 The Applicants called only one witness. He was Dr G M Adler who holds a
Ph.D in Political Science from the Columbia University which he obtained
in 1994 and has been associated with the Department of Sociology at the
University of the Witwatersrand since 1991 until the end of 2000.
1.16 The gist of his evidence was a critical analysis of the investigations and
consultations conducted. The purpose of his testimony was to
demonstrate that Strategy Partners and the University conducted the
aforesaid process in a manner calculated to result in one outcome, which
was the preferred outcome of the University, namely outsourcing.
Professor Adler, who obviously has conducted extensive research in
Industrial Relations and the phenomenon of outsourcing, commented on
the worldwide trend in Universities to implement outsourcing to make them
more costeffective. He gave examples of Universities in the United States
of America where outsourcing failed and was shown to be not necessarily
the best method of solving financial problems at an institution of learning.
1.17 The Respondent led the evidence of Professor De Beer (its Vice
Principal), Mr Marais of Strategy Partners, Dr Visser who used to be the
Executive Director of the National Productivity Institute. He gave expert
evidence in respect of costeffectiveness and the implementation of
internal outsourcing and restructuring. Professor Van Zyl who was the
Principal of the University at the relevant time was also called to give
evidence.
1.18 Several bundles formed part of the record in this matter. These bundles
contained the presentation submitted Strategy Planning, minutes of
consultation meetings held between the Union and the various steering
committees and other parties, resolutions, the sources relied upon by both
expert witnesses, general documents relating to the investigation
conducted by Strategy Planning, and several other relevant documents.
2. ULTRA VIRES AND THE PRINCIPAL’S AUTHORITY TO TAKE
DECISIONS
2.1 Hoofbestuur, a committee comprising the Principal (Professor Van Zyl),
who was the chairperson and senior officers of the University such as
Professors De Beer, Erasmus, Marx and Sinclair, met on several
occasions throughout the Support Services Project set in motion to
conduct the investigations and second phase of the restructuring exercise.
This committee was not governed by a constitution. According to
Professor De Beer Hoofbestuur was a decisionmaking mechanism which
advised the Principal in his decisionmaking. He opined that Hoofbestuur
was the “Rektor in Rade”. As already noted, Hoofbestuur took certain in
principle decisions about the Support Services Project (which included
outsourcing) on 22 May 1998. Professor Van Zyl testified that Hoofbestuur
was a collective decisionmaking mechanism but that he took responsibility
for its decisions and had authority to take such decisions because such
authority was inherent in his position and by virtue of the delegations given
to him.
2.2 Professor De Beer argued that the Principal was authorised by the
Council, the standing committee of the Council and by the various
delegations of that body to take the decisions with respect to the Support
Services Project. He referred to a meeting held on 9 February 1998,
where the standing committee of the Council expressed its wholehearted
support for Hoofbestuur with respect to the Support Services Project.
2.3 The Applicants argued that there is an obvious difference between an
expression of support for something and the delegation to a functionary of
the power to do that act in the first place.
2.4 Professor De Beer argued that it was unnecessary for a specific mandate
for the Support Services Project to have been given because the Principal
had that power in any event. Section 9 of the University of Pretoria
(Private) Act No. 106 of 1990 vests the government of the University in the
Council.
2.5 The Applicants also argued that the concentration of the University on its
core business, the application of business principles to the governance of
the University, including its Support Services, the outsourcing of those
Support Services and the retrenchment amounted to farreaching changes
in the way which the University was organised in the manner of its
operation and in matters of governance which do not form part of the
routine and ordinary, daytoday management of the University. They
argued that decisions of such magnitude had to be taken by a body clearly
and properly authorised to do so, and could not have been effected
lawfully by the Principal.
2.6 Section 9(7) vests in the Council the power to administer the property of
the University and to control the University and all its affairs and functions.
Section (9) empowers the Council to “appoint all such persons as it
considers necessary for efficient conduct of the University and determine
the official title, status, powers, privileges, functions and duties of any
person so appointed …” Section 9(11) of the Act empowers the Council to
“establish committees of the Council consisting as well as members of the
Council and other persons, and may delegate any of its powers and duties
to a committee appointed by it from its member or to any of the officers of
the University”. Hoofbestuur was not a committee of the Council as
envisaged in Section 9(11) of the Act.
2.7 A resolution of the Council dated 1984 resolved in paragraph 7.5.1 thereof
to delegate to the Principal “Die Uittvoerende Bestuur van die Universiteit
ten volle … waarby ingesluit is die Raad se bevoegdhede om aan enige
besluit van die Raad uivoering te gee”. It also resolved to authorise the
Principal to execute any executive act necessary for the executive
management function. It would appear that the delegations were made in
terms of Section 8(A)(1) of the University of Pretoria Act No. 13 of 1930.
2.8 The Applicants contended that Section 8(A)(1) does not confer upon the
Council the power to delegate its functions to the Principal, but by
resolution to delegate any of its powers or functions to a committee, and
not to the Principal or any other officers of the University. It was also
argued that an Act contrary to a statutory provision was incapable of
ratification and that since there was no valid delegation of the power, the
Council was bound to take decisions as to retrenchments, itself and it
could not ratify the ultra vires Act of Hoofbestuur or the Principal. It was
also argued that the Principal did not have an implied power to take the
decision such as he did.
2.9 The Respondent argued that the decision made by the Principal on 22 and
24 May 1998 was not contrary to statutory provisions. In terms of Section
24 May 1998 was not contrary to statutory provisions. In terms of Section
8(A)(1) of Act 13 of 1930 the Council is entitled to delegate authority to a
committee if the members of that committee are members of a Council.
Section 7(1)(A) of that Act provides that the Principal of the University is a
member of Council and that the Principal is appointed as a oneman
committee in terms of the regulations. The Respondent also annexed a
delegation document R600/81 to its head of argument, in this regard. it
was argued that paragraph 7.5.1 of the Council’s minutes of 19 November
1984 specifically refers to Section 8(A)(1) of the 1930 Act, clearly implies
that the Council accepted that the delegation was to the rector or Principal,
as a oneman committee. It was pointed out that Act 106 of 1990 repealed
the whole of the 1930.
2.10 Act and that Section 11 of the 1990 Act, entitled the Council to delegate its
powers and duties to a committee, or to any of the officers of the
University. Reference was made to the Principal’s letter of appointment in
which the Principal was appointed by the Council as the Chief Executive
Officer of the University and the Chief Disciplinary of the University. It was
argued that it was expected of him in deliberation with the Council to fulfil
leadership functions inter alia with regard to strategic planning, strategic
management, organisation to ensure the highest degree of efficiency and
effectiveness.
2.11 Consequently, the Council expressly and impliedly authorised the Principal
to act on its behalf, with the task of appointing and dismissing staff,
amongst other functions and duties. It was argued that the Council’s
authority to dismiss should be extended to the Principal as it is “reasonably
necessary” or “incidental” to the Council’s authority.
2.12 It is of note that the Council only meets approximately three times per
year, and I agree with the proposition that the Council would not be in a
year, and I agree with the proposition that the Council would not be in a
position to appoint and dismiss staff on a daily basis. Both the 1990 and
1997 Acts state categorically that the Principal is the Chief Executive
Officer of the University (Section 7(2) of the 1990 Act), that the Principal is
responsible for the management and administration of the public institution
(Section 3 of the 1997 Act), and that the Council may delegate its powers
to any officer of the University, including the Principal (Section 11 of the
1990 Act and Section 68(2) of the 1997 Act).
2.13 “Powers may be presumed to have been impliedly conferred because
they constitute a logical or necessary consequence of the powers
which have been expressly confirmed, because they are reasonably
required in order to exercise the powers expressly conferred, or
because they are ancillary or incidental to those expressly
conferred”. (Baxter: Administrative Law page 404).
2.14 It has also been held in a number of cases that the scope of authority may
be regarded to be impliedly extended if such authority is “reasonably
necessary” or “incidental” to the authorised power (See: City of Cape
Town v Claremont Union College, 1934 AD 414 ad 420; Randfontein
Estates G M Company Limited v Randfontein Town Council, 1943
(AD) 475 at 494 and 495; Moleah v University of Transkei and Another
1998(2) SA 522 at 535E to 538I).
2.15 In the City of Cape Town Case ( supra) at 420, Wessels C J said:
“Now I take it as settled law, …that what is reasonably incidental to
the proper carrying out of an authorised Act must be considered as
impliedly authorised. Courts of Law must consider the matter from
the point of view of reasonableness; they must not hold that an Act
of a Corporation is ultra vires upon a narrow interpretation of the
powers conferred on the Corporation by the statute. They must look
to all the circumstances, and especially to the consequences of
holding the Act to the ultra vires .”
In my view, the Sections referred to in 1990 and 1979 Acts conferred upon
the Principal the powers to dismiss. Both Acts make provision for a
delegation of powers to the Principal. At best the decision of the Principal
was voidable in NEHAWU v The University of Cape Town and Another
(2000) 7 BLLR 819 at 25D/E the University Council was found to be
competent to ratify a decision to terminate services of employees, that was
taken before the Council was properly constituted.
2.16 According to the minutes of the Council and standing committee for
meetings held in October 1997, February 1998, March 1998 and May
1998, the standing committee and the Council was at all relevant times
aware of and confirmed the actions and decisions taken regarding the
restructuring process and the eventual outsourcing and retrenchment.
2.17 Insofar as the question of ratification is concerned, it was argued on behalf
of the Respondent that the support given by the Council to the decisions of
22 and 24 May 1998, constituted ratification. The applicants as noted
herein before, argued to the contrary, that support and ratification were two
separate concepts. In Neugarten and Another v Standard Bank of
South Africa Limited 1989(1)SA 797(A) at 804H Nicholas J A held that
“ratification may be express or it may be tacit, that is, implied
by conduct from which it is inferred that the person alleged has
ratified intended to adopt or confirm the Act ”. It would appear that
ratification is nothing more than the confirmation of the transaction with
ratification is nothing more than the confirmation of the transaction with
retrospective effect. This, in my view, would also include the concept of
ratification.
3. THE FIRST LEVEL OF ARGUMENT
3.1 The voluminous body of documentation filed by the University in the
course of the restructuring exercise, references are made about open
endedness, transparency and the participative nature of the twophase
process. Assurances are also given at several stages of the restructuring
process, that a final decision had not yet been taken.
3.2 The Applicants argued that there was marked difference between the
University’s public discourse which it presented to those outside its internal
management structures, and its internal discourse through which its true
approach to the process becomes apparent. Far from transparent, open
ended process presented to the employees and the union, a different
picture emerges when the University talks to itself and its consultant (Mr
Marais of Strategy Partners). The Applicants’ case was that from very
early on in the process there was a fixed predisposition to outsourcing as
the appropriate response to an already identified and settled need to
improve efficiency and costeffectiveness, namely outsourcing. In support
of this contention the Applicants made reference to and relied strongly on
the strategic vision speech presented to the University by its then incoming
ViceChancellor and Rector, Professor Van Zyl on 28 January 1997 at the
opening of the academic year.
3.3 In this address Professor Van Zyl set out the future course of the
University and his ideas for the repositioning of the University. Emphasis
was to be placed on improved efficiency and costeffectiveness. The
University was to concentrate on its core business, namely teaching and
research. Its management philosophy would be to place greater emphasis
on business principles. Matters which had to receive specific intention was
the University’s Support Services and its employees. He specifically said
that partnerships with the private sector should be investigated and in
particular the outsourcing of Support Services.
3.4 The Applicants made the point that the sentiments reflected in the
Principal’s address were also present in the presentation by strategy
partners to the University management on 17 February 1997 in which the
consultant described the Support Services investigation which it proposed
to conduct. Further, it was argued that it also was a striking feature in the
closed meetings of the “Projekbestuurskomitee”, a body that was set up to
manage the restructuring process and to bring it timeously to “ its logical
conclusion”.
3.5 According to the Applicants the entire process was not a true and open
ended joint problem solving exercise but rather one that could be
described as a process of pseudoparticipation. The Applicants contended
that “ the trappings of a consultative process were put in place to
secure the acquiescence of those who were ultimately retrenched to
an outcome that was predetermined ”. They said that by the time that
consultations were purportedly held in terms of Section 189 of the Act, the
result was a fait accomplie as outsourcing and retrenchments were the
logical result of the entire process.
3.6 The Applicants also noted that strategic partners were contractually
required to bring the Union into the process and conduct the
investigations and consultation processes. They contend that the
presentation of the restructuring process to management differed markedly
and materially from the manner in which it was presented to NEHAWU,
and that this presentation was positively misleading. In this regard
reference was made to the meeting of 6 May 1997 when Strategy Partners
held its first meeting with NEHAWU.
3.7 Strategy Partners explained the purpose of the consultancy as being to
assist with improved costeffectiveness and efficiency of Support Services
and that the consultancy had been asked to facilitate a process of
evaluation of the efficiency and costeffectiveness of all Support Services.
There would be discussions with various stakeholders steering committees
representing all stakeholders including workers and unions, independent
review of costeffectiveness and efficiency, workshopdeveloped
conclusions and a list of improvement alternatives which would be
considered at a second workshop, and ultimately implementation of the
proper consultations with all roleplayers.
3.8 The Applicants criticised Strategy Partners for omitting to state that it was
in fact contractually obliged by the University to bind the Union into this
process and to secure its acceptance for the mandate of the Support
Services Project. It argued that Strategy Partners was not acting as an
expert consultant available equally to all parties involved, but was instead
acting on behalf of the University to conduct the project that it wanted
carried out.
3.9 Mr Jaftha, of the Union who represented the Union throughout the
process, asked at this meeting, whether retrenchments were envisaged.
The Applicants argued that the response to this question was misleading
since it was to the effect that no final decision had been taken yet and that
there might even be the possibility of increasing posts to ensure cost
effectiveness.
3.10 The process was also criticised for not disclosing to the Union that
outsourcing was a very likely outcome. This is stated against the
background that a strong message was conveyed by Strategy Partners to
the University that it should concentrate on its core business and that
Support Services do not form part of that core.
3.11 Other criticisms levelled at Strategy partners was that it characterised
support services as an onerous labour relations environment by making
reference to the benefits of outsourcing as opposed to having one’s own
workforce and the concomitant problems of industrial actions and the like.
One of the University’ witnesses conceded that this remark was
insensitive.
3.12 The Applicants also made the point that the practical requirements for
successful outsourcing received detailed attention by Strategic Planning in
its reporting to the University, whereas this attention was not matched by a
comparable consideration of the practical requirements for successful
internal restructuring. As against frequent references to outsourcing in the
written proposal of Mr Marais, there is no suggestion that the Report
Services employees are part of the University community, that they are
part of its asset base, or that they are bearers of tacit skills and an
organisational memory.
3.13 Further criticism levelled against the University by the Applicants, was that
outsourcing contracts were drafted prematurely, containing a clause to the
effect that industrial conflict would be the responsibility of the contractor
and that the University could secure the removal of contractor’s employees
from its premises, should it not address the problem successfully. Mr De
Beer explained in this regard, that the University was entitled to address
such problems in a contract, given the possibility .of future conflict.
3.14 Professor Adler’s evidence and the tenure of the crossexamination of the
Respondent’s witnesses, constituted an indepth critical analysis of the
language used during the process and its eventual resemblance to the
outcome of the entire process. In essence, the Applicants case was that
at the time the consultation phase was initiated, the Union and employees
were faced with a foregone conclusion as to outsourcing, which the Union
had an onus to displace. The analysis was thorough, careful and
deliberate and cannot be repeated herein in all its detail. The main points
which are relevant to my enquiry have been referred to.
3.15 The method and work product of Strategy Partners was also severely
criticised. It was asserted that the work product of Strategy Partners is
incapable of independent verification, since many of the findings and
conclusions set out in the reports of the support service investigation
cannot be tested, properly scrutinised or verified. The working papers,
underlying documentation, such as surveys, questionnaires and notes of
interviews were not available because Mr Marais had destroyed them two
years after they had come into existence because according to him, he
had limited floor space. These papers were destroyed after litigation in
this matter had already commenced.
3.16 In its report to the University, Strategic Partners enumerated certain risk
factors. The University’s expert witness, Dr Visser conceded that whether
or not there was sound foundation for such risk factors and whether they
had been properly discussed at a particular workshop, could not be
assessed because the information was not available.
3.17 The Applicants also pointed out that the surveys conducted in hostel
cleaning, for example. Strategic Partners was criticised for only surveying
the views of 132 students with a population of approximately 4 900
occupants, less than 3% of the hostel occupants and the survey is the only
one of a few references to information on how the surveys were
conducted. Professor Adler pointed out that there is no indication how the
sample was drawn, what the response rate was or from which hostel it was
drawn. A previous survey conducted by Profession Pieter Vermeulen of
the University identified how his survey was conducted and in it, he
explained the significance of its returns. This survey was referred to in
illustrating the shortcomings of Strategic Partners in this regard.
3.18 Professor Adler said that there was no accurate information as to the
actual wages of employees and the liability into service levels, without
which it could not be concluded, as it indeed was, that fundamental
change was needed to improve costs and service levels. He said it was
further not possible to ascertain from the documentation that was
available, what part of the payroll cost cuts (the University’s biggest
expense) was associated with efficiency levels and what parts with cuts in
salary. Mr Marais explained, with regard to Campus Security employees
that he did not think employees were likely to accept cuts in salaries as
these appeared not to have been discussed.
3.19 The Applicants contended further, that it does not appear from the
documents which were produced, that Strategic Partners performed a
thoroughgoing financial analysis based on a proper factoring in of all the
elements that could play a role in a proper restructuring process. They
elements that could play a role in a proper restructuring process. They
said that this goes to the very heart of the question whether the option of
internal restructuring was taken seriously and improperly investigated.
3.20 Reference was also made to the absence of :
(a) consideration of changing a grading system from a taskbased to a
competencebased one and a proper costing of such an exercise;
(b) a detailed recasting of the entire remuneration structure linking
performance directly to pay;
(c) a detailed consideration of an improvement in management information
systems;
(d) a consideration of the introduction of userfriendly management
information systems;
(e) an investigation of different ranges of teamwork options and the
corresponding wage implications thereof;
(f) the conducting of an informed tender gathering process in respect of
training programmes or an investigation of appropriate training
programmes for all levels of employment from managerial to lower grade;
(g) any exploration of a change towards differential shift and work times,
particularly in the context of the fluctuating level of demand for Support
Services in the University environment or of the possibility of averaging
hours.
3.21 The Applicants contend that the above failures on the part of Strategy
Partners indicate that there was no serious examination of internal
restructuring, since if such an option was considered, these issues and
their cost implications and likely benefits would have been discussed. The
strategic planning report as a whole, is criticised for its lack of detail of
alternatives considered by the University or by itself.
3.22 Strategy Partners was also criticised for calculating the payroll costs of
“Terrein Dienste” on the basis of internal restructuring, by simply
exercising from the wage bill the 9% of employees that, it was projected,
would be retrenched through internal restructuring. The point was made
that no proper factoring of other benefits that may arise from a proper
restructuring exercise was conducted in this regard.
3.23 Strategy Partners asserted that, in relation to Campus Security, working
hours were lower than industry norms and that the cost per guard per hour
was higher than industry norms. Mr Marais agreed with the proposition
that the major component of the differential between the University’s
Campus Security and industry norms is the hours worked and not the
wages paid.
3.24 Strategy Partners recommended to the University that internal
restructuring would not succeed. According to Professor Adler, it had
done so without conducting a proper skills audit across the entire sector in
question to establish skills, desires and capacities which would have been
a first step of any series investigation of internal restructuring. He also
explained the meaning of pseudoparticipation, as referring to practices
that have the form of participation but none of its guarantees. He
described it as a strategy for employers to obtain their wishes and retain
control over decisions while appearing to do otherwise.
3.25 Mr Marais explained that a long investigation focused exclusively on the
skills of employees was not done, since it was not the task of the project
team. The Applicants contend that this is no justification for a failure to
conduct such a proper skills audit and examination of retraining costs
which, for any bona fide restructuring examination would be the exercise
equivalent to tendering investigation and the obtaining of provisional
contract prices that was indeed conducted for the outsourcing option. It
was further argued that this failure was due to the fact that outsourcing
was a foregone conclusion in the minds of Strategy Partners and the
University.
3.26 The Applicants also argued that survey findings were manipulated by
exaggeration of the negative. Surveys of client perceptions were done. In
its survey of nonacademic clients’ perceptions of the services provided by
technical services, all perceptions were above 3,5 on a scale of 05.
These perceptions it was noted by the Applicants, were initially described
as “reasonable to positive perceptions amongst nonacademic clients” but
in its overall conclusions relating to technical service Strategy Partners
described the responses as merely “acceptable”. Mr Marais held the view
that there was not much difference in these various formulations. He said
that the nuance difference between the phrases was “very small”. In the
University’s management conclusions in February 1998 it remarked that
“based on the perceptions of clients, the service levels ranged from
unsatisfactory to marginally low”. The Applicants contended that this
language illustrates that the University also subscribed to an approach that
was geared to the accentuation of negative features of the services in
question.
3.27 The Applicants also argued that an approach which inflated the negative
was also found in the opinion scale itself, which was loaded, according to
was also found in the opinion scale itself, which was loaded, according to
the Applicants, in a fashion so as to encourage negative responses
amongst those who were surveyed. The opinion scale that was used to
gauge the attitudes of workers to a variety of aspects such as leadership,
work structure, personnel, organisational climate and client satisfaction
rendered a score of 3,5 on a scale between 0/5, merely acceptable, a
score of between 2,5 and 3,5 as critical, and a score of below 2,5 as
reflecting major problems. It was argued that this scale was loaded so that
an average score of 2,5 was indicative of major problems in the area under
consideration and in the result the opinion scale was clearly loaded to
accentuate negative results and to yield the conclusion far reaching
change was required. In the hostel cleaning services, the Nerina Hostel
stood out, scoring high with respect to quality response, helpfulness,
communication and value for money. The Applicants argued that in the
ultimate report of Strategy Partners in report of hostel cleaning it dissolved
Nerina’s significance by producing a summary that service levels ‘varied’ in
the different hostels. It was criticised that it did not adopt the approach of
viewing Nerina as providing a model that required a close examination to
assess why it had excellent client satisfaction and how its operational
processors could be reproduced in the hostel cleaning services as a
whole. Mr Marais explained that one swallow does not make a summer,
and this answer, the Applicants contend, is to refuse to address the issue.
3.28 The Applicants made the point that the outsourcing on hostel cleaning
services as compared with its internal restructuring, was projected to
achieve savings of no more than R300 000 per year, yet it would mean the
retrenchment of workers who had unusually long service profiles, a sum
over 12 years.
retrenchment of workers who had unusually long service profiles, a sum
over 12 years.
3.29 An example was also given of a steering committee in technical services,
which recommended that the appropriate restructuring option for the
support service was internal restructuring and not outsourcing. The
Applicants contend that Strategy Partners simply overrode this conclusion
and made its own recommendation to management in the favour of
outsourcing. It argued that Strategy Partners ought, if it was seriously
investigating internal restructuring in a democratic and participative
manner, would have actively lent its assistance and professional expertise
to technical services in refining its proposals to present to the University,
not in casting an onus on them to justify their own decision while the
experts independently prepared a recommendation overriding the process.
Strategy Partners asserted that the Steering Committee’s recommendation
was “diametrically opposed to the analysis” and was “onvanpas”.
3.30 On the 21 st May 1998, Mr Jaftha of NEHAWU had made a proposal that
management of Support Services should be outsourced. The University
was criticised that for the fact that even though Hoofbestuur was going to
be meeting at 14h00 the following day to make its decisions, this proposal
was not even tabled and examined at the meeting. The following day
Professor De Beer responded by saying that the proposal was not an
option.
3.31 On 13 November 1997, NEHAWU submitted redeployment proposal to the
University which received no formal written response until 22 May 1998.
The redeployment proposal included a proposal to form worker co
operatives to take over the services in question. The redeployment
proposal was not accepted.
3.32 The essence of the Applicants criticism of the consultation process was
that costeffectiveness was preferred to restructuring at the expense of the
employees and the consultation as a whole.
3.33 It was submitted that the consultation process was not a joint problem
solving exercise or joint consensus seeking approach as envisaged by
Section 189 of the Act.
4. THE SECOND LEVEL OF ARGUMENT
4.1 It was contended that the real work which should have been done between
the employer and the Union in a joint consensus seeking approach was in
fact done in advance of the Section 189 process. It was argued that it was
done in the ad hoc and unrepresentative structures created and controlled
by the management consultant. By the time the Section 189 process
commenced, the Applicants contended, the die was already cast. A
settled view in favour of outsourcing had at that stage already been formed
and endorsed. The possibility of conducting a joint problem solving
exercise had by then become foreclosed because all that remained open
for discussion, was the detail relating to the implementation.
4.2 Meetings were held with the Unions and workshops had been set up.
Alternatives were discussed and evaluated according to certain criteria.
The Applicants argued that the alternatives that were presented are “well
known to management consultants and are the standard option that will
usually arise for consideration”.
4.3 Mr Marais saw the steering committees that were established as vehicles
for the participation of interested groups in the investigation and evaluation
of different options. The Applicants argued that the process driven by
Strategy Partners operated through ad hoc structures with ad hoc
membership which weren’t recognised either in the recognition agreement
or in Section 189 of the Act. NEHAWU was not present at the first meeting
of the hostel cleaning services steering held on 19 August 1997. The
second meeting also occurred in the absence of NEHAWU. The
Applicants argued that these workshops and steering committees clearly
did not take the form of collective interaction between management and its
unionised workforce. The presence and involvement of management in the
steering committees was dealt with by Strategy Partners and the
Projekbestuurskomitee as a strategic matter, according to the Applicants.
The reason proffered by the University for this situation was that it was
undesirable to inhibit other stakeholders in the discussion of those
committees. NEHAWU objected on several occasions to the absence of
direct interaction with management in the process. Senior management
was not directly involved in the process in its first phase but subsequently
became involved directly in the second phase.
4.4 It is the Applicants’ view that the decisions of the consultant and the views
of management are not separable. The Applicants further argued that the
work of seeking solutions should have been done in direct consultation
and interaction between the University and NEHAWU and that the
University had as early as February 1997, a legal responsibility to engage
the Unions in a Section 189 process, and not to pass the substance of that
process off onto the management consultant and its workshop. Strategy
Partners was also criticised for reporting back regularly to the
Projekbestuurskomitee on the exercise, questionnaires, surveys and
developing a profile of problem areas in each of the sectors. The second
phase of the project was a process of evaluating the results of first phase
and considering alternative solutions. Phase three was the process of
deliberation and decisionmaking, and Phase four was the implementation.
deliberation and decisionmaking, and Phase four was the implementation.
4.5 It was finally contended that the implication of the project in question, was
irreversible. Reliance was placed on a minute of 14 August 1997, when
the Projekbestuurskomittee recorded that it was dawning onto the
participants of the process that change was necessary and that change
would have to be effected eventually. According to the Applicants the
Section 189 process was to be initiated by management through a
comprehensive process and was not to be left in the hands of Mr Marais.
4.6 Even with the greatest good faith, the Applicants argued, that a proper
Section 189 process could not have been revived or introduced as though
from scratch at the time of its purported initiation.
5.
5.1 I now propose to deal with the various arguments presented and the facts.
5.2 The costing difficulties which the University was faced with at the relevant
time was not placed in dispute. This was put to Dr Visser when he was
crossexamined on behalf of the Applicants. Professor De Beer gave
evidence that there were several bulletins of possible cuts in University
subsidies. Certain steps were taken the past, to deal with these problems
but it came necessary to consider reducing the University’s running costs
and to examine the wage bill. Increased competition required and
enhanced strategic positioning of the University’s core functions.
5.3 During June 1998 wage negotiations were conducted between the
University and the Union. The minutes of a meeting held on 19 June
1998, reflects that the Union understood and accepted that the
retrenchment itself, but wanted an agreement that the increases which
were being negotiated should be implemented for it members for the
period 1 April to June 1998.
5.4 Professor Van Zyl, the ViceChancellor, gave evidence about the necessity
and subsequent success of the restructuring process embarked upon. His
evidence which was not challenged in this regard, indicated that in
following the recommendations of Strategy Partners, there would be
massive savings. The Applicants believe that the savings were not so
great as to sacrifice the positions of the individual employees in question. I
accept that the savings were not massive, but they were substantial.
Professor Van Zyl also testified that there was an increase in service
levels, a decline in theft on the campus, improved quality of cleaning and
the optimal use of buildings.
5.5 On the evidence of both parties, there was a sound commercial rationale
behind the restructuring process.
5.6 The Applicants’ objection to the process is that from the beginning of the
project, there as a fixed and settled preference on the part of Strategy
Partners and management for outsourcing in respect of its labour intensive
support services. The decision to outsource and hence the retrenchments
were not preceded by a joint problem solving exercise, as required by
Section 189 of the Act.
5.7 The appointment of Strategy Partners, according to the testimony of
Mr Marais and Professor De Beer, was to investigate the efficiency and
effectiveness of the Respondent’s support services. The Respondent
wished to be more competitive in an international sense but its income was
reduced. Professor De Beer also referred to the white paper on higher
education transformation which prescribed efficient utilisation of funds
within the tertiary educational sector. The decision to restructure was
therefore not only based on cost savings, but enhanced efficiency. Both
considerations fall within the managerial prerogative. Reference thereto
was also made in one of the collective agreements concluded between the
parties.
5.8 The ViceChancellor’s speech to which much reference was made by the
Applicants, clearly envisaged sweeping changes in respect of the
University, noncore functions, specifically in its support services. He
pertinently mentioned outsourcing in his speech. The applicants
demonstrated that the noncore functions were regarded as problematic by
the University. Strategy Partners indeed held the view that the utilisation
of nonunionised labour in respect of the noncore functions of the
University was more advantageous, than contending with a unionised
workforce. So much is reflected in its recommendations. It would be
reasonable to accept that the University perceived outsourcing as an
attractive option and that it was the preferred option of Strategy Partners
after its investigations.
5.9 Even though none of the Applicants or Union Representatives gave
evidence, I will accept for purposes of this case, that workers are opposed
to outsourcing as they view it as a device to undermine the organisation of
workers and that it impacted negatively on employment security. It poses
a serious threat to employment security. It is however, a viable legitimate,
commercial mechanism.
5.10 The question arises whether a leaning towards outsourcing as one of
several options, or even an expectation on the part of an employer that
outsourcing would be ultimately achieved, derails an entire process, so
much so, that it falls foul of the provisions of Section 189 of the Act. I do
not believe it does. The Section does not envisage that parties to a joint
consensus seeking process may not have certain strong views as to what
the outcome of the process should be. Opposing views would only be
natural, in a process such as the one envisaged by Section 189.
5.11 To establish that the outcome was predetermined before the consultation
process began, I would have to find that Strategy Partners was appointed
and instructed to ensure that outsourcing takes place, irrespective of other
views. The facts will have to show some collusion between Strategy
Partners on the one hand and the University on the other hand. There
would also have to be some indication that the members of the steering
committees were also involved in such a collusion.
5.12 Strategy Partners was not appointed as an agent of the University. It is an
independent organisation. Professor De Beer and Professor Van Zyl only
met Mr Marais on the day he was appointed. The fact that Strategy
Partners as contractually bound to obtain a mandate from the Union in the
Project is not a flaw in the consultative process. The University’s council
met three times a year. It would have been impractical to expect the
council’s members and members of the University’s Human Resources
Department, to conduct the investigations and subsequent consultations.
Professor De Beer gave evidence that the University simply did not have
the internal capacity to perform this type of exercise.
5.13 On the evidence before me, 18 November 1997, was the date on which
the University contemplated retrenchments. Notice was given to the
Applicants in terms of Section 189 of the Act on this day.
5.14 According to Professor De Beer the investigation was not part of Section
189 procedure. The Applicants argue to the contrary. They contend that
the investigations were flawed in that the steering committees had dealt
with measures to avoid dismissals, which they say, was a topic which had
to be discussed with the Union during the consultation stage. Although
measures to avoid dismissals were dealt with in the steering committees,
this was only one of many issues dealt with in both the workshops and the
steering committees.
5.15 Mr Marais testified that all stakeholders including the Applicant were
invited to and participated in steering committees during the investigation
by Strategy Partners. The results and options arising from the investigation
were summarised, together with supporting documentation and discussed
and considered. According to him all stakeholders had the opportunity to
question the factual correctness of the results of findings and had the
opportunity to discuss any uncertainty resulting from the investigation by
Strategy Partners. Alternatives that were discussed during the steering
committees, ranged from retaining the status quo ; internal improvements
and internal restructuring; outsourcing or contracting out; the privatisation
of the service. The Union confirmed its participation in the support
services development project in writing. This was the evidence of Mr
Marais. There was no evidence presented by the Applicants to contradict
him.
5.16 Mr Marais further testified that in compiling his reports, the support
services of the Respondents were measured and compared with other
Universities, private sector suppliers and other corporate environments to
compare all perspectives in a process called “ benchmarking”. The
seasonal nature of support services at the University of Pretoria, indicating
high periods and low periods of demand for certain support services, was
also demonstrated.
5.17 In Technical Services, the predominant group of affected employees were
represented by SAWU. These employees compiled their own report and
agreed with the Respondent on the outcome of the support services
review.
5.18 Dr Adler, the only witness called by the Applicants, admitted that he did not
consult with any persons in the steering committees, neither did he speak
to any of main role players of the Union, i.e. Mr Jafta or Ms Molefe. Neither
was any other official of the Union consulted on this aspect. Dr Adler
could not dispute the fact that retaining employees, as a subject, also
discussed during the steering committees.
5.19 It may have been useful, particularly for the Applicants and Dr Adler, if Mr
Marais did not destroy his source documents and notes and could provide
this documentation. In my view, the omission to furnish these documents
was not fatal to the process. There is no indication that there was mala
fides intention behind Mr Marais’ decision to destroy the documentation in
question. The vast number of documents, which were in fact produced,
seem to suggest that there was nothing sinister about the loss of the other
source documents.
5.20 There is no obligation, in terms of Section 189 of the Act, to involve
employees in an investigation into restructuring, before it actually
contemplates retrenchments. In some instances, it may be premature.
Notwithstanding, the Union was invited to this process. In this regard it is
of note that the Union ded not compile its own report, or attach the
methodology of Strategy Partners much sooner than it did. I gained the
impression that the Union could have played a far more interactive, role in
protecting its members.
5.21 At the meetings held with Trade Unions before 18 November 1997 it was
evident that the discussion did not relate only to the support services but to
the position of the University as a whole, including the academic
departments. Employees were told that there had to be a form of
streamlining as the University became more efficient and effective. The
University’s financial position was also discussed.
5.22 In my view, the meetings were not held to convey that the University would
henceforth conduct only its core businesses. In the UP Bulletin , dated 29
October 1997, voluntary severance packages were mentioned. The
Applicants argued that this was a further indication that retrenchments
were a fait accomplis before 18 November 1997.
5.23 The Respondent pointed out in its heads of argument that the discussions
relating to voluntary severance packages only pertained to academic staff
who were fiftyfive years and older. The minutes of a meeting of 20
October 1997, reflected that an official of SAWU, had asked Mr Marais
about voluntary retirement packages and whether it could present a
solution to the problem being faced by the University. At this stage it is of
note to remember that the Respondent not only had to consider the Union
in question, but also was accountable to other unions. Professor De Beer
replied that he had discussed voluntary retrenchment packages because it
was an obvious plan.
5.24 With regard to the minutes of the second meeting of the
Projejkbestuurskomitee, dated 15 May 1997, the Applicants contended
that the language adopted in the minutes clearly indicate that the
University adopted an approach incompatible with an approach that has its
departure point a commitment to joint problemsolving. In this document it
is stated that a mandate of the Trade Unions would eventually not be
necessary and it goes on to say that Union participation in the project is
desirable and should be promoted. Section 189, does not require an
agreement or a mandate on the part of employees, before the employer
may embark on restructuring. It is also not the case that the union wanted
to give a mandate.
5.25 Mr Marais was appointed in terms of a letter, in which it was clearly put
that the project should be a participative process giving stakeholders an
opportunity to jointly evaluate the current cost efficiency and effectiveness
of the services concerned, the opportunities of performance improvement,
as well as the options and guiding criteria towards change and that the
evaluation of future options regarding the functioning of each support
service would be carried out with proper consideration of inter alia the
interest and rights of employees, students and other service users. This
letter is an objective fact and an indication of the university’s will to engage
in a proper process.
5.26 The corner stone of the Applicants case with reference to this document
and others already discussed, was that the language used when “the
University spoke to itself” and when it spoke to the Union was dissimilar.
The Applicants imply that the University was hypocritical in the method in
which it dealt with the Union. The same type of criticism is levelled at
Strategy Partners. The premature drafting of contracts with sub
contractors, on the face of it warrants serious criticism. It was also
explained that there were practical reasons for this step. These contracts
were also disclosed in the Project. The University’s council consisted of
several persons and so did the steering committees. It is inherent in the
several persons and so did the steering committees. It is inherent in the
structure of the University, faced with the problems it had, that there would
be debates and discussions. It is extremely difficult, to make a finding as
to some form of collective hypocrisy pseudoparticipation or mala fides in a
project of such an extensive nature, as the one undertaken, in this case. I
have already expressed my views on the question of a consulting party,
having a certain view. The uncontested evidence of Mr Marais was that,
only at the second meeting of one of the steering committees, outsourcing
was mentioned for the first time.
5.27 When Mr Sehone, expressed his concern during a meeting with Mr Marais,
on the possibility of restructuring and the risk of accompanying staff
reductions Mr Marais stated that he answered Mr Sehone in the context of
the project and what he believed was the right thing to do and that he said
that there was an open agenda and that all options would be on the table,
including staff increases. He stated categorically that the Union was
presented with a full picture of the objectives, approach and methodology
of the project. He further stated that on a meeting of the 29 th May 1997
where outsourcing was discussed, it would have been incorrect to view
outsourcing as a reasonable outcome at that stage. He stated that it was
not the object of the project. The Applicants called no witness to refute
this allegation. Insofar as Mr Marais was criticised for certain non
disclosures, Professor De Beer, gave who gave evidence on behalf of the
Respondent, stated that if it was done, it was not done on the instructions
of the Respondent. There is also no suggestion that senior management
participated in the actual recommendations made by the steering
committees.
5.28 In Atlantis Diesel Engines (Pty) Ltd v National Union of Metalworkers
of SA (1004 15ILJ 1247 (A) at 1252F, Smalberger J A held that:
“It seems to me that the duty to consult arises, as a general rule, both in
logic and in law, when an employer having foreseen the need for it
contemplates retrenchment. This stage would normally be preceded by a
perception or recognition by management that its business enterprise is
ailing or failing; a consideration of the causes and possible remedies; and
appreciation of the need to take remedial steps, and the identification of
retrenchment as a possible remedial measure. Once that stage has been
reached, consultation with employees or the Union Representatives
becomes an integral part of the process leading to the final decision on
whether or not retrenchment is unavoidable.”
5.29 In the matter under consideration the Union was part of the process, before
the employer foresaw the need for retrenchment.
5.30 In finding that employees were faced with a fait accomplis Ngcobo J A
stated the following in Decision Surveys International (Pty) Ltd v
Ndlamini and Other [1999] 5LLR413 LAC at 417, paragraph 25:
“Similarly, the invitation to the Union to consult can hardly be said to
have been a genuine one on the facts of this case. The final decision
to retrench had already been taken; the timetable for retrenchment
had already been fixed’ the selection criteria had been decided upon;
the number of employees to be retrenched had been determined.
The effective date of retrenchment could not be altered, hence the
company’s refusal to meet and consult with the Union either on 28 or
29 October, as these day fell after the decision to retrench had been
implemented. In consultation with the Union, therefore, would have
amounted to no more than going through motions”.
5.31 In the aforesaid judgment the decision taken by the employer was clearly
irreversible. In the matter under consideration, such comments are not
applicable. The Applicants did not call a single witness who participated in
the process. They have to prove that the Respondent made a final
irreversible decision to retrench the individual Applicants, before the
consultation process ensued. They further have to how that the university
was effectively not open to persuasion on the need to retrench employees,
even if an inprinciple decision to retrench had been taken. That in itself
did not mean that the process as such was unfair or that the employees
had been confronted with a fait accomplis . See: Fletcher v Elna Sewing
Machine Centres Pty) Ltd [2000] (3BLLR) 280LC and NEHAWU v
University of Forthare [1998] 19ILJ 122LC. )
5.32 In the light of the facts of this matter and the nature of the attack on the
consultation process the following comments made in the Atlantis Diesel
decision ( supra) are of significance are:
“Consultation provides an opportunity, inter alia , to explain the
reasons for the proposed retrenchment, to hear representations on
possible ways and means of avoiding retrenchment (or softening its
effect) and to discuss and consider alternative measures. It does not
require an employer to bargain with its workers or Unions with regard
to retrenchment. Furthermore, the ultimate decision to retrench is
one which falls squarely within the competence and responsibility of
management”.
5.33 The aforesaid decision, in my view confirms the managerial prerogative to
take commercial decisions. The University complied with the Act. It
followed its prescribed procedures and followed expert advice to avoid
breaching the procedures. The process was complex. Several factors were
taken into account. In these circumstances, without the evidence of
someone who was actually present at the meetings, I am not able to infer
form the analysis of all that had taken place, that the outcome was
predetermined, irrespective of the Project. Whereas aspects of the
Applicants’ criticism of the methodology used was accurate particularly
with regard to surveys, the standard set was too high in the context of
Section 189 of the Act.
5.34 I am not satisfied that in this matter, that a fait accomplis was
demonstrated on the facts or that the Respondent did not comply with the
spirit and letter of Section 189 of the Act. Consequently the application
should be dismissed. Costs should follow the result.
___________________________
E REVELAS
On behalf of the Applicants On behalf of the Respondents
_____________________________
___________________________
Adv Karel Tip S.C. and Adv Derek Spitz Adv H van R Woudstra
instructed by: Maponya Inc Attorneys instructed by: Hlatswayo, du Plessis, Van der Merwe