IN THE LABOUR COURT OF SOUTH AFRICA
CASE NO: C825/02
Date 1692002
In the matter between:
Applicants
and
Respondent
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J U D G M E N T
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LANDMAN, J:
1. Mr H Fouldien and 34 others, who were formerly employed by SA
Road Tankers (Pty) Ltd, filed a statement of case in this court
alleging that they had been unfairly retrenched. It is now common
cause that their employer was the House of Trucks (Pty) Ltd t/a SA
Road Tankers. The trial was conducted on this basis and the
respondent is now the House of Trucks (Pty) Ltd.
2. On 1 June 2000 the employer notified all its employees of possible
retrenchments. Notwithstanding the evidence of Mr Gericke, who
was the regional manager responsible for the House of Trucks, that
only a possibility of retrenchment was contemplated, it is
abundantly clear that this company could not be saved. This was
known to Mr Gericke when he issued the notice to the employees.
The act of notifying the employees of the possible retrenchment was
necessary to ensure that the company complied with the
requirements of procedural fairness. At least, this is what I accept
for the purposes of this case. On this supposition, it follows that this
process must be adhered to even where, on an objective basis, the
company is beyond saving.
3. What cannot be accepted is that the employees and their union
were asked to provide alternatives to employment without knowing
the magnitude of the company's financial problems. And without
knowing that the company believed that it would retrench all its
employees, save for a number of hand-picked employees who would
be transferred to another related company.
4. I do not suggest that the idea of transferring employees was
defective. On the contrary, it was a step which preserved the
livelihood of those employees. There is a dispute about their terms
and conditions of employment in a new industry but that is of no
concern in this matter.
5. It follows, that when the applicants were dismissed, their dismissals
were substantively fair. Procedurally, the dismissals were defective.
The failure to provide NUMSA and the employees with the bigger
picture was an invitation to them to engage in a meaningless
exercise. The union's response and that of the employees, would
have been different had they known the number of employees
involved and the company's plan for some of their colleagues. But
they could not have saved the day.
6. The Labour Relations Amendment Act 11 of 2002 (LRAA), amended,
inter alia, s 194 of the Labour Relations Act 66 of 1995. Prior to the
LRAA coming into operation on 1 August 2002, s 194 read as
follows:
"Limits on compensation
(1) If a dismissal is unfair only because the employer did not follow a
fair procedure, compensation must be equal to the remuneration
that the employee would have been paid between the date of
dismissal and the last day of the hearing of the arbitration or
adjudication, as the case may be calculated, at the employee's
rate of remuneration on the date of dismissal. Compensation
may however not be awarded in respect of any unreasonable
period of delay that was caused by the employee in initiating or
prosecuting a claim.
(2) The compensation awarded to an employee whose dismissal is
found to be unfair because the employer did not provide that the
reason for dismissal was a fair reason related to an employee's
conduct, capacity or based on the employer's operational
requirements must be just and equitable in all the circumstances,
but not less than the amount specified in sub-section (1), and not
more than the equivalent of 12 months = remuneration
calculated at the employee's rate of remuneration on the date of
dismissal."
Paragraph 3 which deals with automatically unfair dismissals is
not presently relevant.
7. The amended s 194, which applies from 1 August 2002, reads as
follows:
"(1) The compensation awarded to an employee whose dismissal is
found to be unfair either because the employer did not prove
that the reason for dismissal was a fair reason relating to the
employee's conduct or capacity or the employer's operational
requirements, or the employer did not follow a fair procedure, or
both, must be just and equitable in all the circumstances, but
may not be more than the equivalent of 12 months'
remuneration calculated at the employee's rate of remuneration
on the date of dismissal."
Subparagraph (2) of s 194 was deleted.
8. Mr Vasi of NUMSA submitted that the amended s 194 applies to
this matter. Although the application had been instituted prior to the
amendment coming into operation, he submitted that it was
applicable because the trial took place after 1 August 2002. Mr
Buys, who appeared for the House of Trucks, in his capacity as an
official of the National Employers' Forum, contended to the
contrary.
9. The rules of interpretation of statutes regarding the operation, i.e.
the retrospectivity or prospectivity of amendments to statutes, have
been crystallised. These rules which are of particular importance to
this matter, may be summarised as follows:
1. No statute is to be construed as having retrospective
operation. See Petersen v Cuthbert 1945 AD 420
at 430.
2. The presumption against retrospectivity addresses Aelementary
considerations of fairness [which] dictate that individuals should
have an opportunity to know what the law is and to conform their
conduct accordingly @. Per Steven J in Landgraf v USI Film
Products et al 511 US 244 (1994) at 265. This passage was
cited with approval in National Director of Public
Prosecutions v Carolus & Others 2000 (1) SA 1127 (SCA) at
1139C-D.
3. Even a statute, which is expressly stated to be retrospective, is
not to be treated as affecting matters which are the subject of
pending litigation, save in the absence of a clear indication to the
contrary. See Bellairs v Hodnett and Another 1978 (1) SA
1109 (A) at 1148F.
4. A distinction is made between true retrospectivity i.e. where an
Act provides that from a past date, the new Act or amendment is
deemed to have been in operation and cases where the question
is merely whether a new statute or an amendment of a statute
interferes with or is applicable to existing rights. See Olivier JA
in Unitrans Passenger (Pty) Ltd t/a Greyhound Coach Lines
Chairman, National Transport Commission and Others ;
Transnet Ltd (Autonet) v Chairman, National Transport
Commission and Others 1999 (4) SA 1 (SCA). See also
Elmer A Driedger 1978 56 Candanian Bar Review 246 at
168269 who says:
"A retroactive statute is one that operates as of a time prior to
its enactment. A retrospective statute is one that operates for
the future only. It is prospective, but it imposes new results in
respect of a past event. A retroactive statute operates
backwards. A retrospective statute operates forwards , but it
looks backwards in that it attaches new consequences for the
future to an event that took place before the statute was
enacted. A retroactive statute changes the law from what it
was; a retrospective statute changes the law from what it
otherwise would be with respect to a prior event." This
passage was cited with approval in National Director of Public
Prosecutions v Carolus & Others at 1138I1139B.
5. Where the court is left in doubt it should favour an approach to
the law which is conservative.
6. The distinction between amending statutes affecting substantive
rights and those affecting procedural rights is no longer
regarded as being decisive. See the Unitrans case at 7.
7. Where the existing procedure is altered after the
action or claim was instituted, unless a contrary
intention appears, the old procedure applies. See Bell v
Voorsitter van die Rasklassifikasieraad en Andere 1968 (2)
SA 678 (A).
8. Considerations of fairness and equity are to be taken into
account in considering whether amending legislation is
application to pending actions. See the Unitrans case at 9H.
10.I turn to consider whether s 194 (as amended) has retrospective or
retroactive effect. No transitional provisions have been enacted in
the LRAA as regards s 194. Transitional provisions were made as
regards the residual unfair labour practice. See Item 30 of the LRA
(as amended) by clause 55 of the LRAA. This points to a
deliberate intention to have s 194 (as amended) apply to pending
matters.
11. The following observations regarding the old and new section 194
should be noted. The right to be compensated (I leave the remedy
of reinstatement or re-employment aside) rests on a finding that the
employee or employees were unfairly dismissed. The limit on
compensation for unfair dismissals owing to conduct, capacity or the
operational requirements of the employer, remains pegged at
maximum amount equivalent to 12 months' remuneration
calculated at the employee's rate of remuneration on the date of
dismissal. The necessity to determine whether compensation is to
be awarded as a solatium for unprocedural fairness (up to the limit),
as a platform, has been collapsed into a general discretion to award
compensation in an amount which is just and equitable in all the
circumstances. The need to exercise a discretion to award all or
nothing, as regards procedural irregularities, which were sanctioned
in Johnson & Johnson (Pty) Ltd v Chemical Workers Industrial
Union (1999) 20 ILJ 89 (LAC) has happily been removed. So has a
similar need as regards substantive fairness.
12.
13. These discretions has been replaced by a new general discretion
which does not give priority to a solatium for procedural unfairness.
In my view, the court has been given a discretion to decline to
award compensation or to award compensation in any amount up to
the equivalent of 12 months' remuneration. The result is that the
risk of an employer being ordered to pay all or nothing as regards
procedural unfairness (or for that matter substantive unfairness) has
been tempered. The risk of an employee being similarly treated, has
likewise been ameliorated. The new provisions have come about
after strenuous complaints by judges, commissioners, academics
and parties that the old s 194 gave rise to unjust and inequitable
results. As Conradie JA put it in Lorentzen v Sanachem (Pty) Ltd
(2000) 21 ILJ 1075 (LAC) at 1077I-1078A:
"The all or nothing choice facing the learned judge a quo has
once again thrown into sharp relief the dismal state of affairs to
which s 194(2) as interpreted in Johnson & Johnson has given
rise. I do not wish to be understood as saying that Froneman,
DJP who gave the judgment for the court could have found a
better solution to what has turned out to be a section with major
unintended consequences. An award has nothing to do with the
magnitude of the employer's industrial relations transgression. It
is a factor of the employee's wage level and the case load at the
CCMA or the Labour Court. It has little of a true solatium about it.
If the tribunal is busy the solace is large; if it is not, it is small."
14. In Natal Bank Ltd v Deputy Sheriff of Pretoria 1904 TS 620, a
deputy sheriff was held to have had no right to be paid for work
done according to an old tariff which had been repealed. His fee
for that work was to be paid according to the new tariff which was
applicable when he claimed his remuneration, even though this
tariff was not applicable when he did the work. A similar approach
has been adopted as regards interest. See Katzenellenbogen Ltd
v Mullin 1977 (4) SA 855 (A) at 885EF where it was said:
15. "If she had not claimed it at any particular rate the Court a
quo would have been obliged to award it at the legally
permissible rate, i.e. per cent per annum prior to 16 July
1976 and thereafter unless special circumstances were
present, at 11 per cent per annum . By claiming it at 6% per
annum, the rate then usually awarded in practice, she was
merely indicating that she intended claiming the legally
permissible rate and was not necessarily limiting her claim to
that rate if the law permitted a higher rate. Consequently,
the Court a quo when giving judgment on 26 August 1976,
ought to have applied sec 1(1) of the Act even in the
absence of an amendment of the kind now sought."
16.
17. In Community Development Board v Mohomed and
Others1987 (2) SA 899 (A) at 915EG, Botha, JA said:
"Counsel for the appellant pointed to the fact that under the
common law no interest accrued on an as yet unliquidated
amount of compensation (Union Government v Jackson & O
thers 1956 (2) SA 398 (A) at 41016 and 437) and from
that base argued that the liability to pay interest which is
imposed on the Minister by s 12(3) should not be extended
beyond what was strictly necessary according to the language
used. In my view there is no room for such an argument in the
context of the issues to be decided in this case. By enacting
the main provision of s 12(3) the Legislature clearly intended to
bring about a radical departure from the common law position,
and it is clear that it did so because of considerations of equity
(Die SuidAfrikaanse Naturelletrust Trust v Kitchener en
Andere 1964 (3) SA 417 (A) at 423EF, and Klipriviersoog
Properties (Edms) Bpk v Gemeenskapsontwikkelingsraad
1984 (3) SA 768 (T) at 772FG). That being so, there is no
warrant for interpreting the proviso to the main provision in a
manner that would produce what is in effect an arbitrary and
inequitable limitation on the Minister's liability for interest."
18. Finally, in National Director of Public Prosecutions v Carolus &
Others at 1140CE, refernce is made to a dictum by Staughton LJ
in Secretary of State for Social Security and Another v
Tunnicliffe 1991(2) All ER 712 (CA) at 724fg:
"In my judgment the true principle is that Parliament is
presumed not to have intended to alter the law applicable
to past events and transactions in a manner which is
unfair to those concerned in them, unless a concrete intention
appears. It is not simply a question of classifying an enactment
as retrospective or not retroactive, rather it may well be a matter
of degree, the greater the unfairness, the more it is to be
expected that Parliament will make it clear if that it is intended."
19. The right to compensation is a contingent right which rests on the
finding regarding the substantive and procedural fairness of a
dismissal. It is a discretionary remedy, although it is hedged by
limitations on the quantum which can be ordered. It is, of course, a
discretion which must be exercised judicially.
20. To sum up, considerations of fairness, the inference derived from
the failure to provide a transitional measure, the unchanged limit
on quantum, the contingent nature of the right, the element of
discretion, fairness and equity, and the redress of the mischief all
indicate that the provisions of s 194 (as amended) are applicable
to pending disputes. The new s 194 does not remove rights. But it
does remove the effect of an external happenstance linked to time
and the workload of courts and tribunals. A litigant cannot fairly
insist that these considerations confer a right on him or her to have
a matter adjudicated, inter alia , with reference to them.
21. In considering whether to order compensation or to make no
award, I am limited to the circumstances relating to an unfair
procedure in this case. An award of compensation, as regards this
leg, would still encompass, as one its purposes, a solatium for the
harm suffered as a result of a procedural defect of some
magnitude.
22.Turning to the facts of the case, I am of the view that about three
weeks passed between the giving of the inadequate notice of
retrenchment and the full disclosure to the union and employees of
the magnitude of the intended retrenchment. I view this as a guide
to the exercise of my discretion to remedy the wrong, that is the
failure to follow a proper procedure prior to the dismissal of the
applicants.
23.At the end of the trial, oral submissions were made. I allowed the
parties to file further written closing arguments. Submissions were
filed on behalf of the applicants and the House of Trucks. The
parties were also required to settle which of the disputed individual
applicants were parties to this dispute as provided for in clause 8.5
of the pretrial minute. Mr Vasi, in his heads of argument, said that
the following applicants were present in court or had signed the
clause, namely Mr H Fouldien, Mr N Court, Mr M Fedodien, Mr P
Booysen, Mr J Kemp, Mr L Kapp, Mr M Brand, Mr F Nel, Mr N
Davids and Mr D Petersen. In the case of Mr Court he only seeks
severance pay he did not allege that he had been unfairly
dismissed. He was joined merely in an attempt to attain an order
regarding his severance pay. This court, unfortunately, has no
jurisdiction to deal with a claim for severance pay where it is not
linked to a pending claim for unfair retrenchment. With the
exception of Mr Court, the House of Trucks, is agreed that these
are the applicants who would be entitled to relief.
24.In the premises I make the following order:
1. The respondent (The House of Trucks (Pty) Ltd) is ordered to
pay compensation in the amount of equivalent to three weeks'
remuneration as at the date of dismissal to the applicants
whose names appear above, with the exception of Mr M Court.
2. There is to be no order as to costs.
SIGNED AND DATED AT CAPE TOWN THIS 16th DAY OF
SEPTEMBER 2002.
A A Landman
Judge of the Labour Court