IN THE LABOUR COURT OF SOUTH AFRICA
SITTING IN DURBAN
CASE NO
J2249/99
DATE
2003/01/31
In the matter between:
SACCAWU (Applicant)
and
WELKOM HOTEL (Respondent)
JUDGMENT DELIVERED BY
THE HONOURABLE MR ACTING JUSTICE NGCAMU
TRANSCRIBER
SNELLER RECORDINGS (PROPRIETARY) LTD - DURBAN
JUDGMENT
NGCAMU AJ
[1] The dispute before the Court relates to the dismissal of
the applicants for operational reasons.
[2] The applicants contend that SACCAWU was not given an
opportunity to take part in the consultation process.
The core issue in dispute is whether the dismissal was
procedurally fair.
[3] The respondent contends that it was fair and that there
was a fair reason for the dismissal.
[4] The respondent led evidence through its witnesses.
The applicants also gave evidence.
[5] The first witness for the respondent was Mr J Hartman.
He testified that he was a shareholder and the director
of the respondent. The business of the respondent was
the operation of hotels and inns. He stated that since
1998 the hotel occupancy deteriorated as people were
moving out of Welkom. There was a loss in 1998 and it
was decided to take measures to achieve savings.
These included cutting of menus, stop serving lunches
and other steps.
[6] Some of these measures taken did work. The business
was kept going in the hope that business would
improve.
[7] The MBA Consultants were employed to advise on
retrenchment. The MBA addressed a letter to the union
on the 15th April 1999 and suggested that the union
should provide three consecutive dates for
consultation. The union proposed a meeting on 5th
May 1999. The union responded on the 4th May 1999
and requested certain information as set out in the list.
[8] Mr Hartman thought the union wanted to postpone the
discussion on retrenchment. At a meeting held on the
5th May 1999 it was agreed that the list of the affected
members of the union would be submitted. It was
further agreed that the process would be finalised on
the 14th May 1999.
[9] He further testified that although he did not
understand some of the information requested, it was
agreed that financial information required would be
submitted to the auditors. The auditors were informed
to provide the information requested by SACCAWU. He
was of the view that the union did not care about the
business and that the union was delaying.
[10] Under cross-examination, he testified that the two
hotels are operated separately and two financial
statements are drawn. For the purposes of the SARS,
only a combined statement is furnished. At the time of
the consultations what was available was the internal
statements. The audited statements only became
available during August. The internal financial
statements are prepared by the bookkeeper.
[11] He further testified that MBA was requested to assist
with the possible retrenchment and informed them that
the hotel was in financial difficulties.
[12] On 15 April 1999 a decision was taken that there was
no alternative to retrenchment. Seven people were
accordingly retrenched from Welkom Hotel. There were
no further meetings with the union after the 5th May
1999.
[13] The next witness was Mr Meuller, the general manager
of the respondent. He testified that the respondent
had financial problems, and cost-cutting measures
started three years before the retrenchment. He was
involved in the retrenchment process and liaised with
the labour consultants.
[14] The union was advised of the problem. No date was set
by the union for consultation. The union later proposed
a date for the meeting. A day before the proposed
meeting, the union sent a letter requesting certain
information. He did not understand some parts of the
letter. Mr Meuller confirmed that it was agreed that
the list of the affected employees would be sent to the
union and that for further information the union had to
go to the respondents' auditors.
[15] He testified further that a decision to retrench was
made on 19 May 1999. The date of the retrenchment
was set as the 31st May 1999. He described the
current position of the respondent as worse.
[16] Under cross-examination, he stated that a decision to
retrench came from Mr Hartman. He was part of the
decision-making measures to cut costs. These
measures did not give the desired effect. The MBA was
approached to assist. They were given a mandate to
implement a retrenchment process. They did not ask
for financial statements but they had an insight into
the financial position of the respondent. As the figures
showing losses were given to them, the losses were
about R1,25 million.
[17] Mr Hartman set dates for the finalisation of the
process. The MBA was not told what to write in the
letters to the union. He further testified that job
sharing was not discussed with the employees. The
alternatives were, however, considered. Retrenchment
was a last resort.
[18] Mr Meuller, however, conceded that the consultant,
Mr Bronkhorst, accused the union of delaying the
process but added that the union could have come up
with something that could have avoided retrenchment.
He conceded that the respondent did not offer the
union the financial statements but referred the union to
the auditors because they had the financial statements.
He denied that the Welkom Inn was not in financial
difficulties. He conceded that it was not accurate that
the financial problems of Welkom Inn was the reason
for retrenchment. He further conceded that he did not
tell the union that the income statement was available.
He was under the impression that the union wanted all
or nothing.
[19] In answer to a question put by the Court, Mr Meuller
testified that the minutes of the meeting of the 5th May
1999 were prepared by MBA. He had no idea why it
was not recorded that an agreement was reached to
the effect that the union would go to the auditors for
financial statements.
[20] The last witness for the respondent was Mr Bronkhorst.
He testified that he was a consultant with MBA. He was
approached by Mr Hartman to institute a retrenchment
rationale. He was informed of the financial difficulties
of the respondent. He was instructed to proceed with
fair process to deal with the issue. He obtained the
information he required.
[21] He then wrote a letter to the union on the 15th April
1999 to furnish three dates. The employees were told
that the respondent intended to initiate a retrenchment
rationale. A memorandum was sent to the employees
and the union. He explained to Mr Hartman that they
had to try to avoid retrenchment.
[22] The union did not submit the dates. On 24 April 1999
the union proposed 5 May 1999 for the meeting. There
were no proposals by the union nor any request for
documents. He only saw the request for the documents
on the 5th May 1999, that is the date for the meeting.
[23] Mr Bronkhorst further testified that he was the
spokesperson for the respondent. It was agreed that
the names of the affected employees would be given to
the union. He had a direct discussion with Mr Dlephu,
who was acting on behalf of the union. Mr Dlephu was
embarrassed by the request in the letter from the union
as the letter contained information which he himself
did not understand. The atmosphere during the
discussions was fair. An honest attempt to reach
consensus was made.
[24] Consensus was reached that the union had to nominate
auditors to obtain financial statements. There was no
other request from the union except that contained in
the letter of the 4th May 1999. The information
required by the union was not available at the time. He
confirmed that he drafted the minutes and distributed
them to the respondent and the employees.
[25] The respondent complied with the agreement but the
union did not. He further testified that the rationale
for the retrenchment was the losses the respondent
was incurring.
[26] The union did not make any submissions. A decision
had to be taken by the 19th May 1999. The notices
were issued to the affected employees. After the
notices had been issued, he received letters from the
attorneys acting for the union, denying the agreement
to exchange information. When it came to
retrenchment, LIFO was used as a criterion.
[27] Under cross-examination he stated that he had learnt
that the unions were not constructive, they delay
process, there was confrontation. He could not recall
any of the retrenchment involving SACCAWU. He had
no experience with SACCAWU at all. He denied that his
approach to the unions was aggressive. He was aware
that the Welkom Inn had no losses but the two hotels
taken together were making a loss.
[28] He was unable to explain why eight people were
retrenched from the Welkom Inn when it was making a
profit. He testified that at the time the memo was sent
out no decision had been made. There was only one
meeting with the union, SACCAWU.
[29] The applicants called on witness, Mr Colin Dlephu, who
was the union organizer for SACCAWU. He was
involved in the retrenchment process of the
respondent. He had prior consultations with the
respondent but the relationship was not good. The
representatives of the respondent were a problem.
[30] He admitted receiving a notice dealing with the
retrenchment and the rationale. He wrote the letter
proposing the meeting on the 5th May 1999. His letter
was written on the 24th April. At the time he was
committed somewhere. He sent the letter listing
information required by the union but he was not the
author of that letter. The letter was written by the
Deputy President of SACCAWU, who is now deceased.
He attended the meeting on the 5th May 1999,
representing SACCAWU.
[31] The letter listing the required information was
discussed at the meeting on the 5th May. The
respondents' representative found the request
irrelevant. He indicated to the company representative
it was going to be difficult to proceed if the information
is not furnished.
[32] Mr Dlephu conceded that the letter of the 4th May from
SACCAWU contained a request for some information he
also did not know. What was of importance was the
income statement. The company proposed that the
union approach the auditors but his response was that
there were people in the union who were able to deal
with the income statement.
[33] There was no agreement that the auditors had to be
approached. He conceded that the union did not
submit any recommendations as information had not
been received. He denied that the union was delaying
the process, but saw the respondent as the party
delaying.
[34] When answering questions under cross-examination, he
stated that he was a shop steward before he became a
union organizer. He attended workshops. He received
the training through the union. He was trained in
handling cases and negotiations. He also received
training on retrenchments. He denied that he had no
experience in handling retrenchments but was unable
to say how many retrenchment negotiations he had
attended before the present one. He denied that some
of the people the union was acting for were not union
members and stated that he did not think it would have
been possible to take cases of these people.
[35] At this stage I must also indicate that the respondent
did not indicate direct to the Court or to Mr Dlephu
which of the employees were not members of the
union.
[36] Mr Dlephu conceded that the first and second
respondents are separate. He conceded that at the
time he received a notice from the MBA the respondent
envisaged to implement a retrenchment process and
that no finality had been reached. He, however, stated
that he responded late to the letter from MBA because
he had other work to do and he was working alone in
Welkom office. He was, however, unable to say he was
doing anything between the 15th April and 24 April.
[37] He stated that he consulted with the workers and they
told him they did not see any reason for retrenchment.
The workers did not say that the rooms were closed.
They also did not say the menus had been stopped.
When it was put to him that the agreed procedure was
that the union would go to its auditors, he replied that
he told the representatives of the company that it was
unnecessary to incur costs on the auditors.
[38] It was further put to him that he was trying to mislead
the Court in raising this version. He then replied that it
was the first time he had appeared in court. It was
then put to him that it was not suggested to the
respondents' witnesses that they said everything that
was requested was irrelevant. His response was that,
"That is what happened on the 5th May". He denied
that his tardiness resulted in the retrenchment. That
concluded the evidence of the applicants.
[39] The question that remains to be answered is whether
this retrenchment was fair. It has been accepted that
the parties are required to act in good faith during the
consultation. This is so because the process of
consultation that is envisaged in section 189(2)
involves a bilateral process. (See Visser v Sanlam
(2001) 3 BLLR 313 (LAC) at 319 paragraph 24.)
[40] The achievement of a joint consensus-seeking process
maybe foiled by either of the consulting parties. The
employer may obviously frustrate it by not fulfilling its
obligation under section 189(1), (3), (5), (6) and (7).
The other consulting party may do so by refusing to
take part in any of the stages of the consultation
process or by deliberately delaying the whole process.
(See Johnson & Johnson (Pty) Ltd v Chemical Workers
Industrial Union (1999) 20 ILJ 89 LAC, page 96 at
paragraph 28.)
[41] Applying this principle to the present case, the position
is that the respondent, through its consultants, advised
the union of the intention to implement a retrenchment
process. The union was given an opportunity to
suggest three days for the consultation. There was no
immediate response from the union. The explanation
for this is that Mr Dlephu was engaged in other
matters. I have no evidence before me to suggest that
this was not the case.
[42] The letter with a request for information was prepared
by another person, although signed by Mr Dlephu. In
the light of this I accept that Mr Dlephu was busy
during that period within which the union was expected
to respond.
[43] The request for information a day before the intended
meeting may be viewed as a ploy to delay the process
of consultation. The question I have is whether this
was deliberately done for the purpose of delaying the
process.
[44] The proper disclosure of relevant information is
essential for adequate consultation. (See Chothia v
Hall Longmore & Company (Pty) Ltd (1997) 6 BLLR 739
LAC.)
[45] Mr Dlephu conceded that he did not understand some
of the information requested in the letter. It is,
however, not in dispute that some of the information
was relevant. Why was this information not supplied to
the union?
[46] The respondent contends that an agreement was
reached that the union would appoint auditors to
approach the respondents' auditors for this
information. This is denied by the union. The minutes
of the meeting prepared by the respondents' consultant
do not indicate any agreement but a proposal. If there
was an agreement on this, I would have expected it to
be in the minutes, as this is an important issue.
[47] On the other hand, the respondent knew that the
audited financial statements were not available at that
stage, even with the auditors. The statements
prepared by the bookkeeper were available at that
stage but they were not given to the union.
[48] I do not have sufficient evidence to explain why the
available information was not supplied at the meeting.
I cannot accept the suggestion that the union wanted
all or nothing. That is not borne out by the evidence
that has been presented.
[49] I also reject that there was an agreement to have the
information obtained through the auditors. I do so
because the evidence of the applicants is that they
pointed out that they had people who could deal with
the financial statements. The respondent made no
attempts to find out from the union if they had
approached the auditors and why, if they had not. The
respondent had the statements in their possession and
these were not handed over to the union. At that stage
the respondent was aware that the audited financial
statements were only going to be available in August
and this was in May.
[50] I am not satisfied, on the evidence presented, that
there was any deliberate attempt by the union to delay
the process. Instead, I find that the respondent did not
act reasonably in its approach to the consultation
process. If the union frustrates attempts to reach
consensus the employer cannot be blamed.
Consultation must, however, be adequate. (See Langa
& Others v Active Packaging (Pty) Ltd (2001) 1 BLLR 37
LAC.)
[51] There is only one meeting between the respondent and
the union. There has been no suggestion by any of the
parties that another meeting was ever held. In fact, it
has been conceded that only one meeting was held with
SACCAWU. At this meeting the information requested
was not supplied. I accept that there was no follow-up
on the information by both parties. This, however,
does not entitle the employer to proceed without
further consultation.
[52] This brings me to the conclusion that no genuine desire
for proper consultation existed on the part of the
employer. The employer wanted to rush issues in order
to meet the deadline. One meeting which does not
result in any agreement for retrenchment is not
adequate for a proper consultation.
[53] The alternatives considered by the respondent were
not discussed with the union. These had to be
disclosed even if they were likely to be rejected. (See
Kotze v Rebel Discount Liquor Group (Pty) Ltd (2000) 2
BLLR 138 LAC.) Both parties are obliged to debate over
alternatives. (See Fletcher v Elna Sewing Machine
Centres (Pty) Ltd (2000) 3 BLLR 280 LC.)
[54] If, however, the employees decline to formulate
alternatives to retrenchment, the retrenchment will be
fair. It is accepted in the present case that no
alternatives were formulated by the union. This must,
however, be seen in the light of the fact that no
information was furnished to the union in order for
them to prepare their case and present what they
wanted to present to the respondent.
[55] The bilateral process envisaged in section 189 did not
adequately take place and, in my view, this was as a
result of the respondent not furnishing the information
requested.
[56] I have come to the conclusion that the respondent
approached the process with undue haste.
Mr Bronkhorst approached the union with the settled
impression that the unions were not constructive but
confrontational, as a result of his experience with other
unions. SACCAWU in the present case cannot be said to
have been non-constructive or confrontational. This
attitude held by Mr Bronkhorst caused the respondent
to ignore the union's request and to proceed with the
retrenchment without even indicating or inviting the
union to a second meeting.
[57] In my view, it does not matter whether Mr Dlephu had
any prior sufficient experience with regard to the
retrenchment. The test is whether the respondent had
no alternative to the retrenchment. The union did not
decline to formulate the alternatives. The time had not
come for it to do so because the information had not
been furnished.
[58] On the evidence presented, the respondent is to blame
for the failure of the process. The dismissal, therefore,
cannot be fair. It has been accepted that the
respondents are separate entities. I have no doubt
that this is correct. What, however, appears is that
only Welkom Hotel had financial problems and not
Welkom Inn. Welkom Inn was not making any losses
and yet eight employees were retrenched. There has
been no adequate explanation for this retrenchment.
The fact that the two hotels are taken together for the
purposes of the SAR Services does not, in my view,
entitle the respondent to dismiss employees from the
entity which was not experiencing any problems simply
because another entity connected with it was
experiencing financial problems. Such retrenchments,
therefore, cannot be said to be fair.
[59] On the evidence I therefore conclude that the dismissal
of the individual applicants was unfair for the reason
that the process was handled with undue haste. No
sufficient time was given to the union. The union was
not furnished with the information required to conduct
a proper consultation with the respondent and to
formulate the proposals. Only one meeting was held,
which did not yield any fruits. No explanation has been
given why another meeting could not be arranged.
[60] The respondent has failed to demonstrate why
employees from the entity which was making profit
were retrenched. On the whole, I find the respondents
have failed to comply with section 189.
[61] The applicants have requested reinstatement in their
employment on the same condition and terms as those
that governed their employment at the date of
dismissal. As an alterative, they have asked for
compensation equal to twelve months. I have
considered the question of making an order for
reinstatement in the light of the evidence presented.
There was no direct dispute that the Welkom Hotel had
losses. There is also sufficient evidence to show that
the two hotels are sisters and for the purposes of the
SARS they are treated as one. There was evidence by
the respondent as to what was done to save the hotel
from the losses it was incurring. Although this was not
discussed with SACCAWU, I have no reason to reject
that steps were taken by the respondents to save the
business.
[62] The undisputed evidence is that the status of the
respondents is worse than it was at the time of the
retrenchment and for that reason, to reinstate the
applicants will place the respondents in a worse
position. I therefore do not believe that reinstatement
will be proper in the circumstances.
[63] The relief I find suitable and reasonable in the
circumstances is that the applicants be granted
compensation.
[64] The order that I therefore make is the following:
(a) The dismissal of the individual applicants was unfair.
(b) The respondents are ordered to pay the applicants
compensation equal to twelve months based on the
monthly salaries they were each receiving at the time
of the dismissal.
(c) The respondent is ordered to pay the applicants' costs.
LEGAL REPRESENTATION:
FOR APPLICANTS: ADV D G GROBLER,
instructed by Kramer, Weihmann & Joubert.
FOR RESPONDENTS: ADV J BREYTENBACH,
instructed by DBS Attorney.
DATE OF HEARING: 14/8/2002
DATE OF JUDGMENT: 31/01/2003