“NOT REPORTABLE”
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
Case No: JS312/02
In the matter between:
Aviation Union of Southern Africa First Applicant
R F MYBURGH & TWO OTHERS Second to Further Applicants
and
SOUTH AFRICAN AIRWAYS (PTY) LTD Respondent
JUDGMENT
Waglay, J:
1. The first applicant herein is a trade union. The second to fourth applicants who I shall
refer to as the affected employees are members of the first applicant. The applicants
have come to this court seeking an order that the dismissal of the affected employees
was both substantively and procedurally unfair. The relief sought is that of
reinstatement.
2. The affected employees were dismissed with effect from 1 February 2002 on the
grounds of respondent’s operational requirements. The applicants claim the dismissal
to be unfair because of the respondent’s failure to comply with section 189 of the
Labour Relations Act (“Act”) as amended.
3. Briefly, the background to the dismissal is as follows: Sometime towards the end of
September 2001, the Chief Executive Officer (CEO) of the respondent company
made known to all of the respondents staff that for the financial year ending in March
2001, the respondent’s business had made a loss in the region of about R700 million.
In order to stem such loss it proposed that consideration be given to various cost
cutting measures. While vague reasons were given for the losses incurred it was
decided that with immediate effect all external employment would cease and internal
transfers could only take place if motivated and approved by the various executive
vicepresidents. The moratorium covered all employees including casual employees,
fixed term contract employees and temporary employees.
4. A further meeting was then held in October 2001 and at this meeting the CEO
explained the need to restructure the respondent company and to cut costs. One of the
proposals made by the CEO was to reduce management staff between 20 to 30
percent particularly because this layer of staff had increased by about 39 percent
between May 1999 and September 2001.
5. Each section or division within the respondent’s enterprise was headed by an
Executive Vice President (EVP). There EVP’s assisted by the Human Resources
Manager for each section or division were entrusted to design and implement a new
structure within their section or division and identify employees who were excess to
requirement or redundant and to conduct the consultation process as required by
section 189 of the Act.
6. A communiqué was issued to the management staff which included the affected
employees which also detailed a time line to effect the retrenchment this included:
6.1. EVP’s to review structure by 15 October 2001;
6.2. The persons to be affected were to be identified by 24 October 2001;
6.3. A presentation was to be made to the staff on 25 October 2001;
6.4. Consultation with affected employees to take place on 1 November 2001;
6.5. Responses to proposals plus advise as to respondent’s final decision to be given
on 6 November 2001;
6.6. Compulsory severance to be finalised on 14 November 2001;and
6.7. the date of retrenchment would be 30 November 2001.
6.8. Those interested in applying for voluntary severance packages could do so
between 26 October and 14 November 2001.
7. The above communiqu é also set out how the affected employees were to be selected.
It stated that the selection was based on best competency fit or levels of performance
and employment equity. Best competency fit included criteria such as knowledge,
skill and attitude. Levels of performance related to previous years performance
assessment and employment equity meant that at least 50% of the affected grades and
areas should be represented by black employees.
8. The affected employees were the three managers identified as the potential
retrenchees by the EVP of their department. Once they were advised as being the
persons selected for retrenchments, they approached their union, the first applicant,
for assistance. The first applicant immediately sought to be included in the process
but the respondent refused to allow the first applicant to participate in the
retrenchment exercise. The first applicant did however become involved but not
before two court applications were brought by it to be allowed to participate in the
retrenchment process.
9. The second court application took place on 30 November 2001 at this date the
respondent also decided that the intended date for finalising the retrenchment would
be extended to 15 December 2001. After the involvement of the first applicant a
meeting was held on 10 December 2001 this meeting followed various
correspondence including a letter from the respondent advising the first applicant why
the three persons then selected for retrenchment were chosen.
10. At the meeting of 10 December 2001, the respondent again explained the need to
retrench and the first applicant requested to see the past structures and the proposed
structures and the criteria used to identify the affected employees, it also requested
financial information. The respondent then provided information relating to selection
criteria which was what was contained in the communiqu é referred to in paragraph 7
above. The information relating to structure was finally supplied by 21 December
2001. By this time the date for the implementation of the retrenchment (15 December
2001) had passed.
11. Attempts to meet after 21 December 2001 seemed almost impossible. A consultation
meeting did eventually materialised on 23 January 2003. During the first part of this
meeting respondent arranged for the Human Resources Managers of every
department to be present to explain the old and new structure and to answer any and
all questions which the first applicant had.
12. The minutes of the above meeting indicates that the first applicant was satisfied with
the information provided and that the first applicant agreed to revert to the
respondent. This notwithstanding the first applicant by letter stated that further
information was required before the process could be continued. Respondent was
surprised and disappointed by this and a meeting was arranged for 31 January 2002.
Again the respondent was requested to supply their written proposals to finalise the
retrenchment.
13. All the respondent received from the first applicant was a document that can best be
described as a circular letter rather than proposals that sought to deal with the issues
relating to the affected employees. This letter which constituted the proposals is one
which applicant, if it was serious about the consultation process have forwarded to the
respondent before or immediately after the meeting of 10 December 2001 not when
respondent was seeking to finalise the retrenchment.
14. The inference that the respondent drew, having regard to the proposals made by first
applicant was that the applicant was intent on delaying the process and not seriously
engage the respondent in an attempt to constructively deal with the retrenchment.
Despite the inference the respondent prepared a detailed response to the proposals
which was handed to the applicants at the meeting on 31 January 2002. At this
meeting first applicant’s chief negotiator was, and not for the first time, under severe
time constraints and could not be present for over 30 minutes. It was at this meeting
again agreed that the first applicant would revert to the respondent before the end of
that day (31/01/2002). It did do so. The response that he respondent received was
that, it (the fist applicant) was not satisfied with the information provided by the
respondent and as such until the respondent provided documentation to their
satisfaction the process could not continue any further. The response from the first
applicant also added that it was still in the process of studying respondent’s reply to
their proposals ad would react thereto “as soon as possible”.
15. On receipt of the above correspondence from the applicant on 31 January 2002, the
respondent concluded that the applicants were simply seeking to delay the matter and
were not bona fides in their desire to consult. The respondent decided to then
immediately dismiss the affected employees.
16. Based on the above background applicants seek their dismissal to be declared unfair
and the respondent seeks this court to find the dismissals to be fair. The applicant
gave no evidence at the trial. The only evidence was that of the respondent which the
Court must accept unless the evidence is so far fetched and unreasonable that it has to
be rejected.
17. The first issue that respondent was requested to satisfy this Court was that there was a
commercial rationale for the respondent to embark on the reduction of its
management strata. Clearly this was so. The evidence was that the respondent did
incur losses, which amounted to approximately R700 million in the previous financial
year. Although the reasons given for the losses were not altogether cogent, the
respondent was required to address the financial haemorrhage that was occurring and
demonstrated that it was addressing the problem by considering not only personnel
reduction but also other costs saving measures. Its identification of reduction within
the management strata was also justified as it was a strata which had within a year
and a half ballooned by 39% and was therefore seen as an area where over twenty to
thirty percent reduction was a possibility.
18. Having justified the area in which to affect reduction the respondent set down a
timetable and the criteria that it would apply. While the timetable underwent changes
as consultations took place, respondent’s proceeded to select the persons to be
retrenched and communicated its decision to those affected.
19. Although there was some contradiction in the evidence presented as to exactly what
criteria was applied, Van Jaarsveld the EVP who selected the affected employees said
that the criteria he applied was the need for the personnel within the structure, years
of service of the affected employee, and the employment equity plans of the
respondent. The evidence of Van Jaarsveld was also that he took into account the
potential of the personnel when identifying persons to be retrenched. He explained
why one was chosen as opposed to another and his reasoning I am satisfied is not one
which can be said to be such that it was so subjective that it amounts to a failure by
the respondent to apply fair selection criteria in selecting the affected employees.
20. Even though the respondent has satisfied this Court that there was good reason to
embark upon retrenchment exercise and that based on the evidence presented the
selection of the affected employees was not unfair it still needs to satisfy me that it
applied a fair procedure in affecting the dismissal.
21. In respect of the procedure adopted, the respondent had at best failed to enter into
any consultation which sought an agreement between it and either the affected
employees or their union. This in particular in respect of the selection criteria
applicable. While applicants in their cross examination of the respondent’s witnesses
tended to make much of respondent’s failure to explain or provide information related
to the new structure as opposed to the old one or provide some or other information I
am satisfied that whatever information applicants required was furnished and details
relating to the structure was also more than adequately dealt with by having the
meeting between the Human Resources Manager of each department and the first
applicant to explain the structure.
22. Although the information required and requested was provided by the respondent to
the applicants there was neither a preparedness nor an invitation by the respondent to
allow first applicant to review the process it had adopted. While I find that there was
a rationale for its action and that the selection criteria was fair respondent was
nonetheless required to consult with the applicants on these issues but refused to do
so. Furthermore while the first applicant appeared merely to meet with the respondent
whenever it found time to do so, the respondent displayed no urgency in its desire to
deal with this matter. Meetings were held, as much as 3 to 4 weeks apart, neither
party seemed to put the other on terms. The consultation meetings were no more than
a getting together to say things that are expected to be said.
23. Applicant’s failure to show urgency is understandable, its delayed reactions sought to
take advantage of a respondent who simply sought acquiescence rather that a debate
and discussion. Finally when the respondent formed the view that applicants were not
serious in their dealings with the respondent but were seeking to delay the process it
simply went ahead and dismissed the employee when by exercise of some judgment it
could have but applicant to terms in respect of time limits.
24. The one question that arises is, does the failure to properly consult not amount to the
dismissal also being substantively unfair. In dismissals based on operational
requirements this is always a possibility but in this matter the uncontradicted evidence
was that the affected employees could not be occupied elsewhere within the
respondents operation and in such circumstances the Court must accept that the
dismissals though procedurally unfair were substantively unfair.
25. Having found the dismissal to be procedurally unfair the only relief I can consider is
that of compensation. The amount of compensation can however not exceed twelve
months.
26. This is not a matter in which twelve month’s compensation is fair. This is however
also not a matter in which this court can say that had the respondent put applicants to
term that the matter would have been finalised in another month and thus grant each
of the affected employees a months salary as compensation. For reasons stated earlier,
I do not think that respondent even seriously contemplated entering into proper
consultation with the applicant and having regard to the little information I have
about the affected employees I believe the appropriate amount that each should
receive is the amount they would have received had they remained in respondents
employ for a further period of 4 months.
27. In the event of there being a dispute as to the amount payable the applicants may
petition this Court for the determination thereof, however in calculating the
compensation it is specifically ordered that allowances paid to run a project or for
acting in a position which was over and above the salaries payable must not be taken
into account in calculating the compensation.
28. Finally with regard to costs I see no reason, both in law and equity, for costs not to
follow the result.
29. In the result I make the following order
29.1. The dismissals of the second to further applicants was unfair.
29.2. The respondent must compensate the said applicants for their unfair
dismissal in the sum equal to the amount they would have earned had they
remained in respondents employ for a period of four months from the date
of their dismissal.
29.3. Respondent must pay the costs of this application.
_________________
Waglay J
Date of Judgment: 10 October 2003
For the Applicant: Ruth Edmonds Attorneys
For the Respondent: Nicholls Cambanis and Ass.