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J1724/99
IN THE LABOUR COURT OF SOUTH AFRICA
In the matter between :
NUMSA and OTHERS First and Further Applicants
and
DORBYL LIMITED First Respondent
CLIDET 453 (PTY) LIMITED Second Respondent
______________________________________________________________________________
JUDGEMENT
FULTON AJ
1.INTRODUCTION
1.1Thtter concerns the retrenchment of employees who were on a protected strike at the time of their
dismissal.
1.2The first applicant is the National Union of Metalworkers of South Africa (“NUMSA”). The second and
further applicants (“the individual applicants”) are 176 employees who were employed at the first
respondent’s Busaf Letaba facility until its closure in October 1998. It is common cause that 54 of the 176
individual applicants were relocated to the premises of the first respondent’s Rolling Stock Division in
Boksburg, Gauteng (“the relocated employees”), whereas 122 of the individual applicants were retrenched.
There is a dispute about whether or not the relocated employees were retrenched.
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1.3The first respondent in this matter is described as Dorbyl Limited. The first respondent had several
divisions, one of which was the Dorbyl Transport Products (“DTP”) division. The case before me concerns
Busaf Letaba, also referred to as Busaf Northern Province (“Letaba”), which formed part of the Bus or
Busaf division of DTP. The business of Letaba, which was situated near Nkowankowa (formerly Tzaneen)
in the Limpopo Province (formerly the Northern Province), was the assembly of bus bodies.
1.4During the evidence of the first respondent’s second witness, Mr Duff, it came to light that shortly before
this trial the business of Busaf Gauteng, the only remaining bus body assembly plant of the first respondent
at that time, had been sold as a going concern to Clidet 453 (Pty) Ltd. On 11 November 1998 the
applicants brought an application to join Clidet 453 (Pty) Ltd to the proceedings. I granted this application
on 12 November 2003. Clidet 453 (Pty) Ltd is thus the second respondent.
1.5I was handed two bundles of documents. In relation to the first, bundle “A”, the parties agreed in the
pretrial minute that the documents were what they purported to be and could be placed in evidence
without further proof. Save for a few exceptions, the content of these documents was not disputed by the
parties. In particular, the parties were in agreement that, although not verbatim, the minutes of the
consultation meetings contained an accurate summary of what occurred and what was said at the
meetings. In relation to the second bundle, bundle “B”, which contained mostly financial documents, there
was no such agreement.
1.6The first respondent commenced the leading of evidence and presented the testimony of four
witnesses:
1.6.1Mr A Ngubeni, who in 1998 was the human resources director of the DTP division. Mr Ngubeni was
called primarily to testify on the consultation process.
1.6.2Mr R Duff, who in 1998 was the managing director of the DTP division. Mr Duff’s evidence went
chiefly to the operational need to retrench.
1.6.3Mr H Smith, who in 1998 was the general manager of Letaba. Mr Smith gave evidence about the
events at Letaba prior to and at the time of the strike, and about the process whereby employees were
selected for relocation to Gauteng.
1.6.4Mr I Armitage, the general manager of Busaf Gauteng. Mr Armitage gave evidence about the current
situation at Busaf Gauteng.
1.7The applicants called one witness, Mr P Mabitsela, a NUMSA official who conducted the consultation
process on the applicants’ behalf.
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2.THE FACTS
2.1Before I get to the facts of this matter some background on the bus body building industry is necessary.
In the mid 1970’s the bus body building industry was at its highest level. This was a function of apartheid
because the government funded the bus operators who transported people from the homelands to the
cities and vice versa, and thus the bus operators bought buses. This started to change in the early 90’s as
the regime of the time ran out of money and pegged funding. Furthermore, the taxi industry blossomed and
took customers away from the bus industry. Government then decided to restructure the industry and this
led to a paralysis in the industry. An additional problem was that some of the first respondent’s competitors,
such as Durabuild which was a subsidiary of the Bophuthatswana government, were funded by
government. Durabuild, very much a thorn in the side of the first respondent, was in essence a vassal of
state and derived all its income from the state. Then in 1994 when the democratic government was elected
transport devolved to the provinces. This led to the hope that route allocations would be made but at the
time of the hearing of this matter in November 2003 that had still not materialised.
2.2This history is reflected in the business of the first respondent. In the 1980’s the Busaf division of the
first respondent consisted of four bus body manufacturing entities: one in Butterworth which closed in 1982,
one in Pinetown which closed in 1983, one in Port Elizabeth which closed in 1997 and Letaba which as we
know closed in 1998. In 2003 the only remaining entity was the entity in Gauteng which was sold to the
second respondent in mid 2003.
2.3I turn now to the events at Letaba in 1998. Letaba fell within the registered scope of the Motor Industry
Bargaining Council, whereas for the most part the balance of the first respondent’s divisions fell within the
ambit of the National Industrial Council for the Iron Steel Engineering and Metallurgical Industries
(“NICISEMI”). In May 1998 NUMSA and SAMIEA, the employers’ organisation, reached a deadlock in their
annual wage negotiations and on 21 August 1998 NUMSA notified the Motor Industry Bargaining Council
that its members would embark on a strike on 1 September 1998. The employees in that industry, including
the individual applicants, embarked on a national strike on 1 September 1998. It is common cause that the
strike was a protected one and that NUMSA’s demand or one of NUMSA’s demands was that increases be
paid on actuals and not minima.
2.4Mr H Smith, Letaba’s general manager in 1998, testified that when he took up his position in March
1998 Letaba was incurring losses. These losses were communicated to the entire workforce when the
executive came to Letaba for monthly meetings, and also by Mr Smith personally when he interacted with
the shop stewards. During the former, management would talk to the workers and explain the problems. As
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regards the latter, Mr Smith informed the shop stewards of the difficult position in which the company found
itself. He also gave the shop stewards basic business training, for example, how to understand an income
statement and a balance sheet and what one could do when things went wrong. Mr Smith also testified that
he met with NUMSA the day before the strike started. At the time he said he was na ïve enough to believe
that the individual applicants would not support the strike. He gave the shop stewards two messages:
firstly, the individual applicants had no reason to support the industry wide strike because the first
respondent was already paying increases on actuals and not minima and secondly, he said to the shop
stewards that they knew that the business was in a precarious state and that they should not “take the
matter out of [his] hands”. Mr Smith knew that it was on the cards that Letaba could close and he said he
was saying that if the strike went ahead the plant had no future.
2.5On the day the strike started Mr Smith attempted to arrange a meeting with the workers through Mr
Malatjie but was informed by Mr Malatjie that he should communicate any message that he wanted to get
to the workforce through the shop stewards. Mr Smith held a second meeting with Mr Malatjie and the shop
stewards on 3 September 1998. Mr Smith informed the shop stewards that they had no reason to strike
and that the strikers better return to work or they would be putting the business at risk. Mr Malatjie put the
strikers demand to Mr Smith i.e. that Letaba move out of the Motor Industries Bargaining Council to the
NICISEMI or that the first respondent give a 12 – 18 % increase. Mr Smith explained to Mr Malatjie that it
was not possible for the first respondent to unilaterally decide to move to the NICISEMI.
2.6Mr Smith’s evidence on these communications with the workforce and the shop stewards was not
seriously challenged and in any event Mr Malatjie, the chief shop steward, was not called to rebut it. I
therefore accept that at the time of the commencement of the strike in early September 1998 the Letaba
shop stewards knew of the losses Letaba had incurred and the difficult position in which the facility found
itself.
2.7On 4 September 1998 Mr Smith drafted a memorandum to all striking employees. The memorandum
confirmed that management and NUMSA had met on 3 September 1998 and had discussed the union’s
demands i.e. that Busaf Letaba move out of the Motor Industry to the Metal Industry or grant an increase of
12 to 18%. The memorandum then set out why the first respondent could not do this. The last sentence of
the memorandum was: “We therefore appeal to all striking employees to return to work before too much
damage is done in terms of our delivery commitments and production targets.” Mr Smith testified that he
handed this memorandum to a few key people in the hope that the message would reach the striking
employees.
2.8The August 1998 report of Mr Smith, which was seemingly completed in September 1998, contains the
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following important comments:
2.8.1Letaba was contemplating employing an additional 25 shortterm employees from October 1998.
2.8.2The September strike would have a severe impact on the month’s forecast and management hoped
to negotiate a favourable recovery plan.
2.8.3The workforce believed that they were grossly underpaid relative to workers in similar industries
located in Johannesburg and Mr Smith anticipated that this disparity was likely to lead to similar problems
in the future. However, if Letaba were to pay the higher wages it would be at a competitive disadvantage.
Mr Smith posed two possible solutions: close the wage gap and simultaneously address the “aggressive
element” in the workforce or relocate to Gauteng.
2.8.4Letaba was experiencing a low order intake which could only be expected to improve when
government’s new transport system was implemented.
2.9On 18 September 1998 the first respondent put an offer to NUMSA. The key aspects of that offer for the
purposes of this case were as follows:
2.9.1The first respondent offered to close the gap between “current actual rates of pay” in the Motor
Industry and equivalent Metal Industry grades on a quarterly basis over a period of 3 years.
2.9.2The parties would negotiate at plant level in respect of a recovery plan which would include working
on Public Holidays and Saturdays at normal rates.
2.9.3Unless a written response to the offer was received before 12h00 on Monday, 21 September 1998,
the offer would lapse.
2.10On 22 September 1998 Mr Smith informed NUMSA in writing that as the strike action had crippled
production “to a point where it has now become critical to make alternative arrangements to prevent the
Company from loosing [sic] firm orders” , Letaba had no other option but to employ temporary labour as
soon as practically possible. Mr Smith also informed NUMSA that Letaba had decided to implement a
lockout in response to the strike action and that the lockout was effective as from 22 September 1998.
Lastly, Mr Smith informed NUMSA that in the event that the striking employees decided to return to work
they were required to give 2 days’ notice before they would be allowed to return to work.
2.11At approximately 07h40 on 23 September 1998 Letaba attempted to engage casual labour but were
unsuccessful because of the hostility of the striking employees. Most of the striking employees were armed
with sticks with which they assaulted the casual labourers. The striking workers also refused permission for
the casual labourers to gain entry to the premises.
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2.12Also on 23 September 1998, NUMSA wrote to Mr Smith requesting that the first respondent forward
its 18 September 1998 offer to the NUMSA head office and requesting certain information, including a list
of employees. The second last paragraph of this letter stated “We will appreciate it if the above information
can reach our offices within 7 days from date hereof so that we can be able to seriously [sic] consider your
offer.”
2.13In addition, on 23 September 1998, Mr Smith notified NUMSA in writing of Letaba’s intention to start
consultations in relation to a possible closure and that the first meeting in this regard would take place on 1
October 1998.
2.14On 25 September 1998 Letaba instituted an urgent application to interdict the actions of the striking
employees in relation to the casual labourers. On 28 September 1998 this court issued a rule nisi
restraining the striking employees from the conduct complained of.
2.15Also on 25 September 1998 management provided NUMSA with the list of employees which NUMSA
had requested in order to consider management’s 18 September 1998 offer.
2.16On 29 September 1998 the directors of Dorbyl Transport Products held a meeting. The minutes of this
meeting contained, in my view, certain critical recordals:
2.16.1Under the heading “Forecast” the minutes reflect the following:
“Bus Division did not table a revised forecast as a result of the decision to relocate the plant to the RSD
premises.” It was common cause that at this time the Bus or Busaf division consisted of Letaba only.
2.16.2At paragraph 3.2 under the heading “Busaf Letaba” the minutes reflect the following:
“The current position at Letaba was discussed in depth and preliminary indications were that a loss of
R900k would be incurred at PBT level. It was noted that NUMSA had not responded to Dorbyl’s offer in
respect of improving labour rates to the Metal Industries levels over a period of three years.”
Options for Dorbyl were:
Options for Dorbyl were:
i) Continuation with higher labour rates and an intransigent
workforce.
ii) Complete closure.
iii) Closure and relocation to Gauteng.
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After discussion, the Executive unanimously agreed to proceed with Union Consultations regarding Option
3.
Messrs Duff, Smith and Ngubeni were especially mandated by the meeting to proceed as expeditiously as
possible to minimise disruption to Busaf customers.
A more detailed financial study is to be conducted on an urgent basis concerning the proposed relocation
of Busaf Letaba, to the RSD premises. A draft proposal will be tabled at the Dorbyl Exco meeting on 7
October. Lockout action is to be instituted in the interim while the strike is still in progress.”
PBT stands for profit before tax. As stated above the RSD premises were the premises of another division
of the first respondent [where no buses were assembled] in Boksburg, Gauteng.
2.16.3At paragraph 4.4 under the heading “Union Related Issues” the minutes reflect:
The Chairman expressed his belief that the union had targeted Dorbyl during the strike action and no
latitude was to be extended to Numsa under any circumstances.”
2.16.4At paragraph 4.5 under the heading “Durabuild” the minutes reflect:
“Media coverage is to be sought on the Durabuild issue relative to the closure of the Letaba and PE
plants.”
2.17On 30 September 1998 NUMSA wrote to Mr Ngubeni. NUMSA informed Mr Ngubeni that in principle
its members accepted the respondent’s offer and were willing to go back to work as soon as possible, but
that a written agreement should be concluded and that it did not accept a recovery plan on the basis
proposed by the respondent. On the same day Mr Ngubeni wrote back to NUMSA and informed it that the
first respondent would respond to NUMSA’s letter at the consultation meeting on 1 October 1998.
2.18On 1 October 1998 at 11h00 the first consultation meeting took place. Management was represented
by, inter alia , Mr Ngubeni (“AN”), Mr Smith (“HS”), Mr Duff (“RD”) and Mr Flint (“MF”), an executive director
of DTP. NUMSA was represented by Mr Mabitsela (“PJ”), Mr Malatjie (“RM”) and the balance of the shop
stewards. Also present were staff representatives, i.e representatives of non unionised staff, including Mr V
Nomvela (“VN”) and a SANCO representative, Mr Mabuza (“EMA”).
2.19As many of the issues in this case revolve around what occurred at the 1 October 1998 meeting I set
out below some of the material portions of the minute:
“AN = Without wasting any time then, I would like to ask Mr Rob Duff to give us the background which led
to the Company’s intention to start the Consultations on possible closure of the Busaf Northern Province
(Letaba) facility.
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RD = To start with, I can simply say the company has been losing a lot of money for the past five years.
In order to give you some indication we have been incurring pre tax losses for this financial year as
follows :
April = R360 000
May = R267 000
June = R589 000
July = R111 000
August = R104 000
September = R950 000 (Estimate)
All in all, we have lost about R2,4 million in six (6) months. Given that, it is clear that there is no business
sense to continue operating in Letaba. No shareholder would like to invest in such a company. The
decision to close is purely an economic decision .
PJ = Can you substantiate your claim/statement of losses incurred?
RD = Yes, you can have an abridged copy of the financial statements now.
NB At this stage Mr H O B Smith volunteered to make a copy, which was given to the Union. (See
attached copy).
PJ = When do you intend to close down the facility?
AN = As soon as possible. Look, there is no production currently take place. We may start removing
some equipment immediately.”
Management were asked whether the closure was as a result of the strike.
“EMA= Is the closure related to the current strike?
AN = Not necessarily so. The company has been incurring major losses as from April 1998. The
September NUMSA strike only aggravated the situation. The company has reached a stage of no hope for
better things to come in the near future.”
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Mr Malatjie accepted that the first respondent had incurred losses and commented as follows:
“RM = We do understand that you made losses for the past six (6) months. Let us not talk any further.
There is no use.”
The minute reflects that NUMSA wanted to know when Letaba was closing:
“PJ = Is the September strike the main reason for closure?
AN = No. As stated earlier it only made things worse. Can we adjourn the meeting now, and agree on the
date of our next meeting?
PJ = What are we going to tell our members out there. Should we tell them that the company is closing?
AN = We made it clear that our intention is to start the Consultation process for a possible closure. No
final decision has been taken yet. It sounds as if you want to push us to make a final decision today.
VN = I don’t want to see the company closing down. The company’s offer of the 17/9/98 was reasonable.
AN = That was rejected by NUMSA. They only conditionally accepted it yesterday and that was too late
as the offer is not on the table any more.
PJ = NUMSA has got structures. I did write to you, Mr Ngubeni and Henry Smith, regarding our position
concerning the offer. It was difficult for me to respond in time. This is not an individuals issue [sic]. Right
now, our position is we want to go back to work. You better tell us now when are you closing.
EM = I would like to plead with NUMSA to give Busaf enough time to decide on the exact date of closure.
Giving such a decision today will be too soon.
PJ = What should I tell our members after this meeting then? Regarding the issue of working on
Saturdays, Sundays and holidays at normal rates of pay, we say that is totally unacceptable. Our members
are not slaves, we have an agreement here that our members will work only ten (10) hours overtime per
week.
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NB At this point in time, it was clear that the company was under pressure to come up with the
exact date of closure and the way forward. Realising this the Chairperson asked for a caucus. Both
parties then caucused for about 30 minutes.
PROCEEDINGS RESUME:
AN = We were asked to come up with a decision as to when to close down the company. In making that
decision, we have considered everything which was said previously and we are of the opinion that nothing
will change the current market forces of this industry. Even the Premier of Northern Province will not
change that overnight. Our final decision thus is to close down the factory as soon as practically possible.
In order to minimise the impact of the closure, certain skills will be identified and specific individuals offered
jobs somewhere else in a smaller operation (possibly in Gauteng Province).”
2.20Near the end of the meeting Mr Smith states that he will discuss the identification of the skills needed
at the new site with the foremen the next day.
2.21On 2 October 1998 Mr Mabitsela wrote to Mr Ngubeni. In the letter Mr Mabitsela records that the
company had given NUMSA notice of its intention to close down BUSAF Letaba and of its intention of
relocating to Gauteng to a smaller operation. He goes on to request from management the resolution of the
board of directors on closure and all relevant information pertaining to closure and the reasons for closure.
In the last paragraph Mr Mabitsela states:
“You have undertaken to provide us with the above requested information, the date of the intended closure
and your proposal on the severance package before the end of Friday 2 October 1998.”
2.22On 2 October 1998 NUMSA were telefaxed a copy of the minutes of the meeting of 1 October 1998,
the abridged financial statement given to them during the meeting of 1 October 1998 and a letter from Mr
Ngubeni. The material aspects of this letter were:
Ngubeni. The material aspects of this letter were:
2.22.1NUMSA was informed that Letaba would be closed on 5 October 1998.
2.22.2The reasons for closure were economic “such as lack of orders which has resulted in continuous
losses which can no longer be sustained.”
2.22.3The proposed method for selecting retrenchees was retention of skills.
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2.23The next consultation meeting took place on 5 October 1998. On the same day NUMSA and SAMIEA
settled the national wage dispute in terms of a collective agreement which was signed and which provided
for the cessation of the strike. Also on that day Mr Duff prepared a memorandum on Busaf Letaba for the
Dorbyl executive committee meeting on 7 October 1998. This telling memorandum reads as follows [the
emphasis is mine]:
“TO: DORBYL EXCO DATE : 5 OCTOBER 1998
FOR YOUR CONSIDERATION AND DISCUSSION ON WEDNESDAY, 7 OCTOBER 1998
BUSAF LETABA
Purpose
The purpose of this memorandum is to inform Exco of the latest position at Busaf Letaba and the consequences of
the decision taken at the DTP Board Meeting last week to close the operation and relocate on a scaled down
basis to RSD’s premises in Boksburg East . A fully motivated submission, including future prospects, will be
prepared to the usual standard for the November Meeting.
Background
Established in 1972 the company depended for ± 15 years on various forms of Government Decentralisation
assistance etc. This included an incentive paid for employing the maximum number of people. Since the late 1980’s
these forms of assistance have progressively disappeared and the business must today necessarily compete with a
number of localisation disadvantages which do not affect its competitors.
The major disadvantages at present relate to the following :
i) Extra cost for movement of materials from Gauteng.
ii) Cost of transporting chassis and complete buses from and back to Gauteng.
iii) Difficulty in adequately resourcing the business with capable management.
Until the strike the only competitive advantage was payment of average labour rates ± 10% cheaper than in Gauteng.
Profit History (R000)
The performance of Letaba in the last three financial years can be summarised as follows :
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SALES PBIT PBT
1998 24 757 1 009 817
1997 24 245 1 770 1 606
1996 21 097 1230 1 133
In the current financial year following additional product development costs as a consequence of the P.E.
closure, the PBIT performance can be summarised as follows :
Apr
il
Ma
y
June Jul
y
August September
(Estimate)
(23
9)
(11
3)
(357) 99 143 (644)
Significantly September’s result was directly a consequence of the National Strike by Numsa
and has effectively prevented the company from recording an estimated PBIT of R250k in the month.
Labour
In the 1970’s and up to ±1986 Busaf Letaba’s rates of pay could be described as being very low. Over a period of
time these rates have improved to an average of 25% better than NICMI minimums. The company has continued to
award increases on actuals on an annual basis with the application of the setoff principle. (7% in 7/98). Significantly,
even with the Industry strike now having been settled at between 8 and 10 percent, Letaba’s rates of pay would still
exceed the new Industrial Council’s minimums (before application of the offset.)
Numsa are very active in the North Eastern areas of Northern Province and have effectively campaigned that the
company is paying “slave wages” and exploiting its members. On 1/9/98 a militant Shop Steward and an ambitious
Union organiser effectively took the workforce out on strike under the guise of solidarity with the rest of the motor
industry but in reality based on their demands that Dorbyl cease paying wages below those paid under SEIFSA.
Importantly Numsa did not strike at either Durabuild or TFM, Busaf’s main competitors. There is reason to believe that
Busaf was singled out for being a Dorbyl company and therefore possibly a “soft target” which could be used as a
lever to achieve broader industry wide goals including the elimination for the differential in wage rates between urban
and rural areas.
and rural areas.
Equally significant is that Numsa did not take up an offer by Dorbyl Chapter II Companies dated 18/9/98 to equalise
wages rates with the Metal Industry on a progressive basis 3 years linked to a strike recovery plan.
DTP Meeting – 29 July 1998
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Following detailed analysis of the situation and in view of labour’s intransigent position, DTP Directors reviewed
available options :
i) Continue operating at Letaba with higher labour costs.
ii) Complete closure and withdrawal from the industry.
iii) Closure and relocation/establishment of Busaf Gauteng at RSD.
Broadly speaking Option 1 would render the business more uncompetitive at a time when market forces dictate
further cost reductions. The participation of labour in a suggested recovery plan included in a proposal to Numsa was
rejected outright and in hostile fashion. We cannot contemplate labour playing a role to improve productivity etc given
the current Union inspired attitude. Option 1 is thus completely unviable.
Option 2 would entertain the business closing permanently at a minimum cost of :
i) Fixed asset writeoff R7,5m
ii) Retrenchment costs etc R1.5m
Note :
The property is rented and we are confident of extricating Dorbyl from the lease for less than two months rental
(±R60k).
If Option 2 was to be pursued, additional avoidable interest costs would have to be carried at ERFSA given their
commitment to the Hawk program and the likelihood that alternative body builders could not produce the 80 buses
scheduled in the program in the time presently envisaged.
Option 3 is by far the best solution to the impasse. Advantages for pursuing this route are as follows:
i) Better location to market.
ii) Reduced closure cost in respect of plant writeoff and retrenchment expenses.
iii) Occupation of vacant production bays at RSD which will produce R300k p.a. rental income for Dorbyl.
iv) Utilisation of much of RSD’s infrastructure to substantially reduce the cost base of a separate entity as
presently established in Northern Province. This includes H.R., financial, industrial engineering, plant
maintenance services including the provisions of power and water utilities etc.
maintenance services including the provisions of power and water utilities etc.
v) Elimination of material and chassis and bus/transport cost, R1,5m p.a.)
vi) Continued ability to produce ERFSA and TATA buses in accordance with forward strategic plans.
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Financial Synopsis
It is currently estimated that it will cost R3,6m to close and relocate Busaf Letaba to RSD. This includes
recommissioning, staff relocation and recruitment costs and allows for costs pertaining to lost production of R350k
while the relocation takes place.
For a business generating R40m annual sales total savings of R2,8m p.a. are envisaged. The payback is therefore
conservatively estimated to be between 15 and 20 months.
Summary
After considering the above, DTP Directors unanimously agreed to proceed with Option 3 as expeditiously as
possible. As at Monday, 5 October transfer of chassis and partially complete buses to RSD was under way and
transfer of equipment and stores should be complete by end October. It is intended to quickly produce certain buses
from RSD’s premises with selected personnel who, if possible, will relocate to Gauteng during October. Significantly,
expressions of support have been received from major customers including Interstate Bus Lines, Matstrans and
Mercedes Benz.
It is proposed to update Exco more fully at the November meeting once more clarity is to hand regarding an accurate
estimate of relocation costs and final agreed retrenchment costs etc. Simultaneously, a brief review of the future
business plan for Busaf Gauteng will be presented together with appropriate financial justification. At this stage the
production of some 200 buses with a rationalised product range is anticipated yielding R2,5m PBIT with effect from
financial 1999/2000.”
2.24The key aspects of the consultation meeting of 5 October 1998 are:
2.24.1Selection criteria
• NUMSA proposed LIFO as the criterion to select the employees
to be relocated to Gauteng. Management on the other hand
wanted to select employees on the basis of core skills.
• After a caucus management reported to NUMSA that the criteria
would be a combination of LIFO and retention of skills.
would be a combination of LIFO and retention of skills.
• Management informed NUMSA that Mr Ngubeni and Mr Flint
would “do the selection process” and would inform NUMSA of
the outcome the next day. Management also informed NUMSA
that Mr Malatjie and the shop stewards could do their own
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identification of the necessary core skills and the parties could
then compare their lists the following day to ascertain if there
was any common ground.
• NUMSA requested that it be provided with a list of employees
and that such list should contain the employee’s years of
service, grade, severance package and the relocation
allowance.
2.24.2Employees to be relocated
• NUMSA proposed that a R1000 relocation allowance be paid to
employees relocating to Gauteng, that 5 days’ paid leave be
given to these employees to look for alternative accommodation
in Gauteng and that the relocating employees be paid a
severance package.
• Management agreed to pay a relocation allowance of R1000
and to give these employees 3 days’ paid leave to look for
alternative accommodation, but declined to pay the relocated
employees a severance package.
2.24.3The provision of financial information
• NUMSA complained that it had not been provided with all
relevant information requested. In particular, NUMSA requested
a copy of “the cancelled order”.
• Management responded that it had provided all relevant
financial information to NUMSA and disputed that NUMSA had
requested detailed financial information. It, however, informed
NUMSA that if NUMSA wanted to look at detailed financial
information it could do so the following morning. As regards the
cancelled order management informed NUMSA that the order
had been cancelled telephonically.
2.24.4The end of the strike
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• In view of the end of the strike NUMSA wanted to know why
employees were not back at work.
• Management responded by relying on its letter of 22 September
1998 where it informed NUMSA of its decision to lock
employees out and its 2 day notice requirement in the event that
employees wished to return to work.
• NUMSA informed the meeting that it had handed a letter to
management indicating that its members would be returning to
work on 7 October 1998.
2.24.5The removal of chassis to Gauteng
• NUMSA wanted to know why chassis were being moved to
Gauteng.
• Management explained that “Intimidation is one of the reasons
for us to move the chassis to Gauteng so that production can
continue as we did not know when the strike would end.”
2.25On 5 October 1998 Mr Mabitsela wrote a letter to Mr Ngubeni requiring an undertaking in writing
before close of business on that day that the company would not close down Letaba until such time that
there is proper consultation. The letter did not solicit a response other than that Letaba closed on 5 October
1998.
2.26The next consultation meeting was held on 6 October 1998. In addition to Mr Mabitsela attending this
meeting as NUMSA’s representative, Mr M Motsepe, NUMSA’s regional general secretary, attended the
meeting. Mr Motsepe had not attended the prior consultation meetings. The material aspects of this
meeting are:
2.26.1Selection criteria
• NUMSA was provided with the list of employees it had
requested at the meeting of 5 October 1998. NUMSA asked
management to identify the employees who would be relocated
and Mr Flint read the list and informed NUMSA that about 58
employees would be relocated.
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• NUMSA informed management that the list of employees
identified for relocation was unacceptable as there were signs of
favouritism in it. Management responded that it was prepared to
listen to NUMSA’s representations on the list, that the list was
just a proposal and suggested that Mr Malatjie and Mr Smith get
together to try and compile an agreed list.
2.26.2The provision of financial information
• Mr Motsepe informed management that the financial information
provided to Mr Mabitsela was of no relevance, that Mr Mabitsela
was not financially astute and was thus not mandated to make a
decision “in that regard” and that he wanted detailed financial
information to be sent to NUMSA’s financial consultants. Mr
Motsepe then listed the information he required which was
substantial.
• Management’s response was to explain to Mr Motsepe that
there had already been 2 consultation meetings, that Mr
Mabitsela was given the information he needed, that NUMSA
had pressurised the company to make a decision to close the
facility and that the company could not now be drawn back to
where it was on the first day. It was pointed out to Mr Motsepe
that some of the information he had requested had already been
provided to NUMSA.
• After a caucus management stated that it was more than happy
to provide the necessary and relevant financial information
again, but that their position was that they had in this regard
already met their obligations.
2.26.3The decision to close
• Mr Motsepe asked if the company’s decision to close the facility
and relocate to Gauteng was irreversible.
• Mr Ngubeni responded that he would phrase it differently and
say “having considered all proposals from the various parties to
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the negotiations, a final decision to close the Company was
taken.”
2.26.4Alternatives to closure
• Near the end of the meeting Mr Motsepe informed management
that NUMSA would consider a wage freeze if management
reconsidered the decision to close the facility.
• Management did not respond to this suggestion.
2.27On 7 October 1998 Mr Smith wrote a letter to Mr Mabitsela and Mr Malatjie. Referring to NUMSA’s
letter giving 2 days’ notice of the return to work Mr Smith recorded that at the meeting on 5 October 1998
management had “declared short time” and that as the situation remained unchanged, short time would
remain in place until further notice.
2.28On 7 October 1998 the applicants’ attorneys of record sent a letter to Mr Smith. This letter records
some of the complaints made in this case and, in particular, records that the applicants had referred a
dispute to the CCMA in relation to the company’s failure to provide all relevant information in regard to the
closure of the facility and the retrenchment of NUMSA members.
2.29On 9 October 1998 Mr Ngubeni wrote to Mr Mabitsela. The material parts of this letter are:
2.29.1Mr Ngubeni informs NUMSA that the company had notified NUMSA that the retrenchment date
would be 9 October 1998. He goes on to say that “Severance packages for all hourly paid members were
calculated and handed over to yourselves on 6 October 1998 as requested.”
2.29.2Mr Ngubeni records that the contracts of employment of NUMSA members “have now been
terminated”.
2.29.3Management was available to meet with NUMSA on 12 October 1998 to once again make available
to NUMSA all relevant information requested and to endeavour to reach consensus on the list of
employees to be offered alternative employment in Gauteng.
2.30The bundle of documents contained a document dated 9 October 1998 and which was an example of
a standard retrenchment letter. The letter advised the employee that he/she is retrenched and confirms that
his/her services were terminated on 9 October 1998.
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2.31Mr Motsepe responded to Mr Ngubeni’s letter on the same day. In the letter Mr Motsepe challenges
the company’s request to consult after it had already closed and once again requests the “required
information”.
2.32Also written on 9 October 1998 is a letter to NUMSA from the company’s then attorneys of record who
“without prejudice” and without admitting liability, once again offer to make available all and any relevant
documentation requested.
2.33On 12 October 1998 Mr Motsepe wrote to Mr Ngubeni to inform him that clarification would be sought
at the meeting of 12 October 1998 on the reasons why the company was not offering everyone contracts of
employment at the new premises; whether such contracts were new or whether they were a continuation of
existing contracts; demanding that the selection criterion be LIFO only and asking the company to detail
what relevant information it had disclosed to NUMSA. Mr Motsepe also requested the company to re
consider its decision to close the facility.
2.34The last consultation meeting was held on 12 October 1998. The material aspects of this meeting are:
2.34.1Selection criteria
• At the previous meeting Mr Smith and Mr Malatjie were
requested to go and compile a new list of employees to be
relocated. Mr Smith reported that that was done and 80% of
NUMSA’s proposals were entertained. Mr Malatjie confirmed
that a new list was compiled but that “when the letter came from
our Attorneys” he had said that NUMSA was no longer going to
consider the list.
• The minute records that Mr Smith and Mr Malatjie were then
given time to again go through the list and reach consensus on
the employees to be relocated. Mr Smith testified that this was
an error in the minute as he did not recall any further discussion
with Mr Malatjie other than to explain why Mr Malatjie himself
with Mr Malatjie other than to explain why Mr Malatjie himself
had not been offered a job in Gauteng.
• Mr Flint said that sufficient consensus has been reached on
selection criteria. Mr Smith said that “consultations were done
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and compromises made. There is a lot of common ground. We
differ on 3 names out of a list of 58 names.”
• After a caucus, Mr Ngubeni informs the meeting that “we are all
happy about the list compiled by Henry [Mr Smith] and Rufus [Mr
Malatjie]. That is a list reached through consensus and we
should all accept it. With that now accepted, the Company will
do everything possible to pay severance packages by Friday 16
October 1998. All packages for the hourly paid employees will
be calculated up to last week Friday 9 October 1998.”
2.34.2Provision of information
Mr Ngubeni stated that NUMSA had been provided with “all the information needed” namely, financial
statements, the reasons for closure and the date of closure, the cancelled order, the Dorbyl Limited annual
reports, the name list of employees, the letter from Dorbyl Limited to Mr Alec Erwin, Busaf Letaba’s
workload from 1982 and a preliminary list of employees to be relocated to Gauteng.
2.34.3The decision to relocate
Mr Smith gave the reasons on how the company will reduce costs by being based in Gauteng.
2.34.4NUMSA’s letter of 12 October 1998
Management responded to NUMSA’s letter of 12 October 1998. Management explained that the Gauteng
operation would be smaller and consequently, jobs could not be offered to all employees, that relocated
employees would continue with their contracts of service and would not be paid severance pay and that the
decision to close was final and irreversible.
2.35Mr Smith testified that he, together with Mr Malatjie, met with each of the employees identified to
enquire whether he/she wanted to be relocated. They worked off a list which had columns stating “Will
relocate”, “Will not relocate” and “Reasons”. If the employee wanted to relocate then the employee signed
the “Will relocate” column. If they did not want to relocate they signed the “Will not relocate” column and
management put the reason why they did not want to relocate in the “Reasons” column.
2.36Upon closure of Busaf Letaba the first respondent relocated its operations and 54 of the individual
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applicants to the RSD plant in Boksburg, Gauteng. It was the applicants’ case that the standard
retrenchment letter went to all employees, even the relocated employees. In advancing this contention the
applicants relied on two common cause facts in the pretrial minute to the effect that “the individual
applicants were employed by the [first] respondent …..until their dismissal in October 1998 ”. Mr Franklin,
for the respondent, pointed out to me at the commencement of the hearing that the content of these
paragraphs were misleading and it was the first respondent’s case that the 54 relocated employees
continued in the employ of the first respondent and were not retrenched. Mr Smith testified that the
retrenchment letter was not given to all of the individual applicants. It was only given to those employees
who did not relocate to Gauteng. Mr Smith further testified that the letter was not handed out on 9 October
1998 but was given to employees the following week after the individual interviews with employees who
had been identified to be relocated. It is, in my view, highly improbable that the 54 relocated employees
were retrenched. It seems unlikely to me that the first respondent would have paid severance packages to
employees who would continue to work for it in Gauteng. Furthermore, at the 5 October 1998 consultation
meeting NUMSA requested that relocated employees be paid severance pay and management declined to
do so. There is nothing in the minutes of the consultation meetings of 6 and 12 October 1998 to suggest
that management changed its mind on this issue. In fact the contrary is true. At the 12 October 1998
meeting Mr Ngubeni states: “Relocated employees will continue with their contract of services. No
severance packages will be given to them and hence nothing will discontinue or stop. Even their union
membership will continue.” I consequently find that the 54 relocated employees were not retrenched.
2.37On 2 November 1998, NUMSA referred a dispute to the CCMA in relation to an alleged unfair
retrenchment. This dispute was certified unresolved on 29 March 1999.
3.THE ISSUES
3.1Paragraph 7 of the pretrial minute recorded the issues that I am required to determine. At the
commencement of the hearing Mr Van Der Riet informed the court that the applicants had withdrawn their
allegations in relation to severance pay and therefore I am not required to determine the issue referred to in
paragraph 7.8 of the pretrial minute.
3.2The legal issues to be decided are:
“7.1 Whether or not the retrenchments were fair and in compliance with the requirements of the law and
of fairness and in particular –
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7.2 Whether or not the dismissals were automatically unfair on the ground alleged that the respondent
dismissed the individual applicants for their participation in a protected strike, alternatively for their conduct
in furtherance of a protected strike.
7.3 Whether or not the dismissals were automatically unfair on the ground alleged that the respondent
dismissed the individual applicants for their exercise of their rights in terms of the Act.
7.4 Whether or not the dismissals were for a fair reason based on the respondent’s operational
requirements.
7.5 Whether or not the respondent failed to comply with section 189(1) of the Act, on the ground
alleged that the respondent made a final decision to retrench prior to embarking on, alternatively prior to
completing a process of meaningful consultation with the Union.
7.6 Whether or not the respondent failed to comply with section 189(2)(a) of the Act, on the ground
alleged that the respondent did not attempt, alternatively did not genuinely attempt, to reach consensus
with the Union on appropriate measures to:
7.6.1 avoid the dismissal;
7.6.2 change the timing of the dismissals; or
7.6.3 to mitigate the adverse effects of the dismissals.
7.7 Whether or not the respondent failed to comply with section 189(2)(b) of the Act, on the ground
alleged that the respondent did not attempt, alternatively did not genuinely attempt, to reach consensus
with the Union on the method for selecting the employees to be dismissed.
7.8 Whether or not the respondent failed to comply with section 189(2)(c) of the Act, on the ground
alleged that the respondent did not attempt, alternatively did not genuinely attempt, to reach consensus
with the Union on the severance pay for the individual applicants.
7.9 Whether or not the respondent failed to comply with section 189(3) read with section 189(4) and
section 16 of the Act, on the ground alleged that the respondent failed to disclose relevant information that
would have allowed the Union to engage effectively in consultation and in particular whether or not the
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respondent failed to disclose relevant information relating to:
7.9.1 its financial position;
the alleged loss of major contracts;
the reasons for the proposed dismissals;
the alternatives that the respondent considered before proposing the dismissals and the respondent’s
reasons for rejecting each of those alternatives; and
the possibility of the future reemployment of the individual applicants.
7.10 Whether or not the respondent failed to comply with section 189(6) of the Act, on the ground
alleged that the respondent failed to consider and respond to, alternatively failed adequately to consider
and respond to, the representations made by the Union, and on the further ground alleged that the
respondent failed adequately to state its reasons for disagreeing with the Union’s representations.
7.11 Whether or not the respondent failed to comply with section 189(6) of the Act, on the ground
alleged that the respondent did not select the individual applicants as the employees to be dismissed
according to criteria that had been agreed to by the Union, nor according to criteria that were fair and
objective.”
4.THE LAW
4.1Retrenchment of protected strikers
4.1.1Section 67(4) of the Labour Relations Act 66 of 1995 (“the LRA”) provides that an employer may not
dismiss an employee for participating in a protected strike or for any conduct in contemplation or in
furtherance of a protected strike. Section 67(5), however, provides that section 67(4) does not preclude an
employer from fairly dismissing an employee in accordance with the provisions of Chapter VIII for a reason
related to the employee’s conduct during the strike or for a reason based on the employer’s operational
requirements.
4.1.2Consequently, the critical question in this case is whether the individual applicants were dismissed for
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participating in a protected strike or whether they were dismissed for the operational requirements of the
first respondent. If the reason for the dismissals is the participation in a protected strike, and not the
respondent’s operational requirements, then the dismissals will be automatically unfair [section 187(1)(a) of
the LRA].
4.1.3This was the question that came before the Labour Appeal Court in SA Chemical Workers Union &
Others v Afrox Ltd (1999) 20 ILJ 1718 (LAC) , a decision by which I am bound. There the court, at 1726
[32], held as follows:
“The enquiry into the reason for the dismissal is an objective one, where the employer’s motive for the
dismissal will be merely one of a number of factors to be considered. This issue (the reason for the
dismissal) is essentially one of causation and I can see no reason why the usual twofold approach to
causation, applied in other fields of law, should not be applied here. ….. The first step is to determine
factual causation: was participation or support, of the protected strike a sine qua non (or prerequisite) for
the dismissal? Put another way, would the dismissal have occurred if there was no participation or support
of the strike? If the answer is yes, then the dismissal was not automatically unfair. If the answer is no, that
does not immediately render the dismissal automatically unfair: the next issue is one of legal causation,
namely whether such participation or conduct was the “main” or “dominant” or “proximate”, or “most likely”
cause of the dismissal. There are no hard and fast rules to determine the question of legal causation
(compare S v Mokgethi at 40). I would respectfully venture to suggest that the most practical way of
approaching the issue is to determine what the most probable inference is that may be drawn from the
established facts as a cause of the dismissal, in much the same way as the most probable or most
plausible inference is drawn from circumstantial evidence in civil cases.”
4.1.4As a strike by its very nature results in economic hardship for the employer a further vexing question
in matters such as the one before me is how much economic hardship is an employer required to tolerate
before it is entitled to retrench employees. This question has on several occasions been considered by the
Labour Appeal Court and the Supreme Court of Appeal (then the Apellate Division). The LAC in BAWU v
Prestige Hotel CC t/a Blue Waters Hotel (1993) 14 ILJ 963 (LAC) 937 AC and Cobra Watertech v
NUMSA (1995) 16 ILJ 582 (LAC) 616 F held that dismissal must be the last resort of the employer.
However, in NUMSA v Vettsak Cooperative & Others 1996 (4) SA 577 (A) and in National Union of
Mineworkers v Black Mountain Mineral Development Co (Pty) Ltd 1997 (4) SA 51 (A) the court
accepted a threshold of “the likelihood of substantial economic loss.” In the Afrox matter ( supra) Froneman
DJP said that he thought it better not to adopt either approach but rather to seek a solution from the
provisions of the LRA and its impact on the collective bargaining process itself. At 41 the court stated:
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“The general approach of the LRA is to immunize employees participating in a protected strike from normal
delictual and contractual consequences (s 67(2)). In return an employer is not obliged to remunerate
employees during a protected strike (s 67(3)) and it may employ replacement labour during a protected
strike, except for designated maintenance services and during offensive lockouts (s 76). The outcome, or
resolution, of a strike is thus normally left to the respective positions of power of the opposing parties.
Dismissal only becomes a weapon in exceptional circumstances, when operational requirements dictate its
use (s67(5)). Even in nonstrike dismissals based on operational requirements an employer must seek
appropriate measures to avoid dismissals, minimize their number, change their timing and mitigate their
adverse effects (s 189(2)(a)). These are all indications that dismissal should at least not be the first resort,
even though the LRA does not expressly state that dismissal should only be used as a last resort when
dismissing for operational reasons.”
4.1.5Mr Van Der Riet referred me to the recent LAC decision of Chemical Workers’ Industrial Union v
Algorax (Pty) Ltd 2003 11 BLLR 1081 (LAC) . There the Labour Appeal Court referred to an employer’s
obligation to avoid dismissals for operational requirements and to minimise the number of dismissals and
stated “….the reason for the lawmaker to require all of these things from an employer was to place an
obligation on the employer to only resort to dismissing employees for operational requirements as a
measure of last resort.” The decision therefore appears to conflict with the decision in the Afrox matter.
With respect, I think that the Algorax decision (supra) is somewhat anomalous if one considers that the
Labour Appeal Court in 2003 accepted that there is nothing in the LRA which precludes an employer from
retrenching employees in order to increase its profits [ Fry’s Metals (Pty) Ltd v NUMSA & Others [2003] 2
BLLR 140 (LAC) ]. Mr Van Der Riet did not contend that an employer must be on the brink of insolvency
before it is entitled to retrench employees. He said that he understood the “last resort” requirement in the
Algorax decision to mean that an employer must show that retrenchments were necessary. Be that as it
may, the court in Algorax did not mention, even obliquely, the Afrox decision and therefore in my view
cannot be taken to have overturned that decision.
4.1.6Mr Franklin, relying on the remarks of Froneman DJP in the Afrox LAC decision ( supra), emphasised
that I am not to determine the correctness or otherwise of the decision to close Letaba, but rather to
determine whether the operational reason relied upon by the first respondent was genuine, and not merely
a sham. Mr Van Der Riet, in turn, once again referred me to the Algorax decision ( supra). In that case
Zondo JP stated the position as follows:
“Sometimes it is said that the Court should not be critical of the solution that an employer has decided to
employ in order to resolve a problem in its business because it normally will not have the business
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knowledge or expertise which the employer as a businessperson may have to deal with problems in the
workplace. This is true. However, it is not absolute and should not be taken too far. When either the Labour
Court or this Court is seized with a dispute about the fairness of a dismissal, it has to determine the
fairness of the dismissal objectively. The question whether dismissal was fair or not must be answered by
the Court. The Court must not defer to the employer for the purpose of answering that question. In other
words, it cannot say that the employer thinks it is fair, and therefore, it is or should be fair.”
4.1.7Both Mr Franklin and Mr Van Der Riet were ad idem that this aspect of the Algorax decision affirms
the court’s views in the Afrox decision on proving an operational requirement.
4.2The procedural fairness of a retrenchment
4.2.1In the event that an employer is able to show that the dominant or main reason(s) for the dismissal is
a proper operational requirement that is not the end of the matter. The employer is also required to show
that the retrenchments were procedurally fair. This court and the Labour Appeal Court have on many
occasions emphasised that consultation in the context of a retrenchment exercise means a “joint problem
solving” or a “joint consensus seeking” exercise. If an employer makes a decision to retrench employees
before consultation has been completed it essentially presents employees with a fait accompli and that is
fatal to the procedural fairness of the retrenchments.
4.2.2Counsel for both parties referred me to the decision of Johnson & Johnson v CWIU & Others 1999
20 ILJ 89 (LAC) . In that case the LAC characterised the employer’s obligations under section 189 as
follows:
“The employer must initiate the consultation process when it contemplates dismissals for operational
reasons. It must disclose relevant information to the other consulting party; it must allow the other
consulting party an opportunity during consultation to make representations about any matter on which
they are consulting; it must consider these representations and, if it does not agree with them, it must give
its reasons.” The court went on to say that these obligations “are geared to a specific purpose, namely to
attempt to reach consensus on the subjects listed in Section 189(2). The ultimate purpose of Section 189
is thus to achieve a joint consensus seeking process. In this manner this section implicitly recognises the
employer’s right to dismiss for operational reasons, but then only if a fair process aimed at achieving
consensus has failed.”
4.2.3Mr Franklin referred me to two cases that are relevant to procedural fairness. The first was National
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Education Health & Allied Workers Union & Others v University of Pretoria (2002) 23 ILJ 740 (LC)
and pertained to the requirement that an employer may not make a final decision to retrench before
consulting the representative union. In this matter the court stated that an employer is unlikely to announce
the possibility of retrenchments before it is itself convinced of the need to take that step, for fear of
precipitating unnecessary labour unrest. An employer should not therefore be criticised for its firmly held
views at the time it embarks upon a retrenchment consultation process. Its conduct can only be adjudged
to be unfair if at the commencement of the consultation process it has taken an irreversible decision and
was not open to persuasion otherwise. The second decision was Wanda & Others v Toyota SA
Marketing (a Division of Toyota SA Motors Limited) 2003 (2) BLLR 224 (LAC). In this matter the court
held that it is not good faith consultation to initially adopt a firm standpoint on a consultation topic and then
attempt to alter that stance later in the consultation process, without reason.
4.3Relief
4.3.1As will become apparent I find that the dismissals in this matter were for proper operational
requirements and thus substantively fair. In the circumstances I do not intend to deal with the law
surrounding reinstatement.
4.3.2The amended section 194 of the LRA 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”.
4.3.3In Foulden & Others v House of Trucks (Pty) Ltd (2002) 23 ILJ 259 (LC), Landman J held that the
amended section applies to unfair dismissals that occurred even before 1 August 2002. No argument was
addressed to me that I should depart from that decision and I intend to follow it.
4.3.4I turn now to the law on compensation in instances of procedural unfairness. In Johnson v Johnson
(supra) the court held as follows:
“Even if it is accepted that that compensation means ‘a sum of money for something lost’ the ‘something
lost” under section 194(1) is the employee’s right to a fair hearing or procedure prior to dismissal
……….The compensation for the wrong in failing to give effect to an employee’s right to fair procedure is
not based on patrimonial or actual loss. It is in the nature of a solatium for the loss of the right, and is
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punitive to the extent that an employer (who breached the right) must pay a fixed penalty for causing that
loss. In the normal course a legal wrong done by one person to another deserves some form of redress.
The party who committed the wrong is usually not allowed to benefit from external factors which might
have ameliorated the wrong in some way or another. So too, in this instance. The nature of an employee’s
right to compensation under s194(1) also implies that the discretion not to award that compensation may
be exercised in circumstances where the employer has already provided the employee with substantially
the same kind of redress [always taking into account the provisions of s 194(1)], or where the employer’s
ability and willingness to make that redress is frustrated by the conduct of the employee.”
4.3.5The Labour Appeal Court in Johnson & Johnson (supra) also held at 28:
“The achievement of a joint consensus seeking process may be foiled by either one of the consulting
parties. The employer may obviously frustrate it by not fulfilling its obligations under s 189(1), (3), (5), (6)
and (7). The other consulting party may do it by refusing to take part in any of the stages of the
consultation process, or by deliberately delaying the whole process.”
4.3.6In Johnson & Johnson one of the union’s complaints was that the employer had failed to consult on
severance pay. In this regard the court said:
“The appellant’s [employer’s] proposals on the severance package were put to the union at the meeting of
30 September 1996. The union at no stage queried the reasonableness of the package itself (which had
been negotiated with it in 1994). When the union referred the dispute to the commission for conciliation
mediation and arbitration no mention was made of the alleged failure to consult on severance pay. The
overwhelming inference is that the union’s silence indicated its agreement on the reasonableness of the
appellant’s proposals. Even if this is not the case it is nevertheless clear that the appellant, by putting its
proposals on the table without restricting the union in any way from responding, sought to achieve, from its
side, the purpose of jointly seeking agreement on the issue. It cannot be blamed for the union failing to
comply with its corresponding obligations under s 189(2) and (6) and thereby frustrating that purpose.”
4.3.7In Scribante v Avgold Ltd (2000) 21 ILJ 1864 (LC) Damant AJ, after having reviewed the case law
on compensation, considered the relevant factors to be taken into account in determining whether to award
compensation in the context of a procedurally unfair retrenchment. At 3.15 and 3.16 the court held the
following:
“Having weighed up the authorities, in my view the relevant factors to be taken into account in determining
whether to award compensation or not are the following:
1. whether the employer has already provided the employee with substantially the same kind of redress;
2. whether the employer’s ability and willingness to make that redress is frustrated by the conduct of the
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employee;
3. the degree that the employer deviated from the requirements of a fair procedure;
4. whether the employer secured alternative employment for that employee.
I am satisfied that it is not appropriate to take into account the actual loss sustained by the employee,
whether the employee successfully obtained alternative employment immediately after the dismissal,
whether the employee did or did not mitigate his loss, and the period it would have taken to effect a fair
dismissal. I am also satisfied that the other factors considered in the Brandadd case such as length of
service, prospects of finding alternative employment and the financial position of the employer, are not
relevant factors.”
4.3.8In a later decision Alpha Plant & Services (Pty) Ltd v Simmonds & Others (2001) 22 ILJ 359
(LAC) Goldstein AJA found it unnecessary to deal with the relevance or otherwise of patrimonial loss but
considered it relevant to consider the extent of the employer’s deviation from the requirements of
consultation and assistance laid down by the LRA when deciding whether or not to award compensation.
4.3.9Damant AJ’s reasoning was cited with approval in the minority judgement of Page AJA in HM
Liebowitz (Pty) Ltd t/a The Auto Industrial Centre Group of Companies v Fernandes (2002) 23 ILJ
278 (LAC), although the court did add that the list of relevant factors is not an exhaustive one. Of course
the cases referred to were all decided on the provisions of section 194(1) of the LRA prior to its
amendment in 2002. I should also point out that in the HM Liebowitz case the dismissal was not just
procedurally unfair but also substantively unfair and it was for this reason that Zondo JP disagreed with
Page AJA’s reference to the case law set out above. I mention in passing that in the majority judgement in
the HM Liebowitz case Zondo JP at [15] stated that he was of the view that length of service may be
relevant to a case where the only reason why the dismissal is unfair is that the employer failed to follow a
fair procedure. After reviewing all the case law I, with respect, do not agree. Be that as it may, Zondo JP’s
remarks were obiter as that matter dealt with the compensation to be awarded in circumstances where the
dismissal was both substantively and procedurally unfair.
4.3.10I too do not believe that the list of factors listed as relevant in the Scribante case should be viewed
as being exhaustive. After considering the principle behind the award of compensation in a procedurally
unfair dismissal and the comments of the LAC in Johnson & Johnson as set out above I am satisfied that
a further relevant factor is the extent to which the union failed to comply with its corresponding obligations
under sections 189(2) and (6) of the LRA.
4.3.11The only remaining question then is whether there is cause to depart from the existing case law now
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that section 194(1) has been amended and the distinction between compensation for procedurally and
substantively unfair dismissals has been eliminated. Neither counsel in this matter addressed me on this
issue. I do not believe that there is cause to depart from the body of case law on this issue. In matters
where a dismissal is found to be substantively fair the employee was rightly dismissed and therefore any
loss sustained by the employee cannot be said to have been caused by the dismissal. It is essentially a
question of causation. I therefore believe that the principles enunciated in the long line of cases set out in
the Scribante decision remain good law despite the fact that section 194(1) has been amended.
5.APPLICATION OF THE LAW TO THE FACTS
5.1The reason for the dismissals
5.1.1Would the dismissals have occurred if there was no participation in the strike? On the first
respondent’s own version the strike exacerbated an already precarious financial predicament and was one
of the factors that contributed towards its decision to close Letaba. This is borne out by, inter alia, Mr
Ngubeni’s response at the 1 October 1998 meeting to Mr Mabuza’s question of whether the closure of
Letaba was related to the current strike. Mr Ngubeni responded: “Not necessarily so. The company has
been incurring losses as from April 1998. The September NUMSA strike only aggravated the situation.”
That being the case there is factual causation between the strike and the dismissals. The question then is
what was the “main”, or “dominant”, or “proximate” or “most likely cause” of the dismissals.
5.1.2Mr Van Der Riet submitted that the most probable inference to be drawn from the established facts is
that the reason for the closure and the dismissal of the individual applicants is the fact that NUMSA
members resorted to strike action to achieve their aim of eliminating the wage gap. Mr Franklin, on the
other hand, contended that the employees were dismissed following their participation in a strike, which
had a severe impact on Letaba’s business. That does not mean, submitted Mr Franklin, that the employees
were dismissed because they went on strike. Rather the position is that a preexisting financial
predicament which had threatened the viability of the business prior to the strike, was greatly exacerbated
because of the strike.
5.1.3Mr Van Der Riet contended that the first respondent did not have a proper operational requirement
when it terminated the services of the employees. In making this contention Mr Van Der Riet relied on the
following:
At the time the first respondent
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decided to close Letaba there were
orders of more than R14.6 million
on hand that could have been
executed in Letaba. This was
contrary to what management had
informed NUMSA i.e. that the
closure was for “economic reasons
such as lack of orders”. The new
facility at Boksburg could not and
did not execute these orders
before the next year. Mr Smith
testified that this work would
definitely have been completed
before then had the orders been
executed at Letaba.
• The cost disadvantages of the Letaba plant had been there for
many years. If one compares the period of July 1997 to August
1998 with the period October 1998 onwards, nothing, apart from
the strike, had changed in the economic conditions that affected
Busaf Letaba.
• The first respondent’s witnesses did not offer any explanation
why a reduction in the Letaba workforce would not have offered
savings at least similar to those later obtained in Boksburg.
• To further advance this argument Mr Van Der Riet relied on Mr
Smith’s reference in his August 1998 report to “the aggressive
element in the workforce” and to Mr Duff’s comment in his 5
October 1998 memorandum that the true reason for the strike
was that NUMSA was “very active in the North Eastern areas of
the Northern Province and [had] effectively campaigned that the
company is paying ‘slave wages’ and exploiting its members”
and that “on 1/9/98 a militant Shop Steward and an ambitious
union organiser effectively took the workforce out on strike
under the guise of solidarity with the rest of the motor industry
but in reality based on their demands that Dorbyl cease paying
wages below those paid under SEIFSA.”
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5.1.4I have several difficulties with Mr Van Der Riet’s submission. The first is that it ignores a great deal of
compelling and objective financial data on the decline of the DTP business, but more particularly the
business of Letaba. Secondly, the fact that the first respondent relocated 54 hourly paid employees from
Letaba to Boksburg, including three of the seven shop stewards, runs counter to this argument. Thirdly, for
all intents and purposes Mr Malatjie and Mr Smith agreed on which employees should be relocated to
Gauteng. Mr Smith agreed to all but one employee put forward by NUMSA in reaching that decision. And
lastly, it seems unlikely to me that in late 1997 the first respondent would invest some R6 million in the
Letaba facility only to some 9 or so months later close the facility in order to partly rid itself of a
troublesome workforce.
5.1.5It is clear from the evidence that Letaba and the DTP division were suffering financially on various
fronts and had been for some time prior to the strike. Mr Duff testified that Letaba closed because of an
economic decline, a diminishing market, declining and negative economic returns. Mr Duff stated that
Letaba was not a viable business at the time that a decision was made to close the facility. Duff highlighted
the following:
5.1.5.1Losses
For the FYE March 1999 the Busaf division incurred a PBIT of R2.7 million. In the previous financial year
the division had suffered a loss of R594 000.00. In relation to Letaba a loss of R2.6 million was incurred for
the period April 1998 to November 1998. The PBT loss of the division for the 1999 FYE was R4.8 million,
whereas in the previous financial year the division had suffered a loss of R1.4 million. During the period
April 1998 to November 1998 Letaba incurred a PBT loss of just more than R4 million. In Mr Duff’s view
these were significant losses. For the 1999 financial year the whole of the DTP division incurred a loss of
R22.2 million, whereas in the previous financial year the loss was some R13.4 million.
5.1.5.2Shareholders’ return
The losses resulted in a PBIT to capital employed of –57% i.e. the negative return to shareholders was –
57%. In Mr Duff’s view this was an appalling return. As regards the EVA (“Economic Value Added”) of the
bus division for the 1999 financial year i.e. the type of return a shareholder could expect if it invested in a
similar operation, the figure was R3.1 million for the Busaf division. The EVA for the DTP division for the
1999 financial year was R 30.5 million.
5.1.5.3Cash flow
As regards cash flow, the Busaf division had an adverse cash flow of R7.3 million for the FYE March 1999.
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A part of this was attributable to the closure of Letaba. In the previous year the division had had an adverse
cash flow of R2.3 million. This indicates that there was an increased negative cash flow of some R5 million
and that the division was continuing to absorb shareholders’ funds. As regards Letaba there was an
adverse cash flow for the period April 1998 to November 1998 of R11.3 million.
5.1.5.4Orders
As regards orders received by the Busaf division there was a decline in the level of orders received by
some R18 million i.e. there were R22.7 million orders on hand as at 1 April 1998 for completion during the
1998 financial year, whereas as at 31 March 1999 there were R4.8 million orders on hand for completion
during the next financial year.
5.1.6By reference to the executive committee meeting minutes for the DTP division and the business
reviews that he prepared for those meetings, Mr Duff took the court through the status of the business from
June 1997 to March 1998. Aspects highlighted by Mr Duff were:
• The first respondent constantly monitored and attempted to
reduce operational costs. The measures adopted included
retrenchments.
• Sales fell short of expectation and forecasts.
• Durabuild remained a thorn in the respondent’s side and the first
respondent continually attempted to engage government on the
issue.
• The profitability of the business was dependent on a steady flow
of orders and this was not present.
• The respondent, after the closure of Port Elizabeth,
concentrated its efforts on Letaba: capital was injected, skills
were transferred from Port Elizabeth, technology was improved
to satisfy a broader market and the input of a business
consultant was obtained.
• A substantial order was anticipated, but not forthcoming, from
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Great North Transport.
• The first respondent considered itself to be operating in a
depressed market. This was caused by a number of factors,
including the rise of the taxi industry and the failure by
government to allocate new bus routes in accordance with its
revised transport policy.
5.1.7The poor state of the market led to the closure of Busaf Port Elizabeth in mid1997. Busaf Port
Elizabeth closed for the same reasons as Letaba. At the time, mid1997, the first respondent considered
whether to continue in the bus body building business at all, and if so, at what location. Management
decided to consolidate at Letaba and to concentrate on making Letaba a successful enterprise.
5.1.8Mr Smith testified that when he became the general manager of Letaba in March 1998 he inherited a
budget that was grossly unrealistic at current orders and manning levels. Mr Smith expressed the view that
if the order intake didn’t improve Letaba would make a PBIT loss of R1.8 million. Mr Smith then
implemented cost cutting measures at Letaba including the closure of the drawing office (which had been
retained after closure) in Port Elizabeth, moving employees from indirect positions (positions which did not
involve the building of buses) to direct positions and terminating employees on contract. For the months of
July and August 1998 there was an improvement in the PBIT figures because of the cost cutting measures
that he had implemented, but the plant was still making losses.
5.1.9I turn now to the executive meeting of 29 September 1998. As I am of the view that the first
respondent made the decision to close at this meeting (see below) I believe it is critical to consider what
factors at the time led to that decision. These are the established facts:
factors at the time led to that decision. These are the established facts:
• Letaba had been incurring losses since April 1998 and a
substantial loss of R950 000.00 was anticipated for the month of
September 1998.
• The business had been absorbing unacceptable levels of cash.
• Shareholders were unhappy about the returns they were
receiving on their investment.
• Management had communicated and explained the precarious
state of the business to the shop stewards but the employees
had nevertheless decided to proceed with the strike.
• Management had attempted to employ casual labour to alleviate
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the losses but was unable to do so because the strikers had
prevented this. The actions of the strikers led to the court order
of 28 September 1998.
• The first respondent continued to lose orders to Durabuild who
operated in a way that indicated that it was immune to
competitive forces. Raising this with government had had no
positive outcome.
• The first respondent was operating in a declining market. It had
waited several years for government to finalise its transport
policy but this had not occurred. A large order was expected
from the Northern Province but this had not materialised.
• A sister division (also part of the DTP division), ERF SA, which
assembled chassis had developed a new Hawk chassis. Mr Duff
was enthusiastic about the chassis and 80 chassis were
scheduled for assembly. It did not make sense to outsource the
bus body building to another company. It also did not make
sense to build the bodies in Letaba as the chassis would have to
be driven to Letaba and then, once the bodies had been
assembled, back to Gauteng.
• The first respondent’s offer of 18 September 1998 had lapsed.
NUMSA had not accepted the offer but had indicated that it was
giving the offer its serious consideration. It thus appeared that
management’s compromise of improving wages over three
years was not acceptable to NUMSA or the individual applicants.
• Letaba had several competitive disadvantages: it was not close
to its market; the movement of materials from Gauteng resulted
in additional costs; transporting chassis to and from
Johannesburg carried additional costs and there was difficulty in
adequately resourcing the business with capable management.
Letaba’s competitive advantage lay in the low wages of the
employees.
Letaba’s competitive advantage lay in the low wages of the
employees.
• The first respondent had the opportunity to use vacant bays at
RSD and share costs and infrastructure with RSD.
5.1.10The facts as set out above show that there were indeed several operational requirements that led to
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the dismissals. However, the troubling aspect of the dismissals is the timing thereof. Mr Van Der Riet in
oral argument emphasized that it was from the timing of the dismissals that I was to infer that the dominant
reason for the dismissals was the strike. This submission rested on the following facts:
• The first respondent had been suffering losses for some months
prior to the strike. The distinguishing factor in late
September/early October 1998 was the strike.
• The consultations took place in record time and the dismissals
occurred with undue speed.
• Management did not give any consideration to continuing at
Letaba on a reduced scale.
• Management was adamant that the strikers were not going to
come back to work. When NUMSA gave the required two days’
notice that the strike was over, management informed NUMSA
that shorttime was implemented.
• If the first respondent had permitted the strikers to return to work
the plant could have immediately started working on the orders
at hand and the orders would have been processed sooner at
Letaba than in Boksburg. This was not an option considered by
management.
• The relocation cost the first respondent some R3.6 million.
5.1.11There are, however, three considerations that, after careful analysis, I believe indicate that the
timing of the dismissals should not be decisive. The first is that on Mr Smith’s evidence, which I accept,
NUMSA and the individual applicants were at the time of the commencement of the strike well aware of the
precarious financial state of Letaba’s business. Well knowing this the applicants decided to embark on a
strike and pursued their demand for some 5 weeks thereafter. Secondly, on the facts the first respondent
would have had proper operational requirements to close Letaba prior to the commencement of the strike.
As submitted by Mr Franklin, in the event that I was to find that the timing of the dismissals was decisive I
would be faulting the first respondent for not closing Letaba earlier. Thirdly, it seems to me that the strike
demand was in itself an operational requirement that contributed towards the first respondent’s decision to
close Letaba when it did. When I put to Mr Ngubeni that Letaba had endured its location cost
disadvantages for quite some time and asked him what it was in September 1998 that led the first
respondent to its decision to relocate to Gauteng, he responded that if the first respondent had had to pay
the Metal Industry wages immediately that “would have killed Letaba”. I understood this to mean that if the
first respondent acceded to the strikers’ demand, Letaba would lose its competitive advantage and this
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would have sooner or later have led to the closure of the facility. There was other evidence of this. Mr
Smith in his August 1998 report stated: “ Strike action – Apart from the current strike it now seems likely
that we could experience similar problems in future. The perception of the workforce is that they are
grossly underpaid relative to workers in similar industries located in Johannesburg. If Busaf must pay wage
rates similar to that of our competitors in Johannesburg we will have a competitive disadvantage based on
the cost premium associated with procuring materials from Letaba. Solutions – 1. Resolve the labour
issues based on an agreement on closing the current wage gap, while at the same time addressing the
aggressive element within our workforce. 2. Relocate facilities to the Reef.” The minutes of the 31 August
1998 executive meeting of the DTP division reflect that in relation to Letaba: “Discussions are to take place
between management and employee representatives and shop stewards. The issue relating to the
differential between wages in Letaba and on the Reef, if pursued, could result in the eventual closing of the
plant.” And lastly, Mr Duff in his 5 October 1998 memorandum commented that to continue operating with
higher labour costs at Letaba would render the business uncompetitive at a time when market forces
dictated further cost reductions. I do not believe that one can in the circumstances of this matter equate the
strike demand with the strike. Equally I believe it to be a leap of logic to in this matter find that because the
strike demand was a consideration in the decision to dismiss, that the strikers were dismissed for
participating in a protected strike.
5.1.12Consequently, after careful consideration of the totality of factors contributing to the decision to
close Letaba, I am satisfied for the reasons set out above that it is more probable than not that the
dominant or main reasons for the dismissals were a variety of proper operational requirements and not the
strike itself. I consequently find that the dismissals were substantively fair.
5.2The procedural fairness of the retrenchments
There were three main attacks on the procedural fairness of the dismissals: firstly, the decision to close
was made prior to the commencement of consultations; secondly, the first respondent gave the applicants
inadequate financial information and thirdly, the selection of the relocated employees was unfair. The last
two attacks were, correctly in my view, not pursued by Mr Van Der Riet in argument save to reiterate that
because the decision to close Letaba was made prior to the commencement of consultations that decision
marred all aspects of the dismissal procedure. However, as the latter two attacks are relevant to
compensation I intend to deal with them.
5.2.1The decision to close was made prior to the commencement of consultations
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5.2.1.1The first respondent’s case was that the final decision to close Letaba was made at the 1 October
1998 consultation meeting after NUMSA had pressed it to make that decision and after Mr Duff had sought
the final approval of Mr Cooper during the first adjournment of that meeting. The applicants’ case was that
the decision to close Letaba was made at the 29 September 1998 DTP executive meeting.
5.2.1.2In my view it is overwhelmingly probable that the decision to close Letaba was made at the 29
September 1998 executive meeting. These are the reasons why I am the view that it is highly probable that
the decision to close was made at the 29 September 1998 executive meeting:
• The first respondent’s own documents
directly contradict its version. The
minute of the 29 September 1998
executive meeting refers several times
to the “ decision to close” Letaba and
even requests members of
management to take certain steps
pursuant to that decision. Mr Duff when
he is explaining the commercial
rationale for closure at the 1 October
1998 meeting states: “The decision to
close is purely an economic decision”.
Then there is the memorandum of Mr
Duff of 5 October 1998. This
memorandum written shortly after the
executive meeting and the first
consultation meeting refers directly in
its first paragraph to the
“consequences of the decision taken at
the DTP Board Meeting last week to
close the operation.” The first
respondent contended that as this
memorandum was written after the 1
October 1998 I should not give it much
weight. In the words of Mr Duff there
was too much emphasis placed on the
“semantics of the wording”. I disagree
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as in my view it is likely that the
wording in these contemporaneous
documents reflects what occurred at
the time.
• Shortly after the commencement of the
1 October 1998 meeting Mr Ngubeni is
asked when management intended
closing down the facility and he
responds “as soon as possible……We
may start removing some equipment
immediately” (my emphasis). And
equipment was indeed moved
extremely quickly – on 5 October 1998
Mr Ngubeni informs NUMSA that
chassis had already been moved to
Gauteng. 1 October 1998 was a
Thursday. That means that there was
one working day between the first
consultation meeting and the removal
of the chassis.
• Management’s approach at the 1
October 1998 meeting was not one of
“joint problem solving”. Management
did not say “these are the problems –
how are we going to deal with them.”
Also, when NUMSA asked if the facility
was closing and, if so, when,
management did not say to NUMSA
that it was jumping the gun and that
before that decision could be made a
proper consideration of ways to avoid
dismissal should take place.
• There were indications from NUMSA
after the first adjournment at the 1
October 1998 meeting that it wanted
management to reconsider the
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decision to close. Management’s
response was to inform NUMSA that it
had pushed the first respondent into
making a decision and that that
decision was final.
• At the later consultation meetings
NUMSA requested management to
reconsider its decision to close Letaba.
Management refused to do so.
• Considerable losses had been incurred
by the time the end of September 1998
approached. The first respondent had
been unable to mitigate those losses
by employing temporary labour. In fact,
the notice to commence retrenchment
consultations was given on the very
day that the employment of casual
labourers were prohibited by the
strikers. In the words of Mr Duff there
had to be an attempt to “stem the flow
of blood from the company.”
5.2.1.3I consequently do not believe that when management entered the first consultation meeting it had a
firmly held view and was open to persuasion as was found in the University of Pretoria case ( supra). The
facts simply do not warrant such a conclusion.
5.2.1.4Having said that, I am however of the view that NUMSA’s acceptance of the operational need to
close and, in particular, the losses suffered by Letaba, coupled with its pressing for a date of closure are
relevant to the amount of compensation that should be awarded to the retrenched employees and therefore
should be carefully scrutinized.
5.2.1.5Mr Van Der Riet argued that NUMSA’s questions about when the facility would be closed must be
seen in the context of the fact that the strikers wanted to return to work. On 30 September 1998 NUMSA
informed the first respondent that its members in principle accepted the three year wage increase proposal
and wanted to return to work as soon as possible, but that it required a written agreement to be concluded
and that it did not accept management’s recovery plan proposal. Mr Ngubeni’s response to this letter was
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to inform NUMSA that management would respond to NUMSA’s proposal at the 1 October 1998 meeting. I
therefore accept that NUMSA was expecting a response to its proposal at the 1 October 1998 meeting and
that its members, having evinced a desire to return to work, were waiting for a response to NUMSA’s
proposal.
5.2.1.6Be that as it may, it must have been patently apparent to NUMSA at the 1 October 1998 meeting
that the first respondent was serious about the closure of Letaba. The discussion did not centre around
breaking the deadlock on the parties’ positions visàvis the strike but rather the serious situation in which
Letaba found itself. Also, save for asking management to substantiate the losses alleged to have been
incurred, NUMSA did not seriously challenge the reasons put forward by management for the decision to
close Letaba. This makes sense to me in the light of Mr Smith’s evidence that he had communicated the
precarious state of the business to NUMSA prior to and at the commencement of the strike. The minute
confirms this in two important aspects. Mr Ngubeni at the meeting stated that the performance of Letaba
had been shared with the employees on a consistent and regular basis and this comment was not
challenged by NUMSA. And Mr Malatjie stated: “We do understand that you made losses for the past six
(6) months. Let us not talk any further. There is no use.” Under crossexamination Mr Mabitsela tried to
explain that this comment meant that NUMSA wanted to talk further but I reject that evidence. In addition,
after the commercial rationale has been explained NUMSA was offered the opportunity to adjourn to
another date. Mr Mabitsela under crossexamination accepted that the purpose of the adjournment offered
was to give NUMSA the opportunity to consider the first respondent’s motivation for the closure of Letaba
and to respond to it. NUMSA did not take up this opportunity. It is also clear from the minute of the 1
October 1998 meeting that NUMSA was pressing management to tell it if Letaba was closing and, if so,
when. If NUMSA had been misunderstood in asking these questions as it alleged, then it is strange that it
did not protest Mr Ngubeni’s announcement of a final decision to close after the first adjournment of the 1
October 1998 meeting. Mr Mabitsela’s comment of “I forced you to make a decision because I wanted to
know” at the 5 October 1998 meeting also shows that it is unlikely that NUMSA was misunderstood.
5.2.1.7It seems to me then that whilst the first respondent should be held accountable for its failure to
comply with its obligations in terms of section 189(1) and section 189(2)(a)(i) of the LRA, NUMSA too
should be held accountable for its failure to comply with section 189(2)(a)(i) of the LRA. I consequently find
that the retrenchments were procedurally unfair on the basis that the first respondent made a decision to
close Letaba prior to the first consultation meeting and failed to consult properly on appropriate measures
to avoid dismissals. As stated above, I am of the view that NUMSA’s actions are pertinent to the question
of compensation and I deal with this later.
5.2.2Selection criteria and the provision of information
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5.2.2.1Mr Van Der Riet did not, correctly in my view, pursue these attacks in argument. I say correctly
because the evidence did not warrant pursuing an attack on these grounds.
5.2.2.2Mr Smith’s testimony showed that the first respondent consulted both on selection criteria and on
the people to be selected, that by a process of consultation substantial consensus was reached, and that
the persons identified for relocation were the people who in fact went to Boksburg. Mr Malatjie was not
called to rebut Mr Smith’s evidence and I therefore accept it in its entirety.
5.2.2.3I consequently find that in relation to selection criteria and the actual selection of employees to be
relocated/retrenched, which is of course an issue of substantive fairness, the retrenchments were fair.
5.2.2.4As regards the provision of information I am of the view that the evidence revealed that although
the first respondent could have done better (compare for example Mr Duff’s 5 October 1998 memorandum
with the minute of the 1 October 1998 meeting), it did provide NUMSA with sufficient information to
evaluate its motivation for the closure of Letaba. In reaching this conclusion I have taken into account the
following:
1.1.1The first respondent did communicate the predicament of the
business to its employees and the shop stewards prior to the
commencement of the strike and shortly thereafter.
• On the facts the first respondent gave
NUMSA most of the information
requested and in response to repeated
complaints to provide further
information continually offered to make
available all and any relevant
documentation.
• Mr Motsepe’s request for additional
information came at a time after
NUMSA had accepted the first
respondent’s motivation for closure.
5.2.2.5I consequently find that in this respect the retrenchment was procedurally fair.
6.COMPENSATION
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6.1Having found the dismissals to be substantively fair but procedurally unfair I now deal with whether
compensation should be awarded to the retrenched employees and, if so, how much.
6.2I deal first with the 54 employees relocated to Boksburg. As I have found that these employees were
not retrenched it follows that they are not entitled to any relief.
6.3I deal next with the 122 employees who were retrenched in October 1998. The relevant factors to be
considered as per the Scribante and Alpha Plant cases are the degree that the employer deviated from
the requirements of fair procedure and whether the employer secured alternative employment for the
employee. As there was no offer of settlement in this case the first two factors mentioned by Damant AJ in
the Scribante decision are irrelevant.
6.4Mr Franklin contended that in the event that I made a finding of procedural unfairness on the basis that
the first respondent made a decision to close Letaba prior to consultations then I am obliged to take into
account the actions of NUMSA at the 1 October 1998 meeting. Mr Franklin further contended that these
actions of NUMSA had the effect that the first respondent’s failure “made no difference to the outcome” of
the consultations. I do not believe that this is correct. As set out above the first respondent made the
decision to close prior to it commencing retrenchment consultations and it did not adopt a joint problem
solving approach or a joint consensus seeking approach when it did commence consultations. In particular
the first respondent did not attempt to seek consensus on appropriate measures to avoid dismissals.
During the hearing of this matter the first respondent was heavily criticised by the applicants for not having
considered remaining in Letaba but on a reduced scale. It may be that if the first respondent had
approached the consultations with the correct approach this alternative would have been considered.
6.5I do, however, for the reasons that I have explained above, believe that it is relevant for the purposes of
compensation to consider the extent to which the union failed to comply with its obligations under sections
189(2) and (6) of the LRA. In my view the breach of fair procedure in this matter was serious and I would
have been inclined to award the retrenched employees a significant amount of compensation for the
procedural unfairness of their dismissals had it not been for NUMSA’s own failure to comply with their
corresponding obligations under sections 189(2) and (6) of the LRA.
6.6Mr Van Der Riet contended that the first respondent’s premature decision to close Letaba vitiated the
entire consultation process. I do not agree. The evidence revealed that there was substantial consensus on
the selection criteria and that the parties agreed upon all the employees who should be relocated, save
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one. In addition, the parties did consult on ways to minimise the number of dismissals. I do not believe that
I can take into account the fact that the parties did not in a formal sense consult on measures to change
the timing of the dismissals because of NUMSA’s insistence that management inform it of when the facility
would be closing.
6.7In all the circumstances I consider that it would be just and equitable to award the 122 retrenched
employees compensation equal to two months’ remuneration to be calculated at the remuneration level
that applied to them at the time of their retrenchments.
6.8Neither party addressed me on the question of costs. I therefore do not intend to deviate from the
normal principle that costs should follow the event.
6.9As the business of the first respondent was sold to the second respondent in or about mid 2003 as a
going concern the provisions of section 197 apply and as such I am of the view that my order in this matter
should be made visàvis the second respondent.
7.ORDER
7.1I accordingly make the following order:
7.1.1The 54 employees who were relocated to Gauteng were not retrenched.
7.1.2The retrenchments of the balance of the individual applicants were substantively fair but procedurally
unfair.
7.1.3The second respondent is ordered to pay the balance of the individual applicants two months’
remuneration calculated at the remuneration level that applied to them at the time of their retrenchments in
October 1998.
7.1.4The second respondent is ordered to pay the applicants’ costs.
______________________________
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KA FULTON
Acting Judge of the Labour Court
Appearances:
For the applicants: Adv H Van Der Riet SC instructed by Cheadle Thompson & Haysom Inc
For the respondents: Adv A Franklin SC instructed by Pienaar Swart Nkaiseng Inc
Date of hearing: 3 November 2003
Date of Judgement: 08June 2004
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