IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG CASE NO J4223/00
In the matter between
JACOB MODISELLE & LORDWICK MABOTE Applicants
and
RONG SHIN ENTERPRISES (PTY) LTD Respondent
__________________________________________________________________
JUDGMENT
__________________________________________________________________
JAMMY AJ
1. The employment of both of the Applicants in this matter was terminated by the
Respondent on 18 July 2000, purportedly in the context of a retrenchment for
operational reasons. The Applicants contend that their dismissal was both
substantively and procedurally unfair. If indeed they were retrenched, there was no
good reason for this and, in the procedural context, the requirements of fair
procedure as defined in Section 189 of the Labour Relations Act 1995, were in no
respect whatsoever complied with by their employer.
2. Acknowledging the Respondent’s onus to establish the fairness of its dismissal of
the Applicants, Mr K Cronje, representing it, called as his first witness the
Managing Director of the Respondent, Mr W H Peng. Mr Peng gave his evidence
in the Mandarin language, through a sworn interpreter.
3. The Respondent he testified, is a manufacturer of garden furniture, burglar bars etc,
a business which is labour intensive and in 1999/2000, it employed approximately
120 persons, some skilled and some unskilled.
4. By that time, its turnover and profitability had radically decreased as a consequence
of the importation by its competitors of items similar to those which it
manufactured and which were being marketed at prices considerably lower than
those prevailing in his own company and which it was impossible for him to match.
5. The balance sheet as at 29 February 2000, submitted in evidence, was accordingly
prepared by the Respondent’s accountants who, in a letter covering it, emphasised
that it was “compiled for management purposes from information and explanations
submitted to us by the directors. No audit was done”. That analysis, for the record,
indicated an accumulated loss for the financial year 1999 of R1,4 million, and that
for the financial year 2000, of R2,1 million.
6. Faced with accumulating but static stock, the Respondent, Mr Peng said, attempted
to address the situation by reducing its working week from five days to three over a
period of time but although this resulted in a small improvement, it did not solve
the acute financial problems which it was facing and it became apparent to him that
a staff retrenchment was necessary. He personally involved himself in this process,
he testified.
7. In that regard, said Mr Peng, he consulted with the two Applicants, who were
employed as “stock counters”, and requested to know whether they would agree to
his transferring them to the manufacturing department. Both refused however and
indicated that they wished to resign.
8. At that stage, the Respondent sought the assistance of its Labour Relations
consultant, certain Johan Prinsloo, who was instructed to implement the
retrenchment process. Mr Prinsloo proceeded to draft a letter which, dated 14 June
2000, was addressed for the attention of “All Employees”. Headed “Notice of
Intention to Rationalise Operations” the letter recorded “The poor economic
circumstances being experienced in this country at present”, its adverse effect on
the operations of the business, resulting in “certain financial difficulties” and the
necessity to take “certain measures” to address the situation. What was then stated
was the following –
“Various methods to cut costs have already been considered, but the stage
has now been reached where other, more drastic measures have to be
taken, and this means that some employees may be affected. A meeting
will be held with representatives of and/or employees to discuss the
following:
The reason for the rationalisation and to consider possible ways to avoid any
retrenchments.
To discuss criteria for selection of employees to be retrenched, if retrenchments have to
take place.
To discuss a timetable of the potential measures which may have to be taken.
If retrenchments are unavoidable, to discuss what benefits and assistance can be provided
by the Business to the affected employees.
The meeting will be held on 21 June 2000/Time: 10:00 place: Rong Shin Enterprises
(Pty) Ltd”.
9. That letter, said Mr Peng, was distributed by his staff by hand to each individual
employee. A copy was also placed on the notice board.
10. The trade union NUMSA had organised in the company but, to his knowledge, Mr
Peng testified, the two Applicants were not members of that union. Meetings with
employees and union representatives were held following the letter and in the end
result, eleven employees, including the Applicants, were ultimately retrenched.
11. Questioned by Mr M P Mashaba, representing the Applicants, Mr Peng conceded
that the decision to retrench had in fact been made before any process of
consultation was embarked upon. His discussions with the Applicants had been
held prior to the distribution of the letter of 14 June 2000 and no other alternative
than a transfer to another department was discussed with or offered to them. They
decided instead to resign, and, he added, in response to a specific question in that
regard, they had in fact done so. Referred to a letter dated 11 July 2000, also tabled
in these proceedings, and again drafted by Mr Prinsloo, in which each of the
Applicants was purportedly given “Notice of Redundancy” and asked why, if they
had resigned, this was necessary, Mr Peng replied that the department in which they
had been employed no longer existed. He could not however recall the exact date
of their resignation. The letter of 11 July 2000, he concluded, had been written on
the advice on his consultant.
12. The Applicants’ contention that they only received the letter of 11 July on 18 July
2000, the date of their dismissal, was not true, said Mr Peng. Letters were handed
out immediately and in any event they were not dismissed. They had insisted on
resigning themselves.
13. Asked what criteria he had applied in the retrenchments which had been effected,
Mr Peng replied that he did not know labour law, was poor in his knowledge of
Mr Peng replied that he did not know labour law, was poor in his knowledge of
English and relied entirely on his consultant. If the Applicants were to say that they
were dismissed for alleged loitering and playing on a forklift, this was not correct.
It was also not correct that they were dismissed after they had laid complaints about
unilateral reductions in their hourly rates of pay. This was not the case, they were
monthly paid employees.
14. Mr Johan Prinsloo, who described himself as a Labour Relations Practitioner,
testified regarding his assistance to the Respondent in its labour problems. He was
instructed in July 2000 to process a retrenchment, was given the economic reasons
for its necessity in the form of a balance sheet from the Respondent’s accountants
and proceeded to explain the procedure to them.
15. More than 90% of the workforce in the Respondent’s business was represented by
the trade union NUMSA and in consultation with his client, he proceeded to draft
the “Notice of Intention to Rationalise Operations” dated 14 June 2000 which he
handed to the Respondent’s sales manager, Mr Mervyn Pillay for distribution. On
21 June 2000 a meeting was held with the union representatives and shop stewards
at which the retrenchment process was fully discussed, including possible
alternatives to avoid it. Further negotiations and correspondence with the union
ensued but he had no recollection of the two Applicants being involved in any
aspect thereof. Ultimately, some eleven employees were retrenched. As far as he
was concerned, said Mr Prinsloo, all the requisite procedural steps required by
Section 189 of the Labour Relations Act had been followed. He had no knowledge
of the purported resignations of the two Applicants, with whom he had no direct
contact at any time. He was aware that they were stock controllers but was
unaware which of the Respondent’s departments had been declared redundant and
had been closed.
16. The letter of 11 July 2000, the “Notice of Redundancy”, had been drafted and
signed by him following consultation with his clients. The company had given him
a list of names based, he was told, on a LIFO principle, he inserted the names and
instructed that the letters were to be handed to the employees concerned personally.
The Applicants were two of the identified retrenchees and the Respondent was
advised by him of the formula for calculating the severance packages to be paid,
in each case – one week’s pay for each completed year of service plus pro rata
leave pay. On that basis, he concluded, the retrenchments were procedurally fair.
17. Crossexamined by Mr Mashaba, Mr Prinsloo stated that he accepted the financial
information furnished to him as being correct. He had been assured by Mr Pillay
that the notice of redundancy dated 11 July had been distributed to all employees
but he could not comment on the date upon which this had occurred. Asked how he
would deal with non union members, he replied that in the normal course, they
would be consulted individually. He could not say whether this had occurred as far
as the two Applicants were concerned.
18. The final witness to testify for the Respondent was Mr Mervyn Pillay, its sales
manager who, he said, is “involved with employees in labour issues”. Confirming
the financial constraints being experienced by the Respondent at the time, he stated
that he had received the letter of 14 June 2000, advising employees of an intention
to rationalise operations, from Mr Prinsloo but had not distributed it to individual
employees. He had placed it on notice boards on the company’s premises together
with a “disclosure” notice setting out relevant and pertinent information relating to
the proposed retrenchment exercise. He had attended negotiation meetings with the
union representatives and shop stewards but the identification of the persons to be
retrenched was left entirely to management, with no input in that regard either from
the union or otherwise.
19. The letter of 11 July 2000, the formal notice of redundancy, was received by him from Mr
19. The letter of 11 July 2000, the formal notice of redundancy, was received by him from Mr
Prinsloo and, in each case, he personally handed the letter to the employee named therein.
He was not aware of any resignation by either of the Applicants prior to the 14 th June, said
Mr Pillay, but it was correct that Mr Peng had offered them alternative employment in
another department, which they refused. When they were given the redundancy letters,
they requested to be paid out immediately.
20. Asked under crossexamination, in relation to his evidence that he had
placed the initial notice on notice boards, whether all employees could read,
he replied that he was not sure but that the shop stewards could. When it
was put to him that certain employees were not union members and
therefore not represented by shop stewards, he could not dispute this. To
his knowledge however, the First Applicant could read.
21. The Applicants had not been present at the negotiation meeting on 21 June
between management, union representatives and shop stewards but at that
stage it was not yet known who was to be retrenched. He could not recall
any further meeting thereafter however. Ultimately, Mr Pillay conceded,
there had been no direct discussions between management and the two
individual Applicants relating to their retrenchment. The offer of alternative
employment which had been made to them by Mr Peng, was conveyed
after they had received the Notice of Redundancy of 11 July.
22. The company’s version of these events as conveyed in the evidence which I
have reviewed, was emphatically rejected in their testimony by each of the
Applicants. Mr Jacob Modiselle testified that, having been employed by the
company in 1988, he was dismissed on 18 July 2000 as a consequence of
a complaint which he had lodged regarding a unilateral reduction in his pay.
Suggesting in these circumstances that he had not been retrenched, he
explained, after consultation with his representative, that he was not aware
of the difference between dismissal and retrenchment and had been
confused in that context. It did appear, he said, as if the reason for his
dismissal was a purported operational necessity.
23. He had never, before being confronted with it in Court now for the first time,
seen the letter of 14 June 2000 and as far as the Notice of Redundancy of
11 July was concerned, he saw this for the first time on 18 July, the date of
his dismissal. He had never at any time been involved in discussions with
management regarding his purported retrenchment. During the first week
of July he noticed that his pay had been reduced – he was paid for only two
of the five days that he had worked that week. Enquiries made by him
elicited no response and when he attempted, through various sources, to
have the matter rectified, he found that he was “getting nowhere”. He had
refused to sign an agreement to accept reduced pay which had been
submitted to him by Mr Pillay, he said, and was threatened with dismissal
“as with the other ten” if he persisted in that refusal.
24. On 18 July 2000, in accordance with an arrangement to discuss
“redundancy pay in those circumstances”, he attended at the Director’s
office, was told that he “no longer had a job” was referred to the paymaster
who told him that he might have a chance to continue working if he would
“ask for forgiveness” and when he queried this, received his pay, signed a
receipt and left.
25. He has never met Mr Johan Prinsloo, and whilst he had heard about other
retrenchments, had not been involved in that process.
26. Questioned by Mr Cronje, Mr Modiselle stated that he had never been told
the reasons for his retrenchment. As far as he was concerned business in
the store section where he worked remained normal. He had not attended
and knew nothing about a dispute meeting on 21 June 2000. At one stage
Mr Peng, the director, requested him to assist with work in the aluminium
store and he had done so until the end of June, he said. Returning to his
normal post in the first week of July, he was paid for only two days of that
week at a lower rate. His complaints in that regard, he repeated, were
unheeded and when he was eventually called to the director’s office on 18
July at 08h00, Mr Pillay already had a “retrenchment paper”, apparently
from Mr Prinsloo and which he and Mr Mabote, who was with him, were
informed had emanated from the director.
27. The director, Mr Peng, eventually entered the office, sat down, and
speaking in Taiwanese, which was apparently translated for them, informed
them that “we were finished with work and were to go outside”. Mr Pillay
came out and informed them that he was to meet Mr Prinsloo in order to
finalise the amounts to be paid to them and eventually, some time later, and
following the “apology” exchange with the paymaster to which he had
referred, he was paid his money, asked to sign for it and told to go as he
was being retrenched.
28. He had never been offered alternative employment by Mr Peng, he testified.
What he was asked to do was to work temporarily in the aluminium store
but he had returned to his ordinary post towards the end of June. He had
signed a receipt for the amount paid to him because he was asked to do so.
He was told that it was his severance pay but did not understand this. In
any event, he had still not received the short payment which was due to him
but his main concern was that, for no apparent reason, he had lost his job.
29. Finally, said Mr Modiselle, neither he nor Mr Mabote had at any time
resigned or indicated any intention or wish to do so. Mr Peng’s evidence to
the contrary was not true.
30. Mr Modiselle’s evidence was corroborated in all its material respects by the
Second Applicant Mr Lordwick Mabote, both Applicants having manifestly
been dealt with together by the Respondent. He too, he said, had been
short paid for the first week in July and when he had attempted to complain
about that fact, Mr Pillay “gave me a document and told me I was finished
working for the company”. This had occurred on 18 July 2000 and the
document which he as given was the “Notice of Redundancy” dated 11 July
2000. He did not read it, he said, and it was not explained to him. When he
went into the pay office, he was told “not to worry about it, to go away and
come back later to fetch his money”. He duly did so later that day.
31. Management had never at any stage discussed his retrenchment with him,
he said. He had not been consulted by Mr Peng the director and had never
been offered an alternative position in the company. It was only now, in
Court, that he had seen, for the first time, the letter dated 14 June 2000, the
“Notice of Intention to Rationalise Operations”. There is no notice board on
the company’s premises and if there had been one and the letter had been
displayed, he would have “recognised it”.
32. Mr Peng, although not fluent, can speak English and make himself
understood in that language but at no stage prior to his dismissal, had either
he or anyone else on behalf of the company, conveyed any reason for it to
him or consulted with him in any other respect. As far as he was
concerned, said Mr Mabote, there were no apparent changes in the
production levels in the company during June and July.
33. Although he was not happy with the money that he was receiving, he had
nevertheless signed a receipt therefor on 18 July because he was
requested to do so. He was not a member of the trade union and was not
involved and knew nothing about the negotiations between the company
and NUMSA regarding retrenchments.
Conclusion
34. What emerges clearly from the conspectus of this evidence is that whilst Mr Prinsloo, in his
capacity as the labour relations consultant to the company, was directly involved in the
retrenchment exercise implemented by it in the context of having prepared the initial notice
of 14 June, having represented it in its negotiations with the shop stewards and the trade
union and having drafted and signed the final Notice of Redundancy issued to retrenchees,
he was not, by his own admission, a participant at any time or on any basis in consultations
or discussions with the two individual Applicants who, it is not disputed, were not members
of the trade union.
35. Mr Peng’s evidence in that regard is so vague and unsatisfactory as to raise
serious doubts as to its credibility. His knowledge of and fluency in English
is manifestly limited and his contention that, prior to the issue of the notice
of 14 June, he had meaningful discussions with the Applicants, allegedly
apprising them clearly of the problems which the company was facing and
offering them other positions in the company as an alternative to their
retrenchment, is, in my view, improbable in the extreme. This conclusion is
fortified by his adamant evidence that the two Applicants had insisted, at
that stage, on resigning – an allegation strenuously denied by them and of
which no one else, including Mr Pillay, the sales manager directly involved
in the process, or Mr Prinsloo, had any knowledge. It is inconceivable that
had this in fact occurred, this would not have been conveyed by Mr Peng to
his management, colleagues and staff. The unacceptability of that
contention is endorsed by his inability to his explain why, if they had
resigned, the Applicants had in fact continued working until the 18 July.
36. Mr Pillay’s evidence, apart from his acknowledgement that the notice of
14 June had not been distributed directly to employees, is of no assistance.
There was nothing in his testimony which directly controverts the version of
events submitted by the two Applicants in their evidence, other than his
bland statement that, as far as he was concerned, proper procedures had
been followed.
37. The Applicants, for their part, clearly unschooled in the niceties of Labour Relations and the
statutory requirements governing fair retrenchment, presented their evidence confidently
and unambiguously. Aggrieved by an undisputed unilateral reduction in their pay for the
first week of July, their attempts at obtaining an explanation from management not only
proved futile but emerged from the evidence as a convenient avenue for management to
process a purported retrenchment which, to all intents and purposes, could not otherwise
have been justified. Manifestly, no semblance of prior consultation with them occurred.
The criteria for their selection, the timing of their retrenchment and the calculation of their
severance packages was never discussed with them. The whole exercise was presented
to them on 18 July 2000 as a fait accompli with no opportunity to them to query it. When
explanations were sought by them as to the meaning and consequence of the notices
given to them on 18 July, both of them, independently, testified that they were simply told
by the paymaster “not to worry about it”, but merely to accept their pay, sign for it and
leave.
38. In these circumstances, I am left in no doubt and have no hesitation in
finding, that the retrenchment of each of the two Applicants was devoid of
any semblance of procedural fairness and that, whilst they do not seek
reinstatement in their former employment, they are entitled to the
compensation for which the Labour Relations Act provides in a proper case.
39. The order that I make is accordingly the following –
39.1 The Respondent is ordered to pay to each of the Applicants, Mr Jacob Modiselle
and Mr Lordwick Mabote, as compensation for their unfair dismissal, an amount
equivalent to twelve months remuneration calculated at his rate of remuneration on
the date of his dismissal, 18 July 2000.
the date of his dismissal, 18 July 2000.
39.2 The amounts referred to in 39.1 above are to be paid to each of the
Applicants within thirty days of the date of this order.
39.3 The Respondent is in addition, to pay to the Applicants such costs as
they have incurred in these proceedings.
___________________________
B M JAMMY
Acting Judge of the Labour Court
Date of hearing: 14 August 2003
Date of Judgment: 28 August 2003
Representation:
For the Applicants: Mr M P Mashaba: Attorney
For the Respondent: K Cronje