Sneller Verbatim/rs
IN THE LABOUR COURT OF SOUTH AFRICA
BRAAMFONTEIN CASE NO: J1038/97
2002-12-02
In the matter between
SOUTH AFRICAN BREWERIES Applicant
and
FOOD ALLIED WORKER'S UNION Respondent
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J U D G M E N T
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LANDMAN J: South African Breweries (SAB) and the Food and
Allied Worker's Union (FAWU) had concluded a National
Recognition Agreement (the NAR). The agreement provides
for a detailed procedure in Annexure E. It reads:
1. Where it is in the opinion of the company necessary to reduce
its manning levels as a result of economic, financial,
technological and operational considerations that may affect
the jobs of workers, the company shall give at least three
months' notice to the union, or
1.1. The reasons for the proposed reduction of manning levels
1.2 The number of workers to be affected by the proposed
reduction of manning levels
1.3 The proposed date on which the contemplated reduction of
manning levels is scheduled to take place and
1.4 The proposed dates for consultation between the union and
the company.
2. As soon thereafter as reasonably possible the company and
the union should meet to consult on the proposed reduction of
manning levels.
3. The purpose of the consultation would be to
3.1 Discuss the reasons for and supply information regarding the
proposed reduction of manning levels
3.2 Consider ways to avoid or minimize retrenchment which may
include where it is set out a number of steps which was taken.
4. Where the parties agree on sufficient and feasible alternatives,
retrenchments will not be considered.
5. Where no sufficient alternatives to retrenchment are found the
company and the union should consult on the following issues
5.1 The number of employees to be affected by the retrenchment
5.2 The criteria for the selection of employees to be affected by
the retrenchment
5.2.1 The criteria for the selection of employees should, as far
as possible be lifo coupled with the retention of skills.
5.2.2 Where lifo coupled with the retention of skills is not
conclusive, efficiency at the job and attendance records may
be used as additional criteria for selection.
5.3 The time-table for retrenchment and the notice pay
applicable to retrenchees.
There are further provisions but I think it is unnecessary to
quote them. SAB is an international company and in order to
maintain its position in the market and to ensure its long-term
viability, it continually addresses productivity issues.
One of SAB's branches is Rosslyn Brewery, the
respondent, is Rosslyn Brewery. It is a so-called flexi brewery.
This was described as a brewery which has the capacity to
increase the production of beer on short notice. ...(mechanical
interruption) this would take place in December and April of
each year.
The management of the Rosslyn Brewery decided to
embark on a productivity related exercise which they termed
"organisational re-design". The witnesses were unable to say
precisely when this decision was taken. They explained that
the question of productivity was addressed on a continual
basis and that they had, at the beginning of 1997 adopted the
view that they had to look at organisational re-design.
This process was aligned to another programme known
as the best operating process. On 24 February 1997 Rosslyn's
human resources consultant Miss A Botha, sent a letter to
FAWU, this letter reads as follows:
"Having closely studied the organisational design of Rosslyn
Brewery, management has come to the view that changes are
necessary. The proposed changes have implications for
manning levels and restructuring at the brewery. In the light
of the above, this letter serves to advise you that the company
wishes to commence consultations with you as contemplated
in Annexure E of the NRA. As a first step in the process,
management have provided shop stewards with relevant
information and meetings which took place this morning,
Monday 24 February 1997 at 11h00. Thereafter a time-table
for consultation meetings will be developed in liaison with
yourself. We will be making further contact with you in this
regard soon. In the meantime, should you have any queries,
please do not hesitate to contact the writer."
The four departments affected by the organisational re-
design were brewery, engineering, packaging and operations.
The company insisted that the consultation meetings had to be
held on level 3. There were essentially departmental meetings
where the shop stewards, departmental manager and other
management representatives working in the department were
present. The shop stewards of FAWU insisted that the
consultation meetings had to be held on level 4. On that level
the managers of each department and the shop stewards
would be present.
A number of meetings on both levels 3 and 4 were held
after 24 February 1997. Eventually and with effect from 30
June 1997, some 64 employees were retrenched. Initially at
some time 129 employees were at risk of losing their jobs.
The applicant employees initially contested their dismissal on
both substantive and procedural grounds. Their legal
representatives have since informed this court that they do
not persist in the complaint that the dismissals were
substantively unfair. I accordingly only have to determine
whether the dismissals were procedurally fair.
Mr Pretorius SC who appeared for SAB, argued that the
introductory part of Annexure E to the NRA which provides that
where it is in the opinion of the SAB necessary to reduce its
manning levels as a result of economic, financial, technological
and operational considerations that may affect the jobs of
workers, SAB shall give at least three month's notice to the
union, was complied with. He submitted that NRA does not
describe how notice should be given and that it should
necessarily be given in by document. It also does not state, so
he submitted in express terms that notice should be given to
the officials of the union and not to the shop stewards.
It is clear that notice of the proposed retrenchment had
to be given to the union. The collective agreement, the NRA
may supplement Section 189 of the Labour Relations Law, but
it may not detract from this Section. Section 189 requires
notice to be given to the union in the circumstances such as
those which are present in this case.
I have no doubt that a sophisticated employer like SAB
knew this and that it deliberately did not comply with this part
of the retrenchment procedure. Secondly, it does not avail
SAB to lead the evidence of witnesses who are unable to state
when, even approximately, retrenchments were contemplated.
At the most it said that retrenchments were contemplated or
at least the re-design was contemplated early in 1997.
However, if the 24th of February 1997 is taken to be the
first time that it was contemplated and the notice was issued
on that day, the three month period which is referred to in
paragraph 1 of the retrenchment procedure would run from
this date. Mr Strydom ...(inaudible) I believe he appeared on
behalf of the remaining individual applicants, submitted that
SAB's contention that he had given notice to the union via the
shop stewards does not hold water. Apart from pointing out
that the retrenchment procedure is clear about who should
obtain notice, Mr Strydom pointed out that the shop stewards
who are not officials of the union are not in the same position
to consult with SAB. The reason for this is because shop
stewards are also employees of SAB and may be retrenched,
as in fact happened to some of them and he submitted
situations may occur and a conflict of interest may arise
between their positions and that of their co-workers.
I do not find that this was necessarily the case in this
retrenchment exercise but it points to substantive and sound
reasons why notice should be given to the union and not to the
shop stewards. Mr Pretorius submitted that the obligation to
consult on the proposed reduction of manning levels which is
found in clause 2 of the retrenchment procedure, envisaged
various meetings to consult with those issues. He submits that
they were held in the various departments at the so-called
level 3 meetings and he points out that it is not co-incidental
that where the shop stewards approached the consultation
process pro-actively and participated in them, the process
resulted in substantial agreement and he refers specifically to
the engineering department and to a lesser degree in the
brewing department.
His contention which is also SAB's contention is that the
NRA does not require level 4 meetings and this he said, was a
pretext which the shop stewards and FAWU used to delay and
frustrate the process. Once again, it must be accepted that
there are many situations where the tactics of a union and its
members involve the, involve attempts to delay the final
implementation of a retrenchment decision, but there is no
evidence which shows that this was the intention in this case.
In my opinion SAB's response is an attempt to build on
the foundation which is not laid. It leaves the impression that
SAB purposely adopted procedures which ran contrary to its
agreement with the union and this is clearly unacceptable and
it was unacceptable to the union.
The concept of the organisational re-design was a
deliberate process which in itself is not illegitimate for SAB
Rosslyn to shed its unskilled and less skilled or addaptive
workers in the interest of increasing productivity. It has been
suggested that the NAR was not designed to deal with this
project and if this is so, in my opinion it should have been
stated openly and partly should have embarked on an exercise
to agree the way forward or to fall back on the Labour
Relations Law taking into account Annexure E.
It is significant that on 10 March when SAB met with
FAWU, Mr Kutu, the union organiser, summed up FAWU's
impression of SAB's strategy as follows.
"We have found that your nice sounding word, (re-designing) is
in fact a nice way of retrenching our members".
He said that SAB unfortunately forgot to supply FAWU with the
necessary information. He proposed that the relevant
information be furnished with regard to all of the departments
which also were to be re-designed and he proposed a meeting
be held at level 4 on the 18th or 19th of March to consult on
the matter.
Mr Strydom has submitted that in failing to provide the
union with adequate information as contemplated in the
retrenchment procedure, after repeated requests that SAB is
seeking to undermine the union and the employees, because
the union was not placed in a position where it could
meaningfully consult. He says the conclusion to be drawn
from this is that the retrenchees were never properly
represented as a result of this failure and he contends that
SAB has not shown, the requisite information has never been
furnished to the union despite the complaints including a
complaint made on the 6th of June 1997.
I find that FAWU was justified in making this complaint.
By 7 April 1997, although still complaining about information,
indeed it was still to complain about not receiving sufficient
information, FAWU seem to accept the need and inevitability
of retrenchments. Mr Kutu stated:
"In the meetings we have had so far with yourselves it became
quite apparent that your re-designing process will ultimately
end with retrenchments. It is for this reason that we hereby
present our proposals of severance packages which we believe
that negotiations thereof should run concurrently with the re-
design process."
And indeed those parallel negotiations or consultations took
place.
Mr Strydom has pointed out deficiencies in the way in
which SAB approached its obligations and treated the other
requirements provided for in the NRA. There is some merit in
his proposals, but on the broad conspectus, I am unable to
find serious fault with the way SAB conducted itself, but SAB's
approach conduct was flawed because the necessary
mandatory steps to prepare the ground for meaningful
attempt to reach consensus about retrenchment of the largely
vulnerable workers had been deliberately side-stepped. I am
of the opinion that SAB has not acquitted the onus resting
upon itself to show the dismissal of the applicants was
procedurally fair.
I now turn to the issue of compensation. I previously
held in H ...(inaudible) and 43 Others v The House of Cutts
(Pty) Ltd (C825/02), that the provisions of Section 194 as
amended by the Labour Relations Amendment Act of 2002 are
applicable to pending disputes. Subject to the limit of
compensation and award for compensation must be just and
equitable.
In arriving in the compensation which I intend awarding, I
take the following into account.
a) Failure to follow a fair procedure was a deliberate one.
b) The exercise started three months too early.
c) The union realised at a later stage that the game was lost, that
retrenchments were inevitable.
d) SAB attempted to mitigate the effects of retrenchment and
those attempts were fair and reasonable.
e) A solatium is required for the failure to comply with the agreed
process.
In the result I am of the view that compensation in an
amount equivalent to three and a half months' remuneration
for each applicant properly on record would be fair. I would
have been prepared to order interest to run from the date that
the application was served, but this would run contrary to the
applicant's prayer. Therefore I shall award the applicants no
more than they have asked for. No submissions were made
regarding the costs which were reserved. In the
circumstances they should lie, they should lie where they fell.
In the result:
1. The respondent is ordered to pay compensation in an amount
equivalent to three and a half months' remuneration to each of
the applicants properly on record.
2. Interest is to run at the prescribed rate from the date of
judgment until date of pay.
3. The respondent is to pay the cost of the application excluding
the reserved costs.
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