IN THE LABOUR COURT OF SOUTH AFRICA
(HELD AT JOHANNESBURG) CASE NO J2097/99
In the matter between:
LONG, PKC Applicant
and
REUMECH GEAR RATIO (a division of
REUNERT MECHANICAL SYSTEMS LIMITED Respondent
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JUDGMENT
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JAMMY AJ
1. The Applicant, who had until then been employed by the Respondent as a
Quality Control Inspector, was retrenched on 26 March 1999. The
commercial necessity for the restructuring exercise embarked upon by the
Respondent at that time and which constituted the underlying rationale for
the retrenchment programme which it implemented, is not in dispute in this
matter. The parties are in agreement that the only issues for determination
by this court relate to the criteria identified by the Respondent as justifying
specifically the retrenchment of the Applicant and the question whether
alternatives to that retrenchment, submitted by the Applicant to the
Respondent were properly considered and, if so, why they were rejected.
2. The first witness called by the Respondent was Mr J P Steyn who, at the
relevant time, was the Respondent’s human resources manager. Three
Trade Unions were recognised by the Respondent, of which one, NETU,
was the Union of which the Applicant was a member. On 4 February 1999
the Respondent addressed a letter to NETU and the other Unions
recording the reasons identified by it for the reduction of the number of
employees in its service, and alternatives which had already been
considered to avoid retrenchments. Of relevance in that letter was a
paragraph headed “Selection Criteria for Retrenchment”, reading as
follows:
“Should it be necessary for additional employee reductions after the
voluntary retrenchments have been finalised, we propose the LIFO
selection criteria be considered, however, we would welcome your input
and suggestions. LIFO (lastin, firstout) per job category with the
retention of essential skills is especially important, regarding our drive to
become more competitive and obtain alternative business in the
commercial field”.
Consultation meetings were proposed and input from employees, by way
of a notice generally exhibited in the company, was invited.
3. Meetings were held separately with each Union and in the case of NETU,
with its organiser Mr M Scholtz and its shop steward. Discussions ensued
responsibly and each possible alternative as set out in the letter of
4 February 1999, was again reviewed. Selection criteria were examined
and the LIFO principle, subject to the retention of skills, was accepted.
4. The Union was provided with a list of names of employees in the affected
area and the Applicant, although his length of service was greater than
certain other employees whom the company, because of their specific
skills, had elected to retain, was identified for retrenchment, the
justification for that decision being accepted by the Union in the
circumstances explained to it.
5. For that purpose, the company had carried out an evaluation of quality
control personnel in terms of skills, recording the date of employment,
experience and qualifications of each of them. A critical factor in the
selection of the Applicant for retrenchment, ahead of other persons with
shorter service in the company, was the assessment that he “is not
capable of working independently”. This rationalisation, Mr Steyn testified,
was not questioned by the Union, by which the decision to retrench the
Applicant was accepted without further query. It was a fact however that
the general agreement arrived at with NETU in that and in every other
context, was not however reduced to writing.
6. On 26 February 1999 therefore, the Respondent addressed a letter to the
Applicant confirming the consultations which had been held and the fact
that he was to be retrenched. His notice period would terminate on
26 March 1999 and retrenchment benefits, including a “service gratuity”
equivalent to twenty weeks salary, would be paid to him.
7. Somewhat unusually however in the context of the situation then
prevailing, a second and separate letter was addressed by the
Respondent to the Applicant on the same day, 26 February 1999. That
letter read as follows:
“Dear Mr Long
You are probably aware of the fact that there has been a drastic decrease
in the workload.
After considering various alternatives, the company is forced to continue
with the planned restructuring.
We would like to offer you the opportunity to forward any proposals that
may benefit either yourself or any of the other employees concerned.
Please provide us with the proposals, in writing, as soon as possible. All
proposals will, most certainly, be considered”.
That letter was signed by Mr Steyn and Mr J N Greeff, the manager:
Quality Control.
8. The Applicant responded in writing to that invitation on 2 March 1999. He
wished, he said, “to forward the following proposals on behalf of all
employees and myself, who may be affected by the planned restructuring
taking place”. As alternatives to retrenchment and “as a job and cost
saving initiative”, he suggested the following:
Hold recruitment of all new employees.
Eliminate all overtime work completely.
3. Reduce working hours: i.e short time and/or short week on a trial basis of
up to six months, taking into consideration that saving jobs be more of a
priority than retrenchment.
4. Bringing all nightshift employees on to dayshift, so as to save money on
nightshift allowances.
5. Transferring of employees to other suitable jobs within establishment.
6. Offer senior employees early retirement if the pension and retrenchment
package is viable for persons concerned.
7. That the LIFO system be adopted as it is an approved retrenchment
procedure”.
The letter continued:
“I sincerely hope that the above proposals will be taken into serious
consideration, as retrenchments should be an absolutely last resort.
I would hereby also like to state that I personally feel that I have been
unfairly earmarked for retrenchment. Considering my length of service
and trade qualifications I will not hesitate to take my retrenchment to the
CCMA for Arbitration. This is not a case of sour grapes, all I am trying to
do is protect my job and that of my fellow employees as I have enjoyed
working for Gear Ratio over the past ten years”.
9. Pursuant to that letter said Mr Steyn, he met with the Applicant, the Union
organiser and the shop steward. Further meetings were held during March
and in a letter dated 12 March 1999, the Applicant was told that
management “has not made a final decision yet but will give you a final
decision on Tuesday 16 March 1999”. In fact however, further meetings
were held with the Applicant on 22 March and 29 March when,
exhaustively, his proposals were reviewed and the reasons for their
rejection conveyed to him.
10. In the result, the decision to retrench the Applicant as conveyed in the
letter of 26 February 1999 remained unchanged and his services were
terminated in accordance with that notice. As far as he was concerned,
Mr Steyn concluded, the company had negotiated in good faith, had
considered all possible alternatives and had generally complied in all
respects with the requirements of Section 189 of the Labour Relations Act.
11. Crossexamined by counsel for the Applicant, Mr Steyn explained the
second letter of 26 February as indicative of the company’s desire, “to go
the extra mile” in a last ditch attempt to avoid the Applicant’s retrenchment.
The consultation process had by then already been completed but the
company was reluctant to “close the door” if any further possible
alternatives could be realistically considered.
12. With regard to the proposals then submitted by Mr Long, all the
alternatives suggested by him had already been canvassed in detail in the
course of the consultations with his Union which had preceded the final
notice to him. There was nothing new in his submissions and for practical
reasons which had been fully explained, none of them could realistically be
adopted. In the face of those explanations, the Union had unreservedly
agreed that the retrenchment of the Applicant was justified. The notice of
26 February 1999 would not have been given to him had that not been the
case. The Applicant himself had been fully apprised of the criteria for his
case. The Applicant himself had been fully apprised of the criteria for his
selection.
13. Mr Steyn’s testimony was corroborated in all its material respects by
Mr Jan Greeff, the head of the Respondent’s quality control division. It
was he, he testified, who had identified the individuals to be affected,
applying the criterion of lastin, firstout, with the retention of necessary
skills. The company’s main customer was the Defence Force, he said and
it was essential that the most highly skilled persons be retained in its
employment to ensure quality production where lives might depend on it.
14. The ability of quality control personnel to work independently of each other
was an essential requirement, he testified. The Applicant did not possess
that ability. It was he who had compiled a “skills evaluation” of all relevant
personnel with a scoring grid which indicated, against different criteria
there listed, the degree of compliance of each of the individuals
concerned, ranging from “poor” through “acceptable”, “average”, “above
average” and “good”. The Applicant scored “average” in some instances
but insofar as the critical requirements of the job were concerned, his
evaluation was “poor:”
15. Mr Greeff was subjected to exhaustive crossexamination on the skills grid
by the Applicant’s counsel but remained steadfast in his explanation of the
justifiability of his evaluation. The Applicant, he explained, had been
evaluated only in the area where he was working, where the
characteristics requiring control were limited. The whole quality
department was being done away with in the restructuring exercise and
“multitasking” on the part of retained employees was essential. There had
been a clear indication to his immediate superiors that the Applicant was
incapable of working independently on more complex tasks. He was, said
incapable of working independently on more complex tasks. He was, said
Mr Greeff, sensitive to the consequences of retrenchment and its effect on
the careers and families of persons affected and it was in that context that
he endeavoured as far as possible to carry out an objective evaluation.
16. Questioned further and in detail regarding comparative aspects of the
individual evaluations produced by him, Mr Greeff, in my view, explained
them rationally. I do not consider it necessary to traverse that testimony in
detail. In the final result, whilst possessing certain characteristics on a par
with others retained by the company, the Applicant lacked independence,
a knowledge of programming and computer skills, all of which would have
been essential to his ongoing employment. It was totally untrue that he
had dispensed with the Applicant’s services because he “liked him least”.
17. The Applicant was the only witness in his own cause. When he received
the notice of his retrenchment on 26 February, he said, he was not happy
at being retrenched. He conveyed his concerns to the Respondent two or
three days later and it was correct that he had had a number of
discussions with them following that letter, when a serious attempt had
been made to find a basis for his retention in his employment. His
impression however was that the company was “going through the
motions” and that its mind had already been made up. No specific
reasons were furnished to him for his own selection.
18. With regard to the evaluation carried out by Mr Greeff and the comparative
analysis of the qualifications and ability of the various persons mentioned,
these were basically correct. As far as he was concerned he had the basic
ability to work independently as a quality control inspector but if there was
a major component problem, he would call in a Metallurgical Review Board
official for final approval.
19. His shop steward, he confirmed, had been present at the various meetings
with the company officials and, if there had in fact been some agreement
with his Union, it would not have represented him at the subsequent
dispute hearings.
20. The termination of employment for reasons not associated with the
conduct or ability, broadly assessed, of any employee, but for commercial
operational reasons beyond his or her control, is inevitably a traumatic
experience with farreaching ramifications. As the law stands however, it
is an established commercial phenomenon. The Labour Relations Act
1995 in its present form, recognising the need to limit its implementation
where possible and to ensure that the exercise is exhaustively and
responsibly carried out, prescribes the essential requirements for a fair
procedure in that context. Where those requirements are met by an
employer acting in good faith, retrenchment as a last resort in the context
of the maintained viability of the enterprise concerned, will be unassailable.
21. I have considered in depth the evidence adduced by the Respondent’s two
witnesses and by the Applicant in this trial as well as the documentation
tabled in the course of the hearing and whilst the Applicant’s perceptions
of unfairness in relation to the basis and manner of his dismissal, after ten
years of what he justifiably considers to be dedicated service to the
Respondent, is entirely understandable, there is nothing, in my view, in the
substance of the case presented on behalf of the Respondent, to support
it. I am left in no doubt that the consultation process was responsibly
followed by the Respondent’s management, that the evaluation of the
individual skills of the various persons potentially affected by the exercise
was properly and responsibly carried out, whether or not the Applicant
accepted it, and that in all material aspects of its implementation of the
accepted it, and that in all material aspects of its implementation of the
restructuring which led to his retrenchment, the company’s good faith was
apparent. There is nothing in the Applicant’s own testimony which
impugns it and indeed, the ongoing efforts to seek viable alternatives to
the termination of his employment, even after formal notice of his
retrenchment was received by him, is acknowledged and confirmed by
him.
22. Finally, and as a relevant aspect of this matter, the Applicant was at all
material times represented in the consultation process by an organiser of
his Union and by his shop steward. The company’s evidence that an
agreement was arrived at with the Union in that context, which in
accordance with all existing tenets of industrial relations practice, would
bind the Applicant, is not controverted save for the Applicant’s inference
that he has no knowledge of it. Any challenge to that submission by the
Respondent would of necessity have to have been mounted by the
Applicant, presumably by way of the evidence of either the Union
organiser or the shop steward, neither of whom however was called to
testify. The Respondent’s evidence in that regard, accordingly stands
uncontested.
23. For all of these reasons I have concluded that the allegations of unfairness
in the procedural aspects of the Applicant’s retrenchment cannot be
sustained and that his claims must fail. The order that I make is therefore
the following:
The application is dismissed with costs.
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B M JAMMY
Acting Judge of the Labour Court
13 March 2002
Representation:
For the Applicant :
Adv A J Nel, instructed by Snyman Van der Heever Heyns
For the Respondent:
Adv W Hutchinson, instructed by Fluxman Rabinowitz – Raphaely Weiner