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REPORTABLE
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN Case No: C1008/2001
In the matter between:
FOOD AND ALLIED WORKERS UNION First Applicant
CLINT ABRAHAMS AND 113 OTHERS Further Applicants
and
SOUTH AFRICAN BREWERIES LIMITED Respondent
JUDGMENT DELIVERED ON FRIDAY, 3 SEPTEMBER 2004
Gamble, AJ
INTRODUCTION
1. The Respondent, SOUTH AFRICAN BREWERIES LIMITED (hereinafter
“the company”) has for many decades dominated the local beer market. It
currently controls approximately 98% of that market and through a process
of international corporate acquisition to be discussed below, is now the
second largest brewer in the world. One of the company’s best known local
brands is marketed under the adage “The taste that stood the test of time”.
This judgment will examine whether the company’s human resources and
employment practices measure up to the same standards.
2. The First Applicant (hereinafter “the union”) is a trade union duly registered
in accordance with the Labour Relations Act, 66 of 1995 (“the LRA”) and
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represents workers employed in the food, beverage and hospitality industry.
For more than a decade it has had an ongoing relationship with the
company, representing the rights of its members in regard to a myriad of
labour relations issues. The relationship between the union and the
company is, of course, governed at various levels by the LRA.
3. In mid2001 the 2 nd to 113 th applicants (hereinafter “the individual
applicants”) were all employed in various blue collar positions at the
company’s Newlands brewery in Cape Town. The individual applicants
were retrenched by the company (some at the end of May 2001 and the
rest at the end of August 2001) for reasons which the company claims were
legally justified. The union contends that the dismissal of the individual
applicants was unfair, both substantively and procedurally, and it claims
appropriate relief consequential upon a finding by the Court in its favour.
4. The hearing of this matter lasted some 23 days with the bulk of the
evidence being presented by the company in pursuance of its attempt to
discharge the onus which it attracted in terms of section 192 of the LRA.
The union and the individual applicants were represented by Advocates
COLIN KAHANOVITZ and MICHELLE NORTON while the company was
represented by Advocates JEREMY GAUNTLETT SC and LIESL
FICHARDT. The Court is indebted to both sets of counsel and their
respective attorneys for the thorough manner in which the case was
presented, particularly in respect of the documentary evidence. The very
detailed heads of argument filed by the parties have greatly facilitated the
writing of this judgment.
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5. The relevant facts of the case, and the legal conclusions to be drawn
therefrom, are unusual, and in many ways, unique. On certain of the crucial
issues there is a paucity of precedent. Given the broad nature of the issues
debated between the parties at the end of the case, a fairly comprehensive
exposition of the material facts is unavoidable. Fortunately these are largely
common cause and have been extensively detailed in the heads of
argument. The necessity to resort, in this judgment, to the use of much of
the corporate jargon which permeated the hearing is unavoidable.
THE MATERIAL FACTS
Corporate Structure :
6. The company now operates numerous breweries throughout the world:
from America, through Europe and Africa to the Far East. Its South African
operation has breweries in all the major commercial centres. Included in
this number are the following breweries which were referred to during the
evidence given in this case: Pietersburg, Alrode (in Gauteng), Rosslyn
(near Pretoria), Prospecton (in Durban), Port Elizabeth and Newlands in the
Western Cape.
7. The company’s organisational structure is such that each brewery has a
general manager who assumes overall responsibility for the operational
side of the facility, and who is given wide powers in relation to issues
affecting his/her particular brewery. The company’s main board of directors
apparently met on a sixweekly basis during the years relevant to this case,
while the day to day running of the company’s business at a head office
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level was managed by its operating committee (“the OC”).
8. While the events described below led to a number of retrenchments
throughout the company’s South African brewing operations, this case
relates only to the Newlands brewery. Nevertheless, developments at
certain of the other breweries in the run up to the retrenchments are
relevant.
9. At the commencement of the trial, the Court conducted a thorough
inspection in loco of the Newlands brewery (the only notable omission
being the necessity to sample product). From this it was apparent that the
brewery operates in clearly defined manufacturing units, including a
brewing section, a fermentation section and a bottling and packaging
section. The latter are colloquially referred to as “lines” and are randomly
allocated distinguishing numbers.
10. The Newlands brewery is a highly mechanised operation with extensive
hitech and computerised equipment and includes large items of plant and
machinery. The daily volumes of beer produced on the continuous 24 hour
shifts (and there were several of them on the individual lines) are of
exceptional magnitude.
Changing Circumstances:
11. In 1992 the company, then the biggest brewer in South Africa, was
confronted with a political and economic environment which it says was
radically different to that in which it had operated previously. With the end of
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economic sanctions, the South African markets opened up for international
companies to compete in South Africa with local entities. At the same time,
international markets also opened up for local companies to position
themselves to compete globally. The company says that it realized that if it
was to survive it would have to compete internationally. There were
apparently two important “drivers” for change. Firstly, the company had to
determine how best to protect its local market share against international
competition. Secondly, it says it was also forced to compete with a global
market in order to expand internationally.
12. The company says that it found that its local labour practices were outdated
compared to trends in the rest of the world and that, given the change in
competitive environment in which it operated, it had to improve operating
costs to ensure ongoing competitiveness. As a result, the company faced
the likelihood that it would become less competitive in the local market and
would not be able to compete in the international market.
13. At that time, the company utilised an operating practice which later became
colloquially known as “BOP I”. (“BOP” is the acronym for “best operating
practice”.)
14. The company’s strategy in addressing the post apartheid challenges was
not only disclosed to, but actively canvassed with, the union. It was first
formally discussed during the 1994 national wage negotiations; indeed, a
National Substantive Agreement (“NSA”), a collective agreement as
contemplated in section 23 of the LRA, was signed. In terms thereof, the
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parties expressly committed themselves to “ work together to make the
company a successful world class manufacturer ”.
15. Various of the company’s witnesses attempted to convey their
understanding of the concept of world class manufacturing (“WCM”). I must
confess that no clear explanation was given as to what is clearly a
chameleonic concept best understood by those familiar with current
“corporatespeak”. As I understand it, WCM’s central feature is the need to
be internationally competitive: to manufacture products which consumers
consider to be “world class”, in content, pricing and presentation. This in
turn apparently has implications for the calibre of the workforce, as the
union had been told since at least 1994.
Attempts at Joint Problem Solving:
16. Over an extended period after 1994 representatives of the company and
the union engaged in joint informationgathering opportunities and
consultations. This process included the following:
16.1. The company and the union embarked upon a joint overseas study
tour during February 1995 to investigate and evaluate various options
to achieve WCM. They visited, inter alia , international breweries in
Germany and the USA. During this tour the parties (according to the
company) learned that it was essential to the WCM process to build a
teambased, multiskilled and processdriven structure.
16.2. In March 1995 a joint “relationship building” WCM workshop was held
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at the Riverside Sun resort near Vanderbijlpark to enable the study
team to give feedback to management and the union officials. The
conference was addressed by a crosssection of speakers
representing corporate and union interests, and highlighted the
concern on the part of both parties in relation to the issue of job
losses, retrenchments and job security as part of the WCM process.
16.3. At this workshop the company’s erstwhile managing director, Norman
Adami, laid emphasis on the role played by the company in society
stressing that it could fulfill this role by having “enlightened
employment practices” which involved investment in the training and
development “of all staff” and in so doing “develop a positive
relationship with the community” and “become SA’s favourite
company”. Emphasis was laid on the building of a cooperative
partnership with the union to meet the challenges of the future. Job
security came up at the workshop as the number one issue to deal
with.
16.4. Derek van der Riet, the company’s erstwhile manufacturing
consultant, told the workshop that a world class company was one
that had developed and empowered all employees with the required
skills, performance measures and awards to enable constant
improvement. He also spoke of “world class competitiveness with a
social conscience” .
16.5. The participants understood that threats to job security could be
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minimised with a proper understanding about how people would be
upskilled to meet the challenges of the future an understanding of
the necessity to define the time horizon for education and training and
to prepare a proper plan. There was implicit acceptance that
standards of education and training at the company had in the past
not been good enough to enable it to compete as a world player.
However (as one of the company’s witnesses later testified), at this
stage “nobody had a clue exactly what we were going to be doing,
we didn’t have BOP 2 yet, we didn’t know what it was.”
16.6. As pointed out above, during April 1995 and during the national wage
negotiations, the parties amended clause 21 of the NSA to record
that they committed themselves to engage in constructive discussion
and to work together to make the company a successful worldclass
manufacturer. In particular the parties agreed that skills development
was essential in order to achieve the status of a successful world
class manufacturer and they agreed not to boycott training at any
level. There was also consensus that joint taskforces be established
to deal with, inter alia, WCM and job grading.
16.7. During April 1996 to 1998 a WCM pilot project was implemented on
Line 12 at the Alrode Brewery where the learnings from the
international “benchmarking” tour referred to in paragraph The
company and the union embarked upon a joint overseas study tour
during February 1995 to investigate and evaluate various options to
achieve WCM. They visited, inter alia, international breweries in
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Germany and the USA. During this tour the parties (according to the
company) learned that it was essential to the WCM process to build a
teambased, multiskilled and processdriven structure. were
implemented in the local environment. (This project subsequently
became known as “the Alrode Line 12 pilot” .)
16.8. The Alrode Line 12 Pilot was run by a team comprising
representatives of both parties. The project represented an
opportunity to experiment with the structure of the operating teams.
The outcome of the pilot was that the company favoured a very
different packaging line which comprised of four “building blocks” ,
namely the positions described as “BOP operators”, “process
operators”, “process artisans” and “team leaders” . The structure
entailed that the three core processes of work (operating, maintaining
and performing quality control (“QC”) checks, including data
capturing) were performed by a single team with competencies
vested in nonfunctional positions. The central idea was that an
employee could progress incrementally up the corporate employment
structure from one “building block ” to another.
16.9. The Alrode Line 12 pilot team suggested, as part of the project, entry
level specifications suitable for the positions developed during the
pilot. Thereafter, a joint project team (under the leadership of the
company’s erstwhile human resources specialist, Denise Smith
(“Smith”)) was tasked to consider these entry level specifications. In
addition, an independent company, Flagship Consulting, was
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approached to recommend actual entry level specifications relating to
the proposed positions. The company's board eventually accepted
the recommendations of Flagship Consulting.
16.10. In evidence, Smith described her role as being an important actor and
influencer of the way in which the WCM process evolved. She was
the person tasked to initiate the redesigned manufacturing process.
She conceded that BOP I was already “teambased” evidently a
central component of WCM. BOP I was therefore already a WCM
strategy, but the trigger for BOP II (as the revamped model was later
known) was that by 1996 the revised manufacturing strategy
(introduced in 1992) was not “delivering”. The “numbers” in respect of
training investment, when compared to time and the related
performance improvement, “ filled the business with unease as it was
taking too slow ”.
16.11. In November 1996 another company/union workshop was held at
Gordon's Bay. At this workshop all parties again agreed to continue
to work towards WCM and attempt to address the major issues,
including job security, competency acquisition and job losses.
16.12. In February 1997 the parties conducted a joint workshop in Geneva
under the auspices of the International Labour Organisation. The
focus there was the issue of job security. In terms of an agreement
reached subsequently between the company and the union, “Project
Noah” was established. The object of this structure was to provide a
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security net and assistance for employees who lost their jobs as a
result of any restructuring connected to the implementation of WCM.
Project Noah (no doubt socalled to provide a safe haven against the
consequences of the anticipated deluge) was strongly promoted by
management because it understood that retrenchments were coming.
It also formed an important part of the “communication phase” of the
WCM implementation strategy which had as a focal point the
following:
“To position SAB management in a positive light i.e. as a socially responsible employer
who has done all in its power to address the negative side of WCM – here the work done
in Project Noah is our best weapon (as it was intended to be!)”.
16.13. In August and September 1997 a national strike took place as a result
of a deadlock in wage negotiations. This interrupted discussion
between the parties on WCM.
16.14. On 8 April 1998 the company and the union met at the Monkey Valley
conference centre in Noordhoek near Cape Town to discuss progress
on the WCM initiative. It was then agreed to move from joint
workshopping to negotiating a Workplace Change Agreement
("WCA"). The deadline for completing negotiations for the WCA was
set for 31 July 1998. Clearly the company wanted to reach consensus
on issues which would otherwise have to be dealt with under section
189 of the LRA.
16.15. Pursuant to the Monkey Valley discussions, the company presented a
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draft agreement. The parties, however, failed to reach agreement as
a result of the union's insistence on a moratorium on retrenchments:
the union wanted the inclusion of a clause which said that the
company should “ impose a moratorium on retrenchments for a two to
three year period during the period of negotiation and implementation
of workplace change” . In the company’s opinion this was not a
reasonable proposal because it meant that it would have to put WCM
implementation on hold for another three years. The parties,
however, agreed that in the absence of a WCA, they would be bound
to follow the agreed procedures set out in the National Recognition
Agreement and the relevant clauses in the LRA.
16.16. I pause to mention that the breakdown of the WCA negotiations in
mid1998 at a national level meant that any preretrenchment
consultation processes under the LRA would thereafter have to be
conducted at plant level. The potential site of conflict was therefore
removed from a national to a local level. Smith described this change,
from endeavouring to implement WCM by consensus to implementing
it through a retrenchment procedure, as “simply a change in
implementation methodology” .
16.17. During the national wage negotiations that were held during July
1998 the parties again confirmed the existing terms of clause 21 of
the NSA.
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BOP II Implementation
17. After considering its position, the Main Board of the company decided to
implement the WCM “learnings” from the Alrode Line 12 Pilot. The new
operating practice which had been developed at Alrode was then referred
to as “BOP II”. BOP II was first implemented at the Prospecton Brewery on
Line 4. While the union raised no disputes during this particular
implementation, either of a substantive or procedural nature, it bears
mention that neither this implementation nor Alrode Line 12 had any
implications for reduction of jobs.
18. In about May or June 1999 the OC decided that BOP II would proceed at
Newlands as per its “implementation plan” . This decision enjoyed the
confidentiality of the boardroom and was not conveyed to the union.
Implementation then took place in three separate phases:
18.1. The first phase related to Line 1 only and was completed in August
1999. During this implementation, the union was informed in the
company’s business case that it was the start of the process and that
further implementations would take place at a later stage as the
restructuring was “rolled out” to all the manufacturing lines at the
Newlands brewery. The company’s business case for Line 1 records
the following at p 17 thereof:
"As the learnings from Line 1 are implemented in other business areas, redundancies
may result:
Further redeployment will be sought;
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Phased implementation will allow time for employees to enhance basic education
thus improving their chances of meeting selection criteria in future restructuring
processes;
Voluntary versus forced retrenchment options will be discussed when consultation
for other business areas takes place .....".
The company decided that the parties would consult only in relation to line 1 at that stage
to ensure a wide level of understanding of the restructuring process and the impact
thereof once implemented, and also to learn from the implementation on this line. Once
again, this implementation did not have any impact on staffing levels as all/any
redundancies were accommodated on other lines at the brewery.
18.2. The second phase at Newlands related to engineering which was
implemented in 2000. The business case in respect of this phase
again reiterated the principles of WCM and the need for restructuring.
18.3. The third phase, which is the subjectmatter of this enquiry, took
place during 2001 and involved the following work areas:
18.3.1. Lines 2 and Draught;
18.3.2. Lines 3 and 4;
18.3.3. Packaging Engineering, Training and Raw Materials;
18.3.4. Brewing;
18.3.5. Quality Control; and
18.3.6. Other noncore business.
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The company’s business case in respect of this phase again reiterated the principles of
WCM.
19. As stated above, the consultation process in relation to each of these
phases at Newlands was preceded by a decision, at national level, by the
company's board. Implementation at each plant was, however, determined
at that level pursuant to a consultation process with the union. The reason
for this was that each brewery had its own particular requirements and the
details of implementation differed depending on the layout of the lines and
the technology involved.
20. Generally, implementation at regional level occurred after a business case
was presented in respect of each region by the relevant general manager to
the OC. (One business case was not presented in respect of the whole
country.) The OC then approved in principle the individual business cases
presented to it, whereafter the particular region entered into a local
consultation process with the union.
Newlands 2001 Restructuring:
21. It is common cause that the consultation process in respect of the 2001
restructuring at Newlands commenced on 18 January 2001. At this meeting
the business case was presented to the union. (On 20 December 2000 the
company had invited the union to a consultation meeting which was, at that
stage, scheduled for 10 January 2001. The union requested that the latter
meeting be postponed in view of the alleged unavailability of union
representatives.)
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22. Prior to the invitation to the union to consult, the company conducted an
internal “Change Planning Workshop” at Newlands in midNovember 2000.
This was exclusively for management and dealt meticulously with the
process to be followed, highlighting the anticipated hurdles and pitfalls
which may be encountered during the consultation phase. The company
was evidently anticipating strong resistance from the union.
23. The Human Resources Manager at Newlands, Barbara Pinto, prepared the
company’s business case which was subsequently presented to the union
at the first consultation meeting of 18 January 2001 in November
December 2000. This document was intended to constitute compliance by
the company of its obligations under section 189(3) of the LRA.
24. At the meeting of 18 January 2001 the parties agreed that joint
communication sessions be held on 19 January 2001 and 26 January 2001.
At these communication sessions the business case was presented to the
assembled employees (both unionized and nonunionized) by the company
and questions were answered.
25. At the same meeting (on 18 January 2001), the union requested that it be
given a period of one month " to study management's proposals and to
come up with viable options or alternatives ". The company said that it did
not wish to delay the process and requested ongoing weekly consultation
meetings. As became apparent later, the union did not attend these
meetings.
26. On 24 January 2001 the union was notified of the second consultation
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meeting scheduled for 25 January 2001. In this notification the company
again reiterated its perceived need to consult on an ongoing basis. The
next consultation meeting was held on 25 January 2001. The union did not
attend.
27. The following consultation meetings were held on 1 February and
8 February 2001. The union failed to attend these meetings. Various letters
were addressed by the company to the union during January and February
2001 inviting them to participate.
28. Thereafter, the next meeting was held on 15 February 2001. This was also
not attended by the union. At this meeting the company took the decision to
implement the proposal set out in the business case in its erstwhile current
form.
29. Despite the decision to implement, the company maintained that it was
prepared to consider any proposals made by the union. The company
indicated such willingness in its letter dated 22 February 2001. Accordingly,
various further meetings followed:
29.1. On 20 February 2001 the union requested the company to
meet on 26 February 2001. It requested the company to
withdraw the implementation of the proposal and to consult.
The company replied and stated that it had scheduled
consultation meetings to be held on 22 February and
1 March 2001 and was willing to meet on those dates. The
union did not attend the consultation meeting on
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22 February 2001.
29.2. At the next consultation meeting held on 1 March 2001, both
parties were represented. During this meeting, the union
made certain demands that had to be met before presenting
its proposal to the business case.
29.3. On 8 March 2001, both parties attended a consultation
meeting. At this meeting it was minuted that the union had
intentionally stayed away from the consultations. The union
tabled its proposals to the business case at that meeting.
29.4. A further consultation meeting was held on 15 March 2001.
The company tabled its comments in relation to the union's
response to the business case.
29.5. Then followed two meetings on 22 and 29 March 2001. They
were also not attended by the union. Various meetings were
thereafter held in April 2001.
30. The company proceeded to implement the proposals set out in the
business case. The recruitment and selection process was already in place
and was similar to that used in respect of the 1999 and 2000
restructuring processes at Newlands Brewery.
31. The evidence relating to the selection procedure is also largely undisputed.
This procedure entailed the following:
31.1. On 16 February 2001 an internal memorandum was distributed to all
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employees informing them of management's decision to implement
the proposed business case in its current form.
31.2. On 19 February 2001, once the decision had been taken to
implement the proposal as presented by management, the
recruitment process commenced.
31.3. On 22 February 2001 a personal letter was handed to each employee
whose position was affected by the decision to restructure the
organisation. This letter outlined the process that was followed to
date, the attempts to consult with the union and the fact that the
position had become redundant.
31.4. The first recruitment process took place from 19 February 2001 to
30 March 2001 and the second process took place from 15 March
2001 to 30 April 2001.
31.5. In both these processes the following steps were taken:
31.5.1. All new positions were advertised internally for a
period of two weeks. These were placed on notice
boards and circularised via email.
31.5.2. All applications were submitted to one central source
and a recruitment database was maintained for all
applicants to monitor their progress through the
recruitment process.
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31.5.3. Initial screening took place during this period to
determine whether applicants possessed the required
entry level qualifications as set out in the
advertisements. Where the applicants were unable to
provide documentary evidence of their highest
educational qualification, Adult Basic Education and
Training (“ABET”) screening was conducted to
determine their ABET levels.
31.5.4. Oral feedback was provided to those applicants who
were unable to demonstrate the requisite ABET level
based on screening results.
31.5.5. Applicants who did not have the minimum entry level
qualification as applicable to the position applied for
were handed documents, euphemistically termed
"regret letters".
31.5.6. Those applicants who proved to be at the required
ABET level were included in the list of potential
candidates and proceeded to the next stage of the
recruitment process.
31.5.7. In respect of successful candidates, panel interviews
were conducted in all instances. Panels consisted of
two to three members, including an HR specialist, in
most cases. The applicants were also required to
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undergo psychometric assessment.
31.5.8. A standard recruitment interview guide was used for
all the different positions throughout the process to
ensure consistency.
31.5.9. A short list for each position was compiled, based on
the outcome of interviews, recognition of prior
learning, attributes and psychometric assessment
results.
31.5.10.The selection panel, with the involvement of the head
of department, considered the shortlist and arrived at
a decision as to who the most suitable candidates for
the new positions were.
31.5.11.All unsuccessful applicants received verbal feedback
from the recruiting manager, in addition to being
handed a “regret letter.”
32. As a result of the restructuring, a total of 164 positions were declared
redundant: 26 employees were successfully redeployed and 138
employees were retrenched by 31 August 2001.
33. The individual applicants before Court who were affected by this process
are listed in an agreed schedule. In total there are 115. They can usefully
be classified in the following categories:
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33.1. Those applicants who failed to apply for any new positions, who were
not screened and whose ABET levels were not known to the
company. There are 46 in total. For the sake of convenience I shall
hereinafter refer to these persons as “category 1 applicants” ;
33.2. Those applicants who did apply for the new positions, but who failed
to meet the entry level specifications. In total, 55 applicants fall into
this category. (One applicant who applied for redeployment but who
was unsuccessful is included in this number). These will be referred
to as “category 2 applicants” ;
33.3. Those applicants who did apply for the new positions, who met the
entry level specifications and entered the recruitment process, but
who were found to be unsuitable for the new positions. In total, there
are 6 applicants in this category. These will be termed “category 3
applicants”;
33.4. Those applicants whose positions were declared redundant and who
were dismissed for reasons unconnected to the introduction of WCM.
They number 6 and will be termed “category 4 applicants” .
33.5. Two deaf mute applicants. These employees will be referred to as
“category 5 applicants”.
RELEVANT STATUTORY PROVISIONS
34. The union claims that the individual applicants' dismissals were based on
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operational requirements. The procedure for a fair dismissal based on the
employer's operational requirements is found in section 189 of the LRA,
which reads as follows in the form in which it was prior to amendment in
2002 (it being common cause that this is the applicable wording):
“189. Dismissals based on operational requirements
(1) When an employer contemplates dismissing one or more employees for reasons
based on the employer's operational requirements, the employer must consult
(a) any person whom the employer is required to consult in terms of a collective
agreement;
...
(2) The consulting parties must attempt to reach consensus on
(a) appropriate measures
(i) to avoid the dismissals;
(ii) to minimise the number of dismissals;
(iii) to change the timing of the dismissals; and
(iv) to mitigate the adverse effects of the dismissals;
(b) the method for selecting the employees to be dismissed; and
(c) the severance pay for dismissed employees.
(3) The employer must disclose in writing to the other consulting party all relevant
information, including, but not limited to
(a) the reasons for the proposed dismissals;
i. the alternatives
that the employer
considered before
proposing the
dismissals, and the
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reasons for rejecting
each of those
alternatives;
ii. the number of
employees likely to
be affected and the
job categories in
which they are
employed;
(d) the proposed method of selecting which employees to dismiss;
(e) the time when, or the period during which, the dismissals are likely to take effect;
(f) the severance pay proposed;
(g) any assistance that the employer proposes to offer to the employees likely to be
dismissed; and
(h)the possibility of the future re-employment of the employees who are
dismissed.
...
(5) The employer must allow the other consulting party an opportunity during
consultation to make representations about any matter on which they are consulting.
(6) The employer must consider and respond to the representations made by the other
consulting party and, if the employer does not agree with them, the employer must state
the reasons for disagreeing.
(7) The employer must select the employees to be dismissed according to selection
criteria
(a) that have been agreed to by the consulting parties; or
(b) if no criteria have been agreed, criteria that are fair and objective."
35. Section 189 regulates the exercise of the competing fundamental rights of
an employee not to be unfairly dismissed and that of an employer to rely on
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fair labour practices and, where appropriate, to dismiss for operational
reasons. The respective obligations under the section are geared to a
specific purpose, namely to achieve a joint consensusseeking process.
This section does not impose obligations only on the employer. All
consulting parties have a duty to attempt to reach consensus. ( Johnson &
Johnson (Pty) Ltd v CWIU (1999) 20 ILJ 89 (LAC)).
36. A dismissal for operational requirements is a no fault dismissal, unlike
dismissals for misconduct or incapacity. The Code of Good Practice:
Dismissal (Schedule 8 to the LRA) provides as follows:
"Dismissals for operational requirements have been categorised as "no fault" dismissals
in other words, the employee is not responsible for the termination of employment, the
effective cause of termination is one or more external or internal factor related to the
employer's business needs. For this reason, together with the human costs of
retrenchment, this Act places particular obligations on an employer, most of which are
directed toward ensuring that all possible alternatives to dismissal are explored and that
those employees to be dismissed are treated fairly ." (Emphasis added)
37. As set out above, section 189 provides a list of the various issues in respect
of which the parties should attempt to reach consensus and information
which is required to be provided in writing. While a purposive approach may
be adopted, fairness is always to be regarded as the touchstone in relation
to the whole process. A mechanical “check list” approach to determine
whether section 189 has been complied with is inappropriate ( Johnson &
Johnson (Pty) Ltd v CWIU , supra). The proper approach by a court
Johnson (Pty) Ltd v CWIU , supra). The proper approach by a court
considering a complaint of unfair dismissal under section 189, is to
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26
ascertain whether the purpose of the section (the occurrence of a joint
consensusseeking process) has been achieved.
38. It is the union’s case that the company has failed to prove:
38.1. that the reason for the dismissals was a reason based on its
operational requirements;
38.2. alternatively and in any event, even if the reason was one based on
operational requirements, that the reason was a fair one; and
38.3. that the dismissals were effected in accordance with a fair procedure.
I shall proceed to analyse the case along these broad categorizations.
SUBSTANTIVE FAIRNESS : THE LAW
39. The test for substantive fairness in dismissals for operational reasons has
traditionally been described by the Labour Appeal Court as being whether
the retrenchment is “properly and genuinely justified by operational
requirements in the sense that it was a reasonable option in the
circumstances”.
Decision Surveys International (Pty) Limited v Dlamini [1999] 5 BLLR 413 (LAC).
See also: SACTWU v Discreto (A Division of Trump & Springbok Holdings )
(1998) 19 ILJ 1451 (LAC).
40. More recently the Labour Appeal Court endorsed a less deferential test for
proof of substantive fairness – an approach which calls for a more rigorous
or exacting examination by the courts of the reasons advanced by the
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employer. This requires the employer to show that the dismissals were “ a
measure of last resort ” which “ could not be avoided ”. (See CWIU and
Others v Algorax (Pty) Ltd (2003) 11 BLLR 1081 (LAC).) To the extent
that they may previously have been the subject of debate, the following
guidelines have now been laid down by the Judge President in the Algorax
case:
40.1. Whether the dismissal is fair or not is a question which must be
answered by the court and the court must not defer to the employer
for purposes of answering that question (para 69);
40.2. The court should not hesitate to deal with an issue that requires no
special expertise or business knowledge. Some problems require
simple common sense and do not involve any complicated business
transactions or decisions (para 70);
40.3. If there is a way in which the employer could have addressed the
problems by using solutions which preserve jobs rather than which
cause job losses (or which could lead to further job losses), the court
should not hesitate to deal with the matter on the basis that the
employer should have used that solution, rather than the one which
causes job losses:
“This is especially so because resort to dismissal, especially socalled no fault dismissal,
which some regard as the death penalty in the field of labour and employment law, is
meant to be a measure of last resort.” (at para 70).
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See also:
W.G. Davey (Pty) Ltd v NUMSA (1999) 20 ILJ 2017 (SCA) at 2024F.
40.4. Referring to sections 189(2) and (3) the Judge President held as
follows in the Algorax case:
“It seems to me that the reason for the lawmaker to require all of these things from the
employer was to place an obligation on the employer to only resort to dismissing
employees for operational requirements as a measure of last resort . If that is correct, the
court is entitled to intervene when it is clear that certain measures could have been taken
to address the problems without dismissals for operational reasons or where it is clear
that dismissal was not resorted to as a measure of last resort .” (at para 70). (Emphasis
added.)
41. In County Fair Foods (Pty) Ltd v OCGAWU and Another (2003) 7 BLLR
647 (LAC), a judgment handed down before the decision in the Algorax
case at p.656, para 27 it was held by the Judge President that:
“If the employer relies on operational requirements to show the existence of a fair reason
to dismiss, he must show the dismissal of the employee could not be avoided . That is
why both the employer and the employee or his representatives are required by section
189 of the Act to explore the possibilities of avoiding the employee’s dismissal.”
42. In reply, Mr Gauntlett argued strenuously against the “measure of last
resort” approach. He said that to do so would require words to be read into
the statute which postulates simply a test of fairness cast in wide and
unrestricted language (see sections 188(1)(a) and (b)). He argued that the
Algorax case did not lay down general principles, but that the remarks of
the Judge President are to be restricted to the facts of that case.
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29
43. I cannot agree with Mr Gauntlett on this score. The dictum in the Algorax
case is one of general application and is based on a thorough analysis of
sections 189(2)(a)(i) and (ii) read with subsections (3)(a) and (b). The
County Fair case is to the same effect. In the W.G. Davey case the
Supreme Court of Appeal suggested a similar approach in respect of a
strike dismissal why then should there be any lesser test in respect of a no
fault dismissal?
44. In the recent decision in General Food Industries Ltd v FAWU [2004] 7
BLLR 667 (LAC) at p.682J, para 55, Nicholson JA summarised the position
as follows:
“The loss of jobs through retrenchment has such a deleterious impact on the life of
workers and their families that it is imperative that even though reasons to retrench
employees may exist they will only be accepted as valid if the employer can show that
all viable steps have been considered and taken to prevent the retrenchments or to limit
these to a minimum.” (Emphasis added.)
45. Finally, I am enjoined by the aforementioned Code of Good Practice to
consider whether “all possible alternatives to dismissal ... [have been] ...
explored.”
46. Prior to the 2002 amendments to the LRA, the provisions of section 194
accentuated the distinction between substantive and procedural unfairness
in relation to retrenchment dismissals. For purposes of compensation, that
distinction has now largely disappeared, except that a finding of procedural
unfairness alone precludes a Court from reinstating an employee dismissed
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for operational requirements. While this Court may therefore, in the future
be less inclined to draw so clear a distinction between substantive and
procedural unfairness (particularly in cases where the dismissed employee
does not seek reinstatement), I shall proceed to examine the issue of
fairness in this case along traditional lines, more particularly because it is
common cause that the LRA in its pre2002 amended form applies here.
47. Bearing in mind that “fairness, not correctness is the mandated test” ,
the judgment of Davis AJA in BMD Knitting Mills (Pty) Ltd v SACTWU
(2001) 22 ILJ 2264 (LAC) at 2269I2270B is to the following effect:
“The starting point is whether there is a commercial rationale for the decision. But, rather
than take such justification at face value, a court is entitled to examine whether the
particular decision has been taken in a manner which is also fair to the affected party,
namely the employees to be retrenched. To this extent the court is entitled to enquire as
to whether a reasonable basis exists on which the decision, including the proposed
manner, to dismiss for operational requirements is predicated.”
That approach was recently confirmed by Davis AJA in Enterprise Foods (Pty) Ltd v
Allen and Others [2004] 7 BLLR 659 (LAC) at p.663, para 17. As stated earlier, I intend
applying a similar approach in the present case.
48. I pause to mention that in considering issues of fairness, the Court is
obliged to have regard to fairness to both parties. There is no room for any
suggestion (and Mr Kahanovitz for the applicants did not argue this) that
fairness is confined to its effect on employees only.
National Union of Metal Workers of SA v Vetsak Cooperative Ltd and Others 1996
(4) SA 577 (A) at 589CD;
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31
Woolworths (Pty) Ltd v Whitehead 2000 (3) SA 529 (LAC) at 559F;
National Education Health and Allied Workers Union v University of Cape Town
and Others (2003) 24 ILJ 95 (CC) at p.112CE.
49. In his celebrated concurring judgment in the Woolworths case, supra,
Willis JA (in an uncontroversial passage) made the following remarks about
the concept of fairness (albeit in the context of a discrimination complaint):
“[127] Fairness is an elastic and organic concept. It is impossible to define
with exact precision. It has to take account of the norms and values of our society as well
as its realities. Fairness, particularly in the concept of the LRA, requires an evaluation
that is multidimensional. One must look at it not only from the perspective of prospective
employees, but also employers and the interests of society as a whole. Policy
considerations play a role. There may be features in the nature of the issue which call for
restraint by a court in coming to a conclusion that the particular act of discrimination is
unfair.”
SUBSTANTIVE REASONS ADVANCED
50. There is no dispute between the parties regarding the company’s
entitlement to embark upon the WCM strategy. Indeed, in the National
Substantive Agreement concluded between the union and the company on
29 June 1995, the following was expressly recorded in that regard:
“21. World class manufacturing
21.1 It is agreed that SAB and its employees have a
significant contribution to make towards the
rebuilding of the national economy and the
Reconstruction and Development Programme.
The parties commit themselves to engage in
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constructive discussion, within accepted
Procedures and Agreements, and will work
together to make the Company a successful,
world class manufacturer.
21.2 The parties agree that skills development is
essential in order to achieve the status of a
world class manufacturer and marketer of fine
quality beers. The parties, therefore, agree not
to boycott training in the event of any dispute,
either at a local or national level.
21.3 The parties agree that the following joint task
forces be established under the auspices of the
National Forum:
...
21.3.2 task force on world class Manufacturing/Job Grading.”
51. I should point out that the present case differs significantly from the usual
retrenchment scenario one encounters where jobs are shed to save an
ailing company. Here, the company has openly come to Court and
explained that its decision to restructure was motivated by a desire to
become more efficient and competitive (both locally and globally) and to
increase its profitability. In a marketdriven economy there can be no
objection, in principle, to retrenching to increase profit margins (there is
after all a duty to shareholders to do so), provided always that the
employer’s conduct is found to be fair on a general assessment of all the
evidence. (Hendry v Adcock Ingram (1998) 19 ILJ 85 (LC).) See also
Fry’s Metals (Pty) Ltd v NUMSA and Others [2003] 2 BLLR 140 (LAC) at
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1523, para 33 and General Food Industries Ltd v FAWU , supra, at
p.682, para 52; p.684, para 62.
52. Arising from the mutual commitment towards a strategy of WCM, and no
doubt in an endeavour to obviate the necessity to later enter into section
189 consultations at a local/plant level, the company, in 1998, proposed
that the Workplace Change Agreement be concluded. I shall revert to the
WCA hereunder. Suffice it to say at this stage that the relevant document
drawn up by the company for discussion purposes to attempt to reach
consensus on this point, is replete with references to WCM and the
corporate jargon associated therewith. The uncontested evidence of Burger
in relation to this document was that negotiations in relation thereto broke
down when the union demanded a moratorium on job losses which the
company was not prepared to give. There was no evidence to suggest that
the union, at any stage during the WCA negotiations or the other
discussions and interactions leading up thereto, did not appreciate or object
to the introduction of WCM per se.
53. In the circumstances I am satisfied that the company’s reliance upon WCM
as the primary factor motivating change in its workplace constitutes a valid
“commercial rationale” , in the context in which that concept has been used
in the cases referred to above. At this level, then, I am satisfied that the
company did not treat the individual applicants unfairly.
INCAPACITY DISMISSAL ?
54. Mr Kahanovitz took the argument in relation to substantive fairness to a
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34
further level and contended that the real reason for the dismissal of the
individual applicants was their incapacity to perform the work required of
them by the company under the BOP II model. To this extent, Mr
Kahanovitz contended that the retrenchment was a sham intended to mask
the real reason for the dismissal.
55. Mr Gauntlett readily conceded that if the union’s argument on this score
was correct, the company was in trouble and that it would not be able to
justify the dismissals on the basis of section 189 of the LRA. However, Mr
Gauntlett argued strenuously against any suggestion of an incapacity
dismissal. The issue is not as simple as it seems and requires some
detailed analysis.
56. The union’s argument draws succour from a number of recent decisions
including Greig v Afrox Ltd (2001) 22 ILJ 2102 (ARB), SA Mutual
Assurance Society v Insurance and Banking Staff Association and
Others (2001) 9 BLLR 1045 (LAC), Wolfaardt and Another v Industrial
Development Corp of SA Ltd (2002) 23 ILJ 1610 (LC), Ntshanga v
South African Breweries Ltd (2003) 8 BLLR 789 (LC) and an article by
Prof Rycroft (who incidentally wrote the arbitration award in Greig v Afrox ,
supra) entitled Corporate restructuring and “Applying For Your Own
Job” (2002) 23 ILJ 678.
57. Prof Rycroft’s article is a critique of the SA Mutual Life case and provides a
useful summary of the principles underpinning the argument advanced by
Mr Kahanovitz. It commences with the following remark:
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35
“An industrial relations trend has taken root in terms of which an employer, for
operational reasons, seeks to introduce a restructured organisational template, and in so
doing redefines the requirements and competencies for jobs in the new structure.
Existing staff are then told that all existing positions have become redundant and that if
they want to continue in employment with the employer, they must apply for the ‘new’
positions. Those who fail to apply or who are not appointed, are considered to have
resigned or are retrenched.”
58. After a thorough discussion of the SA Mutual Life case and various other
decisions of the Labour Appeal Court and the Labour Court, Prof Rycroft
concludes with the following remarks:
“In summary, an employer intending to restructure by way of defining jobs and making all
or a group of existing jobs redundant must be able to show: (i) a reasonable and
commercial rationale for the decision to restructure; (ii) that the particular decision has
been taken in a manner which is also fair to the employees to be retrenched; (iii) that the
retrenchment of the employees is essential to achieve the purposes of the restructuring;
(iv) that the criteria for appointment to the ‘new’ jobs are clear and justifiable, linked
specifically to the new job description; (v) that guidance is given to employees as to
which of the restructured jobs they might be eligible (sic); (vi) that employees are given
an opportunity in the interview to answer any questions about past performance that
might be used as a criterion for not appointing them to the job; and (vii) that the eventual
selections are objectively justifiable.”
59. It is worth noting that Prof Rycroft suggests, too, that the deferential
approach towards the commercial efficacy of an employer’s decision (cf.
approach towards the commercial efficacy of an employer’s decision (cf.
SACTWU and Others v Discreto (A Division of Trump and Springbok
Holdings) (1998) 19 ILJ 1451 (LAC)), has yielded to an enquiry in which
the Court is now entitled to examine the content of the reasons given by the
employer in assessing whether it has established substantive fairness.
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36
60. Relying on Prof Rycroft’s article in the main, Mr Kahanovitz argued that the
employer’s classification of “redundancy” in the present case should be
carefully scrutinised because:
60.1. unless an employer is closing down or moving its operation, the
designation of all jobs as “redundant” is not an accurate description
of what changes the employer is seeking to make; and
60.2. modifying a job or its responsibilities does not make that job
“redundant” because jobs are always in the process of being
adapted and finetuned.
61. The decision by Davis AJA (Zondo JP and Du Plessis AJ concurring) in the
SA Mutual Life , case, is worth quoting at some length:
“… Mr. Bozalek [who appeared for the employees] submitted that the very
documentation upon which appellant had relied to justify the restructuring of the
department indicated that much of the problem with the department lay in the
‘inadequate skill level and qualifications of several of the recruitment consultants’. During
the consultation period second to fifth respondents had taken the approach that, with
improved training and skill development, many of the difficulties which the department
had encountered could be resolved. Accordingly Mr. Bozalek submitted that the decision
to restructure the department represented a guise under which the appellant sought to
address problems of perceived nonperformance or incapacity of the individual
respondents which on its own documentation was caused by a skill shortage.
When the restructuring of the department is examined within this factual context it
appears that it represented a means of the dismissal of the individual respondents based
upon incapacity and poor work performance. …
… Furthermore, when asked as to how the incumbents of the old department were
expected to perform successfully in their new posts, Ms. Griffiths was constrained to
answer that they were assessed according to the required level of competence for the
new jobs and that they had received further training, the very point on which second to
fifth respondents had sought to negotiate.
… When the evidence is evaluated holistically, a clear picture emerges of appellant
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being dissatisfied with the performance of certain members within the department, and
choosing not to initiate proper disciplinary enquiries (sic) in relation to performance and
incapacity. Rather appellant sought to restructure the department as a means of
dismissing those employees with whom it was dissatisfied, namely the individual
respondents.
In the circumstances, appellant was not able to discharge the onus of establishing that
second to fifth respondents were retrenched because their jobs had become redundant
pursuant to a process of restructuring the department. It was also not able to show that
the individual respondents would not have been able to perform to the acceptable level
of competence in the restructured department. … The ultimate decision to change the
department was predicated upon appellant’s manifest dissatisfaction with the
performance of certain personnel in the department rather than the grounds of
operational requirements. …” (at paras 12 to 17).
62. In argument Mr Kahanovitz relied heavily on the SA Mutual Life case as
support for his contention that the dismissals in the present case were
effected for reasons of incapacity. While there are certainly similarities
between the two cases, in my mind there is a fundamental factual
difference between the two:
62.1. Davis AJA found at p.1050F (para 17) in the SA Mutual Life case
that
“The ultimate decision to change the department was predicated upon appellant’s
manifest dissatisfaction with the performance of certain personnel in the department
rather than on the grounds of operational requirements, namely requirements based on
the economic, technological, structural or similar needs of the employer (section 213 of
the Act).”
the Act).”
62.2. In the present case the unchallenged evidence is that the decision to
move from BOP I to BOP II was aimed at improving the overall
efficiency of the company’s entire production facility countrywide.
(The focus was on a more generalised and macro scale.)
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63. The company’s production efficiency (according to Michael Short who gave
evidence on behalf of the company) is measured on a percentage basis
and is calculated to reflect the amount of time that any production line is
operative. So, for example, to achieve 100% efficiency a production line
would have to operate for every hour within a 24 hour cycle. When the line
is static and not running, the efficiency factor reduces and is reflected by a
percentage lower than 100.
64. The uncontested evidence is that, at the Newlands brewery, the efficiency
prior to the restructuring was of the order of 53%, while currently it is close
to 70%. This, according to the company, is a significant increase in
efficiency and is one which is based on the overall structural changes which
were introduced with the BOP II model. This is a wholly different situation to
a complaint by an employer about poor work performance in a particular
area. I find, therefore, that the SA Mutual Life case, while persuasive
authority in respect of the principles postulated, is based on a
fundamentally different set of facts and is therefore distinguishable.
65. Mr Gauntlett argued that the facts of the present case do not reflect a
dismissal for incapacity. As I will attempt to demonstrate hereunder, certain
of the dismissed employees were considered by the company to be
incapable of being sent on training courses to enable them to work in the
new structure. The union did not dispute that the new structure (BOP II)
was a materially different structure to the BOP I structure. While it may be
that certain of the individual BOP II tasks remain unaltered, the
unchallenged evidence of Smith, Burger and Ingmar Boesenberg (the
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general manager at Newlands) was that the organisation of work at the
Newlands brewery under BOP II has been materially changed: BOP II
employees are now required to perform a variety of tasks. The affected
employees were capable of rendering services in the old structure, and
there was never any suggestion by Mr Kahanovitz in the crossexamination
of the company’s witnesses that the inability of the employees to work in
the old (BOP I) structure was a factor which led to their dismissals.
66. In the circumstances of the present case, I am of the view that an
incapacity dismissal does not arise because the alleged incapacity on the
part of the affected workers was not in relation to their extant position. I am
to be guided in this regard by the provisions of section 9 of Schedule 8 to
the LRA in which guidelines are set out for the evaluation of evidence in
cases of dismissal for incapacity.
“Any person determining whether a dismissal for poor work performance is unfair should
consider
a) whether or not the employee failed to meet a performance
standard; and
b) if the employee did not meet a required performance standard
whether or not
(i) the employee was aware, or could reasonably be expected to have been aware, of
the required performance standards;
(ii)the employee was given a fair opportunity to meet the required performance standard;
and
(iii)dismissal was an appropriate sanction for not meeting the required performance
standard.”
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67. Consideration of these guidelines clearly requires that the employee is to
be evaluated against a performance standard fixed in respect of his/her
past performance. In my view, it would be fallacious to argue that the
inability to meet an entry level requirement for a new and redesigned job
constitutes incapacity in respect of past performance. Further, I consider
that it would be unfair to an employer, which was contemplating the
introduction of a new work regime (which of itself might require a smaller
workforce) to retain its entire old workforce and to follow the provisions of
the aforementioned section 9 of Schedule 8 to establish who was liable to
be dismissed. Such a system would be chaotic to say the least.
68. The case of Wolfaardt and Another v Industrial Development Corp of
SA Ltd (2002) 23 ILJ 1610 (LC) also involved a decision to do away with
all current positions whereafter employees had to apply for the new
positions. There were fewer new positions than old positions. Of relevance
to this matter are the following findings made by Landman J:
68.1. The key was whether it is permissible for an employer to make all
employees redundant and then select, albeit according to certain
broad criteria, the employees it wishes to retain (at para 24). This
process was somewhat colourfully described as being one of pouring
old wine into new skins, but as “ the new skins were smaller than the
old, there would be some plonk left over . This case is partly about
who decided what goes into the new skins and what happens to the
plonk.” (at para 10).
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68.2. The employer argued that employees had been selected for
retrenchment using only one criterion, namely a failure to be
appointed to a position in the new structure (at para 25).
68.3. At para 26 referring to Rycroft’s article where it is submitted that
restructuring should not be used to dismiss employees who cannot
be dismissed for misconduct or incapacity Landman J held that this
principle would apply not only where the employer uses restructuring
as a sham or stratagem but also where the employer cannot show
that the nonemployment is fair, e.g. where the employees are not
afforded an opportunity to deal with the perceptions of their
incapacity.
68.4. The process of having to apply for a new job places an employee in
the precarious position of being a “supplicant”. Having to apply for a
job may ignore, sometimes unconsciously, that an existing employee
enjoys job security (at para 27).
69. It would seem that the facts in the Wolfaardt case, too, differ from the
present to the extent that the selection criteria applied to all “redundant”
employees in that case were regarded by the Court as being too arbitrary:
“[32] When it comes to selection the procedure was simply the choice made by
management. The procedure and selection criteria remind one of schoolboys picking a
team by calling out names until the less desirable players are left and discarded or
accepted reluctantly. This is not objective. It is palpably unfair.”
70. The conclusion which I draw from the debate on this issue is that Prof
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Rycroft’s approach set out above provides a useful tool in deciding whether
there was substantive fairness or not in cases of this nature. Save for the
category 4 employees (to which further reference will be made hereunder),
I am satisfied that the positions in which the present applicants were
previously employed can properly be described as being “redundant” with
the introduction of the BOP II model which was indisputably a new method
of workorganization.
SELECTION CRITERIA
71. As pointed out above, one of the areas which the LRA enjoins the parties to
attempt to seek consensus on is “the proposed method of selecting which
employees to dismiss” (section 189(3)(d)). The issue of selection criteria (or
more properly, the fairness thereof) is one of those categories which can
resort under either substantive or procedural fairness, depending on the
circumstances. In the present case I propose considering the primary
selection criterion as part of the substantive fairness enquiry.
72. The collective agreement referred to above (“the NRA”) contains a
negotiated retrenchment procedure (colloquially referred to in evidence as
“Annexure F”). Clause 5 of that annexure requires the company and the
union to consult on, inter alia , the following issues when no alternatives to
retrenchment are found:
“5.2 The criteria for the selection of employees to be effected by the retrenchment:
5.2.1 the criteria for the selection of retrenchees should, as far as possible, be LIFO
coupled with retention of skills; and
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5.2.2 where LIFO coupled with the retention of skills is not conclusive, efficiency at the
job and attendance records may be used as additional criteria for selection.”
73. It will immediately be observed that the primary agreed selection criteria
(paragraph 5.2.1 of Annexure F) played no part whatsoever in the present
case. The company’s contention is that these were not capable of
application in the prevailing circumstances and that its choice of alternate
criteria was justified and fair.
74. In a document prepared in 1998 (postAlrode Line 12), Smith attempted to
illustrate the “fallout points” which would accompany the implementation of
BOP II. In summary, that document envisaged the following process:
74.1. All positions in the existing BOP I structure to be declared redundant;
74.2. Entry level specifications (“ELS”) to be established for all applicants
for posts in the new structure. (The ELS for external applicants were
to be higher than for existing employees.)
74.3. Existing employees who did not meet the minimum entry
specifications were to be redeployed where possible.
74.4. If redeployment was not feasible those employees were to be
retrenched.
74.5. If the existing employees did meet the ELS, they were to be sent on
preimplementation training courses, whereafter they were required to
undergo competency assessments. If they did not pass these
assessments, they were to be retrenched.
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74.6. Employees who successfully passed the competency assessments
were then employed on the new lines and were subjected to further
scrutiny. Such employees who were not assessed as competent after
a “third summative assessment” were then retrenched.
75. From this proposed procedure it can be seen that the setting of entry level
specifications for existing employees had the potential of materially
affecting their job security. In respect of certain employees, the fixing of a
new hurdle which they had to surmount before their continued employment
could be considered, effectively amounted to a selection criterion for
retrenchment in the event that they were unable to comply with the entry
level requirements for the restructured jobs . In the crossexamination of
Smith it was put thus:
“... (T)hen one can also infer that the people you’re not even letting into the training zone
as it were you’re making the call, you’re making the prognosis that they’re not going to
have the necessary levels of competence? Correct.”
76. The category 2 applicants were directly affected by this policy. Simply put,
they were dismissed because the company held the view that they were not
capable of being trained (or even being sent for training) to work in the
BOP II structure and they were not deployed elsewhere in the brewery.
77. The obvious question that follows then is: “Did the company act fairly in
setting the relevant entry level specification in regard to existing
employees?”
78. In its amended statement of claim the union attacked the unfairness of the
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company’s approach in this regard as follows:
“5.6.B2... (v) Respondent also adopted the view that for the BOP II strategy to achieve
its goals only employees with certain minimum levels of general education would be
considered for training as BOP II employees.
(vi) Employees’ levels of general education
would, so respondent decided, be measured
by reference to assessments made under the
Adult Basic Education and Training (“ABET”)
system.
(vii) Respondent decided that to be eligible for
training as a BOP II operator/employee the
following minimum entry specification would
apply in the case of internal candidates:
(a) Attendant: ABET Level 2
(Literacy and Numeracy);
(b) BOP Operator: Abet Level 3
(Literacy and Numeracy);
(c) Process Operator: ABET Level
4
(Literacy and Numeracy).
...
5.6.F In terms of a carefully planned preconceived ‘WCM implementation
strategy’ ... respondent implemented a plan to retrench approximately 25% of its national
workforce. This plan was executed in the following manner ...
(ii) Fixed selection criteria were set which would either have the result
of leading to the retrenchment of employees with the lowest education levels (who were
more often than not the longest serving employees). This occurred in circumstances
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where respondent was clearly aware that its conduct would not only result in the
retrenchment of a large number of the employees but moreover, that its claim to be a
company occupying a ’high moral ground’ (sic) would be seriously questioned in
consequence of its decision to exclude from its business employees who had, to a large
extent, been the victims of socalled Bantu education.”
79. The union contended further that the legal conclusions flowing from these
allegations included:
“6.1.(f) The selection criteria used by the respondent were unfair, to wit:
i) numeracy and literacy levels;
ii) experience;
iii) ‘personal attributes’;
iv) various factors unknown to the applicants.”
80. The Company’s response to these averments is as follows:
“3.11. Ad para 5.6.B
...
3.11.3 The core features of BOP II entailed, inter alia,
the following:
3.11.3.1 Teambased structures from
management to shop floor;
3.11.3.2 A step change in general level
of competence;
3.11.3.3 Selfsufficient, shiftbased
teams;
3.11.3.4 A threetiered team structure
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in packaging;
3.11.3.5 Focussed business units and
process areas;
3.11.3.6 Asset care and QC
accountability at source;
3.11.3.7 Smaller teams of multiskilled,
crossfunctional team
members;
3.11.3.8 Autonomous maintenance at
shop floor;
3.11.3.9 Appropriate engineering skills
required at Level 1 for
situational problemsolving;
3.11.3.10 High levels of literacy and
numeracy at Level 1 amongst
operators for, inter alia,
capturing of data;
3.11.3.11 A teambased structure
consisting of the four building
blocks (BOP operator,
process operator, process
artisan and team leader);
3.11.3.12 Building blocks to create
career pathways ...
3.11.4 ...
3.11.5 The minimum entry level specifications for
internal candidates in respect of the positions
were as follows:
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3.11.5.1 Packaging attendant: ABET
Level 2 literacy, ABET Level 2
numeracy, mechanical
aptitude, oneyear experience
in a packaging environment;
3.11.5.2 Packaging BOP operator:
ABET Level 3 numeracy,
mechanical aptitude, two
years experience in a
packaging environment;
3.11.5.3 Packaging process operator:
ABET Level 4 literacy, ABET
Level 4 numeracy,
mechanical aptitude, two
years experience in a
packaging environment;
3.11.5.4 Packaging process artisan:
trade test qualification
(preferably in mechanical,
electrical or millwright), two
years in a packaging
environment, job specific
assessment;
3.11.5.5 Those employees who failed
to apply for the new positions
or who were unsuccessful in
applying for the new positions
were retrenched in
circumstances where they
could not be redeployed.
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3.11.6 Save as aforesaid, these allegations are
denied.”
81. In response to the union’s legal conclusions. the company pleaded as
follows:
“3.47.6 Ad Paragraph 6.1(f) :
3.47.6.1 The selection criteria for internal candidates are set
out in paragraph 3.11 above.
3.47.6.2 Save as aforesaid, these allegations are denied.”
82. The question of the selection criteria was a hotbed of dispute between the
parties and took up a major portion of the 23 days over which this trial ran.
The company relied, in the main, on this issue on the evidence of Smith,
Felicity Miller and Short, as well as the Flagship Report. The union adduced
only the evidence of an expert, Daryl McLean, in rebuttal. In evaluating this
evidence and the legal conclusions flowing therefrom, I shall broadly
approach the case in the manner suggested by Prof Rycroft in the article
referred to above.
83. In summary, the company argues on this aspect of the case, that its choice
of ABET as the entry level specification was a fair comparator which was
justified as an initial assessment tool in the circumstances. It contends that
this choice was found by Flagship to be appropriate. Even if it is now found
to have been wrong, the company argues that its choice was bona fide and
reasonable and that it is not for the Court to sit in judgment as an “appellate
body” over its decision. Rather, Mr Gauntlett argued, the Court’s function is
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to consider the position as if it were reviewing an administrative act. The
test then is one of rationality rather than accuracy or correctness. I do not
think that it is necessary to lay down yet another approach in a matter such
as this. The abovementioned dictum of Davis AJA in the BMD Knitting
Mills case clearly reflects that in appropriate circumstances a wrong
decision may be excusable: “fairness not correctness is the mandated test.”
84. The union’s argument, in reliance on McLean’s evidence, is that the
company’s point of departure in regard to ABET was fatally flawed in the
circumstances and that Flagship’s endorsement thereof does not address
the real enquiry, viz. was ABET an appropriate yardstick at all in the instant
case and should it ever have been considered by the company as an ELS?
In other words, was the use of ABET reasonable in the prevailing
circumstances?
85. An evaluation of certain of the evidence on this point then becomes
necessary. In determining the reasonableness of the company’s reliance on
ABET as an ELS, one has to consider, as well, whether the employees who
did not possess the designated ABET levels were fairly afforded an
opportunity to enhance their prospects of attaining those entry levels.
I consider it convenient to consider all these issues at the same time.
THE COMPANY’S USE OF ABET AS AN ENTRY LEVEL SPECIFICATION
Generally:
86. The agreed schedule of the 115 individual applicants reflects that:
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86.1. all are males;
86.2. the vast majority are Black Africans;
86.3. the average length of service with the company was of the order of 15
years;
86.4. many of them had served the company for more than 20 years and in
some cases for 35 to 40 years;
86.5. the majority had been employed in the packaging department on lines
2 or 3/4;
86.6. the company had no record of the educational level of the educational
level of 34 (almost 30%) of the employees;
86.7. about half of them (approximately 57) did not have the requisite
ABET entry level specifications.
87. In respect of those employees who claimed to have recognised levels of
education Pinto said that the company relied implicitly on the schoolleaving
certificates which the individuals possessed (or claimed to possess).
88. In relation to certain of the employees whose levels of formal education
were not known, the company arranged for ABET screening in March 2001.
Some employees evidently were not willing to undergo such screening.
89. There was considerable debate, both in crossexamination of various of the
company’s witnesses (in particular Pinto) and in argument, as to whether
the company advertised only ABET levels as entry qualifications for BOP II
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operator positions or whether employees were informed that proof of
schoolleaving qualifications would be equally acceptable. The clear
implication was that if prospective employees were only told that ABET was
the entry level specification (as opposed to a formal educational standard),
they did not apply because they were confused or misled as to the requisite
entry qualification.
90. The evidence of Pinto certainly was strongly suggestive of the fact that
ABET alone was advertised as the appropriate qualification. However, in
my view, not much turns on this point because the union did not adduce
cogent and reliable evidence to warrant the reasonable inference that
category 1 retrenchees did not apply for new positions because they were
confused about the criteria. I do not think that longstanding employees
whose jobs are under threat will easily labour under a misapprehension as
to what they need to do (or should do) to retain employment.
91. Of far greater significance in regard to ABET as an entry level requirement
is the structural approach of the company to the relevance of ABET as a
determination factor in regard to future employability.
ABET The Early Years:
92. Felicity Miller (an experienced human resources practitioner with the
company) testified that she had been responsible for the introduction of an
ABET programme in the company nationally as far back as August 1992.
The purposes of this intervention were described by the witness as follows:
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“(T)he first one was taking cognisance of the historical background of our workers, many
of whom lacked the necessary literacy levels to survive in a changing world; and
secondly the changing world of work that would require new skills and new competencies
and they required literacy and numeracy levels to operate in the changing world of work.”
93. Prior to the introduction of that ABET programme nationally, management
and certain of the union’s shop stewards formed a committee which
planned and implemented the programme. Participation in the initial ABET
programmes on the part of the workers was completely voluntary and was
facilitated through the union shop stewards. One of the shop stewards on
that 1992 committee was Neville Mphanga, who still serves the union. He
was responsible for furnishing Mr Kahanovitz with instructions during the
course of the trial, but did not give evidence.
94. Miller stated that, as far as she was concerned, the decision by an
employee not to participate in any ABET programme had the potential
consequence that that person “would not have the necessary skills for the
changes in the workplace”. She said, too, that this consequence was made
clear to the shop stewards in discussions within the ABET committee
referred to above. She was unable to say whether this position filtered
through to the rank and file of the workforce via the shop stewards.
95. Under crossexamination Miller said that initially the ABET intervention was
part of the company’s general social responsibility plan, but that there was
also a general need in the company for skills upliftment due to the changing
nature of work globally.
96. I might add that McLean, who evidently has extensive experience in ABET
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practice and policy, said that the company’s early ABET interventions were
known to him. I understood him to convey that, as a practitioner in the
ABET field, he was informed of, and impressed by, the manner in which the
company had embarked on this area of corporate responsibility.
97. During the workshop at the Riverside Sun in 1995 referred to above, a
certain Gavin Hartford addressed the participants. He was described as a
fulltime national organizer of the union. According to the minutes of the
workshop, Hartford made it quite clear that the pursuit of a WCM strategy
would have the following consequences:
97.1. the necessity to reassess the skills levels of workers;
97.2. the need to address training in the workplace so as to provide a
degree of “portability and accreditation across the company” ;
97.3. a new level of work organization, including “team work” and multi
skilling;
97.4. the need for appropriate managerial adjustment or transformation;
97.5. a threat to employment security (“It is understood that jobs will
change fundamentally, but a guarantee of no retrenchments is
essential”).
98. In answer to a question from the floor during discussion time, Hartford is
recorded as having said:
“It is unworkable to make Adult Basic Education compulsory. You cannot force people to
learn if they don’t want to. It must be a voluntary system. In terms of managing the
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company’s commitment to ABE and achieving high education standards among
employees, in support of increased flexibility and productivity, it is important to negotiate
minimum entry standards for new employees. This stops the flow of illiterate and
innumerate people into the business.
If retrenchments take place, older employees whose education and training levels are
inadequate for the new direction the business is taking, can be targeted for
retrenchments. However, this cannot be done without providing them with a social
security net.”
99. In argument Mr Gauntlett relied on Miller’s evidence and Hartford’s alleged
statements (which were not disputed by the union) as establishing a
foundation for the contention that ABET as an entry level specification was
fundamentally fair. In my view, the emphasis placed thereon by the
company is excessive. At best, I think it can be said that the union was
aware of the importance of ABET training and the potential influence that it
could have on employees’ advancement in the workplace. However, it
cannot be said that, before the Alrode pilot, workers at the lower level of the
corporate structure would have had reason to contemplate job losses due
to inadequate ABET qualifications.
Alrode Line 12 Pilot:
100. The pilot project on Line 12 at Alrode emerged as a joint initiative of
management and the union. It involved the formation of a completely new
production line to be staffed in accordance with the WCM ( “building blocks” )
principles referred to above. In corporatespeak Smith referred to Alrode
Line 12 as “a greenfield site” . The term refers to the establishment of a
new facility being staffed for the first time in contradistinction to a “brown
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field site” which apparently is an existing facility that is being renovated and/
or restructured and which has a workforce in place.
101. The development of the Alrode pilot took place over more than a year and it
was intended to serve as a model for possible future development of the
company’s organizational (work) structure. The evidence shows that there
was significant participation in the pilot from the union’s side and that it
wasn’t simply a case of management imposing its will on the workforce.
102. Smith testified that at the conclusion of the Alrode pilot the joint team
applied its mind to the minimum entry level specification that would be
appropriate for workers employed on a similar line. There was evidently
consensus that ABET levels would be acceptable and, in particular, at
Numeracy Level 2 and Literacy Level 3.
103. In arriving at the particular ABET levels, the joint team had to determine
what kind of English literacy and numeracy would be required from a (new)
BOP II operator. According to Smith, this was done on a fairly detailed
basis: the team looked at a large number of documents and data which
such an operator would be required to deal with on a daily basis and then
attempted to establish the ABET levels appropriate thereto.
104. In considering these ABET levels regard was also had to the National
Qualifications Framework (“NQF”) as monitored by the South African
Qualifications Authority (“SAQA”). Smith testified that the team was
satisfied that the contemplated ABET levels fell within NQF level 1, the so
called “General Education and Training Band” . Given that BOP II operators
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would have to undergo preimplementation training of some two to three
months, it was also considered important that the trainees’ levels of
numeracy and literacy be adequate to enable them to be trained.
Flagship Report:
105. Upon completion of the Alrode Line 12 pilot, Smith headed up a further
project team (this time consisting only of management representatives)
which set about refining the experience gleaned at Alrode and, in particular,
the entry level specifications.
106. Smith said that she was concerned that the levels which had been agreed
upon by the joint team may have been too low, particularly with regard to
the levels needed for training. Consequently, it was decided by the
management project team that the requisite ABET levels should be raised
to Literacy 4 and Numeracy 3.
107. In relation to this proposal Smith said the following:
“The moment the project team came up with that view in a [main] board presentation, it
was fundamentally contentious, because if you move your entry spec, your minimum
spec up, you move your number up, there’s a direct link between the two, so there was
no underestimating the significance of this view. At the same time, it was felt quite
strongly that if you are going to do an initiative of this size and impact and cost, then you
do it right, so review the stuff properly, which is why at that point we then got in
Flagship ... so we got Flagship involved, we briefed them, we did not give them the
internal specs as they stood at that time, nor did we give them the project team’s view
that these specs were too low, in fact it was as hands off an involvement with a
consulting company as I have ever done, simply because we knew that whatever they
consulting company as I have ever done, simply because we knew that whatever they
came up with will be the decision and we will live with it, and we must be able to defend
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it.”
The Flagship proposal, in mid1998, was that, in relation to a BOP II operator, the
appropriate ABET levels would be Literacy 3 and Numeracy 3.
108. The report, euphemistically described by Mr Gauntlett as a “comprehensive
cure for insomnia”, was prepared by an independent external consultancy
(Flagship Mentoring and Training CC). No attempt was made by the
company to adduce any evidence in support of the views set out in the
report, allegedly because the author thereof was working in the Middle East
at the time.
109. Mr Kahanovitz correctly, in my view, challenged the admissibility of the
expert opinion contained in the report in the absence of viva voce evidence
from its author. Mr Gauntlett indicated that the company did not seek to rely
on any opinion evidence arising out of the Flagship report. Rather, it seems
that the company simply wished to adduce evidence that it ultimately fixed
the ABET levels after a thorough external investigation had been
conducted. Nevertheless, McLean made extensive reference to the content
of the report in his evidence.
110. Shortly after receipt of the Flagship report a special meeting of the
company’s main board took place at which the entry level specifications as
recommended by Flagship were approved.
111. At this juncture it may be observed that by the middle of 1998:
111.1. the company had taken a decision nationally that BOP II should be
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implemented;
111.2. the entry level specifications for the new positions under BOP II had
been determined by the company;
111.3. the implementation of BOP II at the various breweries would take
place on an ad hoc basis at a time when both the board and the
general manager of the relevant brewery were satisfied that such
implementation was warranted;
111.4. the company appreciated that the introduction of a world class
manufacturing strategy such as BOP II would be likely to lead to
retrenchment of staff who did not meet the predetermined entry level
specifications.
112. The evidence before me suggests that, in relation to the Newlands 2001
restructuring, there was no serious debate between the parties as to the
appropriateness of the abovementioned ABET levels as entry level
specifications. I am left with the clear impression that, as far as the
company was concerned, the crossbar had been set by the Board in
mid1998 and that there was no need for local management at Newlands to
consider any other ELS.
113. The union, on the other hand, had had limited input on the ELS via the joint
team at Alrode Line 12, although it must be borne in mind that it was never
the company’s case that this input bound the union to a mandated position.
In this regard Smith stated that “It was definitely not meant to be the
mandated view for the world, it was an input into a national decision”.
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114. Under crossexamination by Mr Kahanovitz, the following passage in
Smith’s evidence on this point is important:
“Yes so in other words it follows from that that they [i.e. the shop stewards on the joint
team] were unwilling to enter into an agreement with the company that what you call the
lessons from Alrode could be rolled out to all the other plants in the country, they were
unwilling to reach such an agreement with you? I’m saying it was uncontentious when
we agreed it for line 12. The moment you make that a mandate for your division it has
tremendous retrenchment impact which the shop stewards would not associate
themselves with understandably.”
115. It should be remembered, too, that Alrode Line 12, being a “green field
site”, never really presented potential retrenchment problems: there was no
existing staff complement. Newlands on the other hand was regarded as a
“brown field site” , i.e. there were existing lines that were staffed and if
changes thereto were to be made, these may have led to retrenchments.
116. In summary then, the company contends that the process whereby it fixed
the entry level specifications for BOP II operators and process operators
was neither arbitrary nor subjective. It says that the process, at least at the
initial stage (Alrode Line 12), involved certain of the union’s representatives
who agreed to the ELS on that line. Thereafter, the company relies on the
Flagship report as a validation of its decision. Finally, it says that the
uncontested evidence of Pinto and Michael Norton (both human resource
practitioners) is that literacy and numeracy levels were implicit in the new
job descriptions and the work itself.
117. In addition, the company maintains that it was at all times bona fide in the
choices that it made: I did not understand the union to argue to the
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contrary. I might add that it is clear from an overall assessment of the
evidence that the company went to great lengths in selecting and designing
its new work structure. It consulted extensively with the union at a national
level in an endeavour to procure consensus at that level and only when this
process resulted in deadlock on the issue of job security did the company
move on to invoking the provisions of section 189 of the LRA. When it did
so, the procedure was “driven” at plant level. However, as I have pointed
out above, there was no real debate at that level in regard to the ABET
levels and, to that extent, it may be said that the company’s choice of
selection criteria was unilateral.
McLean’s Critique:
118. Under crossexamination Smith was asked what justified the use of ABET
as entry level criterion. She responded as follows:
“I think it’s a principle that says if education of a tertiary or secondary level can be used
as an entry spec why can’t adult basic education be used as an entry spec. If you look at
the NQF definition of education it talks about it in terms of learning, be it formal learning
or informal learning or nonformal learning. So if you can say that somebody must be a
chartered accountant why can’t you say that somebody must have ABET 3? It’s all
defined on the same educational park.”
119. I think that Smith’s answer demonstrates the relatively superficial level of
her understanding of the use of ABET as an instrument of measurement.
Indeed, she went on to say under crossexamination, in response to a
question as to whether she had ever asked anyone with expertise in ABET
whether there was a foundation for her statement quoted above, that Miller
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was the company’s ABET specialist and that “she would have been the
specialist that we asked and she checked with external people ...”. Miller’s
evidence was that she was no longer responsible for ABET at the company
after 1997, when she moved to a new position.
120. No evidence of any expert nature (or otherwise) was presented by the
company in relation to the appropriateness or otherwise of choosing ABET
as the instrument of measurement. Miller, who gave evidence after Smith,
was not led on this aspect nor was she crossexamined thereon.
121. The principal witness for the union was McLean whose evidence was
presented in an attempt to deal with the perceived shortcomings in the
company’s case on the ABET issue.
122. McLean relied on his expertise and experience in the ABET field over a
number of years to criticise the approach adopted by the company in
assessing its employees’ continued employability against an ABET unit
standard. In summary he described the assessment as “flawed in virtually
every respect”, primarily because ABET unit standards were not a valid
assessment of workplace competency or trainability.
123. McLean’s evidence detailed a number of theoretical and policy
considerations relevant to the correct assessment tools which an employer
confronted with the choices which the Respondent company faced may
have used. He then went on to attempt to apply the theory to the
practicalities of the present case.
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124. I do not intend traversing McLean’s evidence in every detail the record
speaks for itself. I shall deal with the most salient aspects thereof and, in
particular, the contextualization of the facts at hand.
125. McLean was subjected to a skilful and analytical crossexamination by Mr
Gauntlett, the thrust of which was to demonstrate that the witness did not
fully familiarize himself with the true conditions at shopfloorlevel. In
argument Mr Gauntlett contended that McLean was too doctrinaire and
somewhat out of touch with the realities of the present case.
126. While McLean’s approach was clearly grounded in principle, I hardly think
that he could be described as the pedantic theorist which the company
suggested. His curriculum vitae demonstrates a wealth of practical
experience, inter alia , in the field of workplace training, the evaluation of
training programmes and ABET generally. Of all the people who testified in
the trial he stands alone as the only witness who was properly qualified in
the ABET field and who was able, authoritatively, to address the nub of the
problem in relation to the suitability of the choice of ABET as an entry level
specification.
127. The bedrock of McLean’s approach was that before an employer can rely
on a particular test or tool of assessment to gauge the employability or
trainability of a person, it must be demonstrated that the test has “predictive
validity”. I understand this to mean that the question to be posed is: “Does
the assessment actually measure what it is aiming to measure?” If it does
not, said McLean, then the test is “invalid” and has no predictive validity.
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128. The witness went on to say that an unfair test would perforce not be valid.
However, the issue which must be determined here is whether a test that is
“invalid” is necessarily unfair. I do not think that the answer is a simple yes
or no. In my mind the potential “invalidity” must be carefully assessed in the
context of the relevant facts and it is then for the Court to make a judgment
call along the lines suggested in the Woolworths case, supra. In so doing,
a Court will be mindful of the directions of the Constitutional Court in the
matter of NEHAWU v UCT , supra, that fairness applies equally to employer
and employee and the remark by Davis AJA in the BMD Knitting Mills
case, supra, that fairness and not correctness is the test.
129. No South African authorities on the “predictive validity” point were referred
to by either party in argument. Mr Kahanovitz relied strongly on the 1975
decision of the US Supreme Court in Albemarle Paper Co v Moody , 422
U.S. 405 (1975). One leg of that case involved an enquiry into what an
employer had to show to establish that preemployment tests (which were
admittedly racially discriminatory in effect, though not in intent) were
sufficiently “job related” to withstand challenge under the 1964 Civil Rights
Act and the 1972 Equal Employment Opportunity Act. The Court’s
approach was equity based.
130. Delivering the decision of the majority of the Court, Mr Justice Stewart held,
inter alia , that:
130.1. the fact that the employer had approached the case in a bona fide
fashion did not preclude a Court from finding that the employees were
entitled to the equitable relief which they sought;
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130.2. employment tests should not be used without meaningful study of
their relationship to performance ability;
130.3. such tests should measure “the person for the job and not the person
in the abstract” (emphasis added);
130.4. the relevant statutory guidelines under consideration would only
permit discriminatory testing if the employer showed, by methods
which were professionally acceptable, that such tests were
“predictive of or significantly correlated with important elements of
work behaviour which compromise or are relevant to the job on jobs
for which candidates are being evaluated.”
131. I accept that the Albemarle Paper case was based on an entirely different
legislative framework and factual scenario to the present matter.
Nevertheless, I am satisfied that it is of sufficiently persuasive authority to
merit consideration in this case. The decision certainly endorses, in broad
terms, the approach advanced by McLean.
132. McLean said that ABET unit standards are generic in nature. They are
intended to apply to a wide crosssection of situations and, accordingly,
have been formulated at a general level. They do not necessarily accurately
and adequately reflect workplacespecific language, literacy and numeracy
requirements.
133. It is important to have regard as well to any onthejob experience gained
by an employee with low levels of literacy and to assess this in a work
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related context rather than in a written test. McLean said the following in
this regard, under crossexamination:
“It’s fairly fundamental actually in the sense that firstly somebody who has had any
amount of experience in any particular context, is likely to be familiar with the contextual
cues that are available to aid interpretation or calculation respectively in relation to
literacy or numeracy. So, the core thinking in both literacy and in mathematics is that
ordinary people perform very complex calculations or read very complex tests, better in
context than they do in a decontextualised piece of paper. So, if these people have got
some a fair amount of experience on the production lines ... (t)hey’re not likely to be
able to perform as successfully on a written test, a written test of schooling numeracies
and schooling literacies as they are to perform on the basis of a test which tested
workplace numeracies” (emphasis added).
134. In addition:
“... (A) written test is not a a written test of schooling literacies and schooling
numeracies is a very poor indicator of anybody’s ability to read and interpret workplace
instruction forms or do the calculations that are required in the workplace.”
135. McLean pointed out that it would have been fairly straightforward for the
company to have designed a test or assessmenttool to adequately
measure the ability of its employees with lower levels of literacy and
numeracy to be trained for, and perform in, the new structure.
Importance of context in assessment of workplace numeracy and literacy
136. McLean emphasised the importance of socalled “contextembedded”
assessment of workplace numeracy and literacy. He said it was quite
possible that somebody working in a brewery might be familiar with the
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English vocabulary detailed in the work instruction forms and be able to fill
in work instruction forms, yet fail a generic literacy placement test. This was
because people in a workplace who fill in work instruction forms on a daily
basis know what the purpose of it is, recognise the text type, recognise
visual cues and interpret the meaning of it in that context.
137. He testified that the company’s numeracy assessment was not an adequate
assessment of existing workplace numeracy skills because it was
“disembedded” or removed from workplace contexts and problems.
Research demonstrated that numeracy skills are contextembedded.
Because the calculations and measurements required in the company’s
numeracy test were contextdisembedded, it would have been more difficult
for candidates to demonstrate their actual numeracy abilities. A candidate
might fail this assessment while being competent to do the mathematical
analyses required in the workplace. McLean said that within the work
context:
137.1. numeracy challenges might be threedimensional, rather than two
dimensional as in the numeracy assessment used;
137.2. there would be visual or other cues to enable interpretation and
support of the task;
137.3. there would be support mechanisms, including social support
mechanisms (evidenced by the teamwork structure under BOP II)
which meant that the individual did not have to process the task
independently;
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137.4. there would be a recurrency and routinisation of numeracy
challenges/problems/tasks which may have enabled even a poorly
numerate employee to be able to do the mathematical operation
required, effectively.
138. McLean said under crossexamination that he would predict that individuals
who failed the assessments might have passed if the numeracy and literacy
challenges had been put in context and resembled things required in the
workplace.
139. In response to a question by the Court, McLean indicated that the best form
of assessment would be in an authentic workplace setting. Failing this, a
simulated workplace scenario would be the next best form and only if this
was not possible, something like a written test could be utilised, but then
only one corresponding with the features of the simulated environment.
140. McLean also testified that the assessments used by the company were
furthermore compromised by the fact that they were not, apparently,
preceded by any process to “foreground” (or bring to the surface) a
candidate’s consciousness knowledge from prior learning which had
become implicit.
The need for confidence in “high stakes” assessments
141. McLean highlighted a distinction, in assessment theory, policy and practice,
between “highstakes” and “lowstakes” assessments, the distinction being
that the former have, and the latter do not have, major life implications for
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candidates. A placement test is a “lowstakes” assessment. He said that
placement tests are generally not very accurate but this should not present
a problem to the employer because individuals can be replaced at some
stage during the process. Selecting someone for a job or a career path
would be termed a “highstakes” assessment. A “highstakes” assessment,
he testified, requires a high degree of confidence in the assessment
decision, which must be demonstrated through:
141.1. research which proves the validity of the assessment instruments and
the constructs they aim to measure; and
141.2. quality assurance of the assessment (through, for example, pre
assessment and postassessment moderation of the results). In the
absence of any evidence of moderation of the company’s
assessments, McLean expressed the view that, on this basis alone,
the results should not be accepted. There should first be an audit of
the instruments to determine their validity, reliability and practicability.
Subsequently the results would have to be audited. When he was
asked in crossexamination (with reference to the Alrode pilot)
whether the degree of confidence in instruments would be influenced
by the fact that a pilot project had been conducted, McLean answered
that unless the pilot project resulted in the documentation of an
assessment guide and a confirmation and endorsement of the validity
of the assessment, the pilot project would make no difference.
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The importance of experience in attainment of multiskilling
142. Finally, McLean underscored the importance of workplace experience.
Particularly where an employer is seeking multiskilled employees –
individuals “who can pose and solve problems, who can think
systematically, who can work effectively as a member of a team” someone
with work experience would be more likely to have a sense of “systems
thinking” and problemsolving in a particular environment than someone
without it and such a person would do better on a contextembedded
assessment than someone with schoolingtype literacies only. If the
company elected to employ people with a matric qualification rather than
people with 20 years’ work experience, they were less likely to get a
successfully multiskilled workforce than they would have done otherwise.
He concluded that the tests used by the company did not in any case
assess the types of competencies required for multiskilling.
Conclusions on the ABET issue
143. I am satisfied that McLean’s evidence establishes, on a balance of
probabilities, that the use of ABET literacy and numeracy levels in the
present case was not of sufficient “predictive validity” to establish whether
existing employees should be considered for employment and/or training in
the new structure at the level of BOP II operator.
144. While no viva voce evidence was led by the company in support of the
Flagship report, I think that the following general observations in the
document support McLean’s evidence:
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“It became apparent, and this was reinforced in interviews, that literacy requirements are
generally more critical with regard to training than to carrying out the work. People
working their way up from the shop floor, with handson experience of the machinery,
would not need the same level of communication skills to achieve competency, as would
a person without tradespecific experience ... Many of the skills, as well as much of the
vocabulary needed for the jobs discussed below are trade specific and will require
training regardless of ABET levels achieved. While certain ABET levels are suggested as
being appropriate for particular positions it should be noted that personnel without
certification at these levels may have developed competency in such positions.”
(Emphasis added.)
145. The evidence was that implementation of the BOP II structure at Newlands
did not involve any change in machinery. Rather, it was the organization of
work on the lines in question which was restructured. There was no
evidence to suggest, for instance, that an existing employee who had many
years of experience operating the empty bottle inspection machine would
not also be able to handle the labelling machine and the bottle washing
machine in the new set up. This seems to support the approach of both
McLean and the passage in the Flagship report referred to above.
USE OF INVALID ASSESSMENT TOOL UNFAIR ?
146. I proceed to examine whether, on a consideration of the case as a whole,
the use of ABET as an entry level specification in respect of the category 2
applicants was fair. I limit the enquiry to this category since these applicants
were precluded from reapplying for positions in the new structure because
they were automatically excluded by the company’s decision to make use
of ABET entry levels. Unlike the category 3 applicants, who were admitted
of ABET entry levels. Unlike the category 3 applicants, who were admitted
to further training programmes at the Westlake facility in the Cape
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Peninsula, the category 2 applicants were summarily precluded from
demonstrating to the company their potential to be trained and to work in
the new structure.
147. As demonstrated above, many of the category 2 applicants were men who
had served the company for long periods of time, were individuals who had
grown up at a time when the only schooling option available to them was
Bantu education, a discriminatory practice fundamental to the apartheid
state, and most importantly were workers whose ability to perform in
accordance with their existing job descriptions was not challenged.
148. When the company’s Main Board made the decision to adopt BOP II in
mid1998 in advancement of its WCM strategy, it was alive to the fact that
pursuance of an option which was highly automated and mechanised (as
was the trend in breweries in Europe, America and the Far East), would
impact severely on its workforce.
149. Michael Short, the company’s erstwhile operations director for its Southern
Region (and one who was privy to Main Board deliberations and decisions)
testified that the company took its social responsibility function seriously
and was careful not to compromise job security:
“So we tried to moderate the application of technology to the extent it was appropriate
and not to drastically reduce the operations on the line, the people employed by the
Brewery.”
This exercise involved a careful balancing act between retaining its complete dominance
in the local beer market (then at about 94%) on the one hand (“having our business
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strong”), while retaining employees, many of whom were perceived by the company to
lack “a higher level of intellect, a higher level of training, a higher level of background, a
higher level of comprehension.”
150. Quite obviously, in a company the size of the Respondent, it cannot be
contended (nor was it) that there were unaffordable financial implications in
meeting the assessment methods suggested by McLean. I would think, too,
that in the case of longstanding employees who stand to lose their tenure
through a nofault dismissal it would be reasonable to require of the
employer that it satisfies itself, through the use of appropriately qualified
specialists and/or consultants, that it is adopting the correct approach in
relation to the assessment of those employees’ ability to perform
adequately in the new structure.
151. For the reasons set out above, I do not think that it was sufficient for the
company to rely solely on the Flagship report since this did not address the
core issue, viz. was the use of ABET levels a fair measure of assessment
and competence? In my view, the Flagship report goes no further than
proposing appropriate ABET levels, thereby implicitly accepting (without
question) the suitability of ABET as the tool of measurement.
152. Where an employer realizes (as the company admittedly did in the present
case) that its choice of a particular entry level specification in relation to
restructured jobs is likely to lead to retrenchments, it is, in my view,
incumbent on that employer to take reasonable steps to establish the
fairness of its choice. This would be consonant with the principles laid down
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in the County Fair , Algorax and General Food decisions referred to
above which impose a duty on the employer to take reasonable steps to
avoid dismissals where possible.
153. In all the circumstances, I am of the view that the choice of an invalid
assessment tool in the present case was not fair. To the extent that it has
only been demonstrated that the retrenchment of category 2 applicants is
causally linked to this choice, it follows that it is only this category of
applicants who are the subject of my finding of unfairness on this leg of the
case.
FAILURE TO IMPROVE ABET LEVELS
154. During argument Mr Gauntlett stressed that employees with inadequate
ABET levels had been given ample warning by the company of the
necessity to improve their literacy and numeracy levels and, in addition, that
the company had provided ABET classes to enable employees to do so. Mr
Kahanovitz contended that this approach was tantamount to blaming the
retrenched employees for their inadequate ABET levels, thereby
introducing an element of fault into the dismissals.
155. It was common cause that the company knew by mid1999 at the latest that
the implementation of BOP II was to take place at the Newlands brewery
and that certain predetermined ABET levels would be required for existing
employees to be considered for continued employment, for example, as
BOP operators.
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156. At that stage ABET programmes had been offered by the company at the
various breweries for a number of years: in the case of Newlands since
1995. While attendance of these ABET courses was voluntary and outside
of normal working hours, it had been repeatedly pointed out by various of
the company’s representatives that change in the workplace was inevitable
and that such change was likely to be accompanied by a greater demand
for skills, literacy and numeracy. There was, therefore, a general warning to
employees to prepare themselves for the consequences of change.
157. In my considered view, the facts of the present case required the employer
to make its position clear to all affected employees at the earliest possible
opportunity. After all, if the company wished to give all employees a fair
chance to retain their employment in the restructured workplace, it was duty
bound, in my view, to inform them in clear and unequivocal terms of the
inadequacy of their qualifications and to provide reasonable means for
those employees to obtain the requisite levels of competence.
158. While there was reference in the evidence to various forms of
communication over the years by the company to its employees (whether
directly or through the union) of the importance of improving skills levels
and undertaking ABET courses to enhance literacy and numeracy levels, in
my view there was nothing sufficiently concrete from the company to put
the employees at Newlands affected by the 2001 restructuring on notice
that they stood to lose their jobs if they did not improve their literacy and/or
numeracy levels so as to achieve a prescribed level.
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159. In attempting to bolster its case in this regard, the company relied, inter alia ,
on a memorandum issued on 31 December 1999 by the human resources
manager at Newlands, Khaya Ngcwembe, in which certain individuals were
advised to participate in ABET classes
“to help prepare ... [themselves] ... for the future requirements by (sic) the company. This
is due to the fact that, over time, due to developments in the various fields, the entry
requirements for specific jobs do change ...” .
Employees were then urged to avail themselves of “this last opportunity for ABET that
the company is making available ...”.
160. Given the fact that a decision had been taken at national level the previous
year regarding the requisite ABET levels in the new BOP II structure, it is
difficult to understand why the company did not convey precisely this
information to each of the employees most likely to be affected by the
introduction of that structure.
161. The earlier restructuring that took place at Newlands in 1999 and 2000
involved the new ABET levels, but due to the fact that there were no
retrenchments on Line 1 and only a handful in engineering, the importance
of those levels is unlikely to have been brought home to other employees in
different departments. In any event, there was no evidence to suggest that
employees other than those on Line 1 engineering were involved in the
consultative process relevant to that restructuring, in which the company’s
business plan (which included the contemplated entry levels) was
presented.
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162. A further factor which warrants mention in this regard is the apparent limited
availability of ABET at Newlands.
163. In crossexamination of certain of the company’s witnesses Mr Kahanovitz
suggested that the ABET centre at Newlands had closed down sometime in
1999. No direct evidence was adduced by the union to establish this fact
and I must confess that the evidence on this issue is not clear. While Lynn
Majiet, the ABET consultant contracted by the company at Newlands, was
not called to testify, notwithstanding her availability, it does seem to me that
there was at least some interruption of the ABET classes at Newlands in
1999 and 2000:
163.1. In September 1999 the company sent out an ABET questionnaire to
establish the extent of interest in parttime ABET classes on the part
of employees at Newlands.
163.2. At the beginning of 2000 Ngcwembe announced that an “ABET week”
would be held at the end of January 2000. This document stated
that
“The purpose of ABET levels is to focus the attention of all employees in Newlands on
Adult Basic Education to relaunch ABET in Newlands.” (Emphasis added.)
163.3. Majiet prepared various documents which indicate a renewed
endeavour to provide a comprehensive ABET intervention in 2000
which would be overseen by a joint committee made up of
management and employee representatives.
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163.4. The 2000 ABET classes would start once an assessment had been
made of the number of employees involved. Significantly it was
“anticipated that only one class will be running in the first year (2000)
on a pilot basis.” (Emphasis added.)
163.5. Majiet submitted extensive budget documents to the company to
assess the cost of ABET courses at various levels of literacy to be
run from 1 June 2000 to 30 June 2001. The total cost thereof was
projected to be R594 600.00.
163.6. During AprilMay 2000 a screening process was undertaken to
assess the number of potential candidates who would be interested in
ABET at various levels.
163.7. A list of interested candidates was drawn up (they numbered 156
from levels 1 through to 4). Eventually, 67 persons were enrolled
only at ABET levels 3 and 4.
163.8. Candidates were required to conclude a written agreement with the
company in which they were liable to repay the company the sum of
R990 (the cost of materials) in the event that they dropped out of the
ABET programme. Employees were afforded the opportunity of
attending the courses (ranging from 280 336 hours) on a 50/50
basis, i.e. 50% on company time and 50% at their own expense.
Classes were to run for two hours per session.
163.9. The minutes of a meeting on 14 July 2000 of the ABET committee at
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Newlands reflect that Majiet raised the issue of budgetary constraints
regarding ABET training
“Lynn reported that a meeting was held with ... [Boesenberg] ... re [ABET] levels 1 and
2 ... [Boesenberg] ... indicated that unfortunately we do not have the finances to run a
level 1 and 2 class. Reality is that the currently (sic) ABET budget is insufficient for
running the current level 3 and 4 classes.”
163.10. In September 2000 an attempt was made to commence with the
enrollment of level 1 and 2 ABET candidates. In an email dated
6 September 2000 Majiet told Boesenberg and Ngcwembe
“If we do not start these classes soon these learners will not be able to write the June
examination next year.”
164. Given the amount involved, the complaint in June 2000 of budgetary
constraints is startling to say the least. Indeed, Mr Gauntlett made it clear
on a number of occasions during the case that affordability on the part of
the company (in relation to a variety of issues) was never an issue. That,
too, would have been surprising had it been raised by a company of this
size.
165. After commencement of the consultative process at Newlands brewery
early in 2001, the company offered a series of fasttrack ABET courses
aimed at giving affected employees a lastminute opportunity to improve
their entry level qualifications. This belated attempt came at an advanced
stage of the consultative process and does not appear to have offered
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those employees a realistic opportunity to improve their positions
adequately.
166. Upon consideration of all the relevant facts I am left with the distinct
impression that the company did not wish to (nor did it) go out of its way to
timeously highlight the pitfalls of inadequate ABET levels in the BOP II
structure at Newlands. A minute of a meeting of the Main Board in early
November 2000 reflects that the company anticipated a reduction in
employee numbers of 25% due to the implementation of BOP II. This may
account for the fact that the company did not press home with its
employees the importance of improving their ABET levels so as to
potentially avoid retrenchment. It may explain, too, the sporadic nature of
the ABET programmes at Newlands and the apparent reluctance to assist
the most vulnerable of employees those at ABET levels 1 and 2.
167. There is ample evidence to show that the company knew from 1999 that its
Newlands employees would require certain ABET levels to be admitted to
training in the BOP II structure. It does not appear to me that the company
took adequate steps to assist these employees in obtaining (or having
access to) the necessary ABET interventions. In my considered view the
company failed to show that “all viable steps” to avoid retrenchment had
been considered and taken in respect of this group of employees and I am
driven to conclude that the retrenchment of the category 2 applicants was
substantively unfair.
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CATEGORY 1 APPLICANTS
168. As regards the category 1 applicants, there is no evidence before me to
explain why they did not apply for positions in the new structure. While it
may well be that they relied on the company’s intention to set minimum
entry levels and that they did not think they met same, this does appear to
be somewhat speculative in the circumstances. They do not fall into the
same position as the category 2 applicants and I am of the view that there
is sufficient evidence before me to show that their dismissals were
substantively unfair.
CATEGORY 3 APPLICANTS
169. The category 3 applicants were afforded an opportunity to enter into the
training phase of the BOP II implementation and they were evaluated
thereafter. There is no evidence to show that their subsequent
retrenchment was not reasonably based on their failure to meet the criteria
set down in that evaluation process. Indeed, the company has fairly
demonstrated the necessity to retrench the category 3 applicants whose
dismissals were accordingly substantively fair.
CATEGORY 4 APPLICANTS
170. Six employees of many years service (ranging between 11 and 19 years)
were targeted for retrenchment by the company due to what was termed
“outsourcing of noncore Business Activities” .
171. Under crossexamination Boesenberg, when asked what the dismissal of
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these workers had to do with WCM, remarked quite frankly “arguably, not a
lot”.
172. On 18 January 2001 the company presented its business case to the union
and employees at Newlands by way of some 60 slides through a
computerised programme known as “Power Point” . The business case was
intended by the company to constitute compliance with its obligations under
section 189(3) of the LRA. This presentation encompassed four distinct
categories described as “Proposal 1 4” .
173. “Proposal 4” was described in the business plan as relating to “other”. In
slide 6 thereof the company recorded its “preliminary thinking” in relation to
this category of restructuring. This was cryptically worded as being
“Productivity opportunities in Warehouse, Risk Management and
Production General”.
174. The only other slide which deals with “Proposal 4” is no. 51 which records
the following in telegram style:
“Outsourcing of NonCore Business Activities:
Warehouse:
• Outsourcing of cleaning
• Impact of 3 heads
Risk Management:
• Reduction of SAB Security supervision
• Outsourcing of Laundry/O + G store
• Integration of Shop Assistant and Receptionist positions
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• Impact of 5 heads
Production General:
• Outsourcing of cleaning
Proposed timing : June 2001.”
175. No substantive reasons were advanced in the business case as to why it
was necessary to jeopardise the job security of longstanding employees
and make use of outsourced labour in the abovementioned positions. Nor
was there any viva voce evidence adduced at the trial in this regard by the
company.
176. When the trial recommenced in midDecember 2003, the parties sought to
limit the introduction of further viva voce evidence and agreed on the
admission of various written statements, both from witnesses on behalf of
the company and from certain of the applicants. I queried the status of
these documents in the absence of any crossexamination by the opposing
party and was assured by both parties that the evidence contained in them
would form part of the record as if it were viva voce evidence.
177. In a document termed “Evidence of Ingmar Boesenberg in Rebuttal”, the
company sought to provide an explanation for the dismissal of the category
4 applicants or socalled “other” employees. The focus of the document
was on the evidence given by the only lay witness who testified on behalf of
the union (and of himself as a coapplicant), David Mantangana.
178. The material parts of Boesenberg’s statement read as follows:
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“4. The outsourcing of noncore activities, including the laundry [where Mantangana was
employed], was based on an economic rationale and formed part of the organizational
design principles and new work practices underlying the restructuring to a world class
manufacturing organization. As stated in the business case, the focus was, inter alia, on
quality, speed, productivity, cost and morale.
5. Economies of scale dictated that noncore business activities such as the laundry
department required to be consolidated in a larger service portfolio.
6. This resulted in the laundry department position occupied by Mr Mantangana, and other
positions such as security, as they were performed in the past, becoming redundant
within the organization.”
179. It will be noted that, in contradistinction to his viva voce evidence,
Boesenberg sought, at the very end of the proceedings, to justify the
“other” retrenchments under the rubric of WCM. This was, of course, never
the company’s case in the business plan. There was no evidence adduced
in support of the “economies of scale” allegation and I am not in a position
to evaluate the bald assertion made by Boesenberg in this regard.
180. There was evidence to show that Mantangana had been severely injured in
a motor vehicle accident some many years previously and his attendance
record and functioning was affected thereby. I should say that
Mantangana’s dismissal certainly has the sound of incapacity to it, but be
that as it may I am not satisfied that the company has adduced sufficient
persuasive evidence to discharge the onus of proving that the dismissal of
Mantangana and the “other” applicants who resort under category 4 was for
a fair reason nor that it had taken “all viable steps” to avoid the
retrenchment of this group of employees.
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181. I am inclined to agree with Mr Kahanovitz’s remark in regard to this
category that “Everything under the sun, so it would seem, is a component
part of this pliable and elastic business philosophy” (i.e. WCM).
182. While there is evidently a global trend towards the casualization of labour (a
situation which is obviously anathema to the entrenchment of job security),
there was no compelling reason advanced by the company to explain why
the decision to outsource in respect of this category of applicants was
necessary to advance the interests of WCM.
183. It follows, therefore, that the dismissal of the category 4 employees was
also substantively unfair.
CATEGORY 5 APPLICANTS
184. Under the old structure the company employed two deaf mute men. Japan
Ndongeni (applicant no. 74) had been with the company for 12 years and
worked as an attendant on packaging Line 2. Ephraim Mandindi (applicant
no. 42), who was a qualified forklift driver, worked as an attendant in the
raw materials department. He had more than 15 years experience and also
deputised as a relief forklift driver on occasion.
185. Smith emphasised in her evidence the importance of “verbal interaction” in
the team structure envisaged under WCM. She considered that deaf people
would therefore be unable to operate effectively in the new system.
186. Pinto confirmed, in questions from the Court, that both these applicants
were dismissed because of their disability and their inability to
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“communicate in the new structure” .
187. The union fairly questioned how these two employees had managed to
successfully discharge their duties under the old system for extensive
periods of time notwithstanding their disabilities.
188. The company’s documentation, which summarises the status of the various
applicants, their known ABET and/or educational levels and the company’s
reasons for dismissal, reflects that the two deaf mute applicants did not
apply for positions in the new structure.
189. Once again, there is certainly the possibility that these applicants were
dismissed for the reasons given by Pinto (and I express no view on whether
this was discriminatory or not), but there is no evidence from either of them
as to their reasons for not applying. In the absence of such an explanation
(and there was no evidence that they were not available to testify), I am
unable to find that their dismissals were substantively unfair.
PROCEDURAL FAIRNESS
190. The principles relating to procedural fairness have been laid down by the
Labour Appeal Court in numerous decisions, including Johnson &
Johnson (Pty) Ltd v CWIU (1999) 20 ILJ 89 (LAC); Imperial Transport
Services (Pty) Ltd v Stirling [1999] 3 BLLR 201 (LAC); Kotze v Rebel
Discounting Liquor Group (Pty) Ltd [2000] 2 BLLR 138 (LAC) and, more
recently, Enterprise Foods (Pty) Ltd v Allen , supra, and General Food
Industries Ltd v FAWU , supra.
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191. These cases suggest that once the employer contemplates a restructuring
exercise which may lead to dismissals, it is required to initiate the
consultative process contemplated under section 189 of the LRA. When it
does so, the employer is obliged to approach the matter with an open mind
and should be receptive to counterproposals from the employees and/or
the union. While it does not have to cowtow to the union’s demands, the
employer should make a genuine attempt to reach consensus on the issues
prescribed by section 189(2) of the LRA, including matters such as the
choice of selection criteria to be used to determine candidates for
retrenchment, the timing and avoidance of dismissals where possible and
the payment of severance packages. Most importantly, it has been
repeatedly said that the employer must not confront the employees with a
fait accompli.
192. In the instant case, the company appreciated in at least 1998 that pursuit of
a WCM strategy could lead to job losses. To this end it attempted to
negotiate the Workplace Change Agreement with the union nationally.
These negotiations (which were clearly a legitimate attempt to avoid going
through a section 189 exercise) faltered when the union demanded job
security and a moratorium on dismissals.
193. The company then decided to abandon negotiation at a national level and
to follow the prescripts of section 189 in respect of each restructuring at
each brewery. So, for instance, at Newlands, there were different
consultative processes for the implementation of WCM in Line 1 packaging
(1999), the engineering department (2000) and Lines 2, 3 and 4 packaging
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(2001).
194. In relation to the restructuring in the Lines 2, 3 and 4 packaging department
at Newlands (the subject of this case), the company relied on the business
case referred to above as its compliance with section 189. However, Mr
Gauntlett said sight should not be lost of what had gone on before: the
union knew that WCM could lead to retrenchments and it should have been
alerted to the consequences at a relatively early stage of proceedings.
195. In my view, that forewarning could only have been of a general nature. The
Alrode Line 12 pilot (a “greenfield” site) did not lead to retrenchments, nor
did the Newlands Line 1 restructuring, while the engineering restructuring at
Newlands was a very limited intervention as far as job losses were
concerned.
196. In any event, it is not for the union or the employees to anticipate the
designs of the company, which is, after all, in control of its enterprise and
knows when and how it intends implementing its proposals and/or new
working models.
197. Mr Kahanovitz argued that the company knew as far back as mid1998 that
WCM would be introduced at Newlands packaging and that the duty to
commence consultation arose then. Not so, countered Mr Gauntlett, who
said that there was nothing to consult about at that stage since there was
no business plan yet drawn up for Newlands packaging. It was argued that
the company decided around October/November 2000 that Newlands
packaging Lines 2, 3 and 4 should be restructured, that the business plan
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was prepared and presented within a reasonable time frame thereafter.
198. As is so often the case in matters of this nature, I think the answer lies
somewhere in between. It would be fair to say that there was nothing
concrete to put on the negotiating table in mid1998 as far as Newlands
packaging was concerned. Nevertheless, the company knew that WCM
was eventually going to be implemented throughout its various structures
nationwide and that it would certainly affect all the packaging lines at
Newlands. (That, after all, was the purpose of the Alrode Line 12 pilot.)
199. The company knew, too, that it intended to fix minimum entry level
requirements for the new positions and that a good number of its workforce
would be affected thereby, to the extent that retrenchments would be the
most likely options.
200. In my view, it would have been fairer for the company to have given earlier
notice to the union, particularly in order that affected employees could have
had the opportunity to improve their ABET levels or otherwise demonstrate
their competencies in the new structure.
201. The evidence shows that the company wanted to first put all its ducks in a
row (perhaps quarts would be a more appropriate metaphor). Having
carefully planned its strategy at the Change Planning Workshop in
November 2000 it commenced the consultation process on relatively short
notice to the union and then sought to lock it into a rigid timeframe.
202. Pieter Keyter was transferred by the company to Newlands on 1 December
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2000 from Durban. He held an appointment as a human resources
consultant and was responsible for overseeing the implementation of the
restructuring of the Lines 2, 3 and 4 packaging department at Newlands. He
denied a suggestion under crossexamination that he had been specially
transferred to Newlands because of his prior experience in handling the
WCM implementation at Durban’s Prospecton brewery. Nevertheless, he
clearly had plenty of experience in the area of restructuringrelated
consultations and was a participant in the Change Planning Workshop held
at Newlands prior to him taking up his new position.
203. It is clear that the company went about the Newlands Lines 2, 3 and 4
packaging restructuring exercise in a considered, detailed and thorough
manner. The Change Planning Workshop was an exercise to equip various
levels of management with the expertise and tools to handle the difficult
and unenviable task that lay ahead. Management knew that it was dealing
with a tough union that would employ the traditional delaying tactics and
stratagems that are part and parcel of such an exercise. As noted earlier in
this judgment, management wanted to retain the moral high ground
throughout the process.
204. At the first consultative meeting on 18 January 2001 (the date having been
shifted from 10 January 2001 to accommodate the union), the union
received the company’s business case in the form of the Power Point
presentation referred to above. I have reviewed the slides in their printed
form and would say that it is a comprehensive and detailed document which
would take some time to digest (even for one familiar with the basic
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concepts set out therein). The union requested an opportunity to consider
the company’s business plan and asked that the company afford them a
month to study the document and formulate a response.
205. The company refused the union’s request for a month and said that weekly
meetings would follow at which the union was expected to be present and
to respond. In an email on 18 January 2001 to his superior, Alan
Cumming, Keyter made some particularly relevant observations:
205.1. In relation to the union’s request for time he remarked:
“... in a nutshell, they want us to suspend the consultation process for a month to allow
them time to study the document and come up with alternative proposals. While this
does not appear to be an unreasonable request at face value, we were unable to agree
to it, based on the fact that we simply don’t have a month to spare i.t.o. our
implementation timeline. In fact, we told them that we’d like to be in a position to make a
decision on whether to implement in its current form or with other alternatives in +/ a
month from today”.
205.2. In an endeavour to understand the company’s consultative
obligations, he asked:
“What is the implication of their expected proposal if they come up with a proposal that
is completely different to our’s how do we handle this? Are we obliged to consult with
them on their proposal, or will it be OK to reject it early on, obviously stating our reasons
why?”
205.3. Finally, in attempting to understand the term “fait accompli” he asked
whether it meant:
“(a) we’ll do it our way and ignore all other input;
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(b) we’ll listen to other input and include it in our proposal, if viable, but our
implementation date is cast in stone (operational requirement);
(c) same as (b), but we’ll even consider changing the implementation date.”
Keyter then formulated his own interpretation as follows:
“Clearly, I want it to mean (b) above, because if the timeline gets extended there will be
financial implications for the business.”
Quite what those “financial implications” were, was never really explored in cross
examination of the witness.
206. Cumming replied to these issues as follows:
206.1. “We are bound to a minimum of 4 months. Our guideline is that the
Contemplation phase should take ± 1 month. 1 month’s suspension
of consultations to consult outsiders seems excessive/ Why not max
1 / 2 weeks.”
206.2. “We have to consider ANY proposal and accept or reject it. If it can
be rejected outright, that’s OK as long as we have seriously
considered it in writing.”
206.3. “Fait Accompli” means (a) only. I think time lines are not a big issue
re fait accompli as the business obviously has to stick to timelines
and this will change only by agreement or if an interdict is obtained
that is our agreement.”
207. The company produced Keyter’s handwritten notes of the meeting of
18 January 2001. These afford an interesting insight into the thinking of the
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management team at that meeting. When confronted with the import of his
notes, Keyter sought to explain them away as simply his personal ideas
and stated that he was playing “a little bit of devil’s advocate”.
208. Under crossexamination, Pinto accepted that aspects of Keyter’s email
reflected the thinking of the management negotiating team. She did not
object to the contents of the email when it was forwarded to her in January
2001.
209. I should point out that in the agreed retrenchment procedure (“Annexure F”)
provision is made for 4 months in which to conclude a retrenchment
exercise. The union took the point that each phase of the process was a 4
month period thereby extending the length of the process. (This issue was
taken to arbitration during the process and the arbitrator dismissed the
union’s argument.)
210. The union, in an admitted tactical manouvre, did not attend any meetings
for the requested month. (I understood that it wanted to behave consistently
with the stance adopted on the ‘4 month’ dispute.) Nevertheless, the
company persisted in holding the weekly consultative meetings and, in an
exercise of complete futility (but presumably to maintain the moral high
ground) recorded minutes of those meetings at which it alone was present.
211. I consider that the abovementioned notes and exchange of emails confirm
the inflexibility on the part of the company’s lead negotiator at Newlands.
The matter was put beyond the pale, however, when under cross
examination Keyter stated the following:
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“Mr Keyter, I’m going to argue at the end of the case, the email speaks for itself, the
reason that you couldn’t agree was the one which you state in the email which you sent
to Mr Cummings (sic) at the time, and that is simply this, to use your own words, we
simply don’t have a month to spare in terms of our implementation time line. Can’t you
just admit that that is exactly what happened M’Lord, we wanted to implement the
proposal as is, there is no doubt about that.”
212. The witness did go on to assert his belief in the consultative process, but I
am of the opinion that the union’s complaint that the company approached
the consultations with a firm and preconceived view is sustainable. This is
adequately demonstrated by the fact that the company set about
implementing its proposal before the union presented its counterproposal,
and then purported to consult with the union in circumstances where a
reversal of the situation was virtually impossible.
213. A further fact which demonstrates that the company had made up its mind
irreversibly relates to the decision to introduce WCM per se . While this had
been a topic of debate between the company and the union nationally in
1998, no consensus had been reached at that level due to the union’s
demand for a moratorium on retrenchments. I do not believe that the choice
of WCM or not was ever open for serious debate at Newlands in January
2001. Implementation thereof was already far advanced at Newlands and
had taken place at other breweries. Quite clearly the company had decided
at the highest level that this was the model of restructuring that it favoured
and it was hardly open to Boesenberg and his team at Newlands to come
up with a different model.
214. Finally, on this score, the choice of entry level specifications had been fixed
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at national level after the input from Flagship and there was no realistic
likelihood of any other criterion being agreed upon at Newlands.
215. Allied to this is the complete disregard by the company of the agreed
selection criteria in annexure, viz. LIFO with retention of special skills. That
deviation from a generally accepted set of criteria was similarly not
seriously up for debate.
216. In the Johnson & Johnson case, supra, Froneman DJP warned against
the mechanical use of a checklist of items of procedural regularity in cases
of retrenchment. I believe that I have highlighted above what I consider to
be a number of material procedural shortcomings on the part of the
company. Indeed, there may be more.
217. When the facts are considered holistically I am left with the overwhelming
impression that the company did not behave fairly in relation to the
procedure it adopted and subsequently employed in the 2001 exercise at
the Newlands brewery. In saying so I am mindful of the passage in the
judgment of Willis JA in the Woolworths case, supra, and in particular
the tactics employed by the union both at national and local levels. Bearing
in mind where the balance of power lies in a retrenchment exercise (it is
ultimately the company’s prerogative to put forward its proposals and to
attempt to convince the union to agree, but disensus is not fatal to its case),
I do not regard the union’s stance in the present case as being anything out
of the ordinary. It was certainly not a position which in any way serves to
legitimize or ameliorate the company’s unreasonableness.
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218. In all the circumstances I am persuaded that the dismissal of all the
applicants was procedurally unfair.
COMPENSATION
219. Section 193 of the LRA provides for the various remedies available in the
case of a finding of unfair dismissal. In terms of section 193(2)(d) of the
LRA reinstatement is not permitted in the case of procedural unfairness. In
such event, the court may only order the payment of compensation by the
employer.
220. While the “merits” of this case have been determined in accordance with
the statute as it stood before the 2002 amendments to the LRA, I am of the
view that the issue of compensation is to be determined in accordance with
the wide discretion introduced into section 194(1) by the 2002 amendment.
(See Fouldien and Others v House of Trucks (Pty) Ltd [2002] 12 BLLR
1176 (LC) at 1182, para 17.)
221. That discretion is to be exercised in such a manner that the award is “just
and equitable in all the circumstances, but may not be more than 12
months’ remuneration calculated at the employee’s rate of remuneration on
the date of dismissal.”
Procedural Unfairness
222. An award for compensation under the amended section 194(1) still
encompasses the solatium occasioned by a procedural defect
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(see Fouldien’s case, supra, at p.1182, para 18). That solatium was
described by Conradie JA in Lorentzen v Sanachem (Pty) Ltd [2000] 7
BLLR 763 (LAC) at 766, as requiring an evaluation of the magnitude of the
employer’s transgression together with the anxiety and “hurt” suffered by
the affected employee.
223. In my view, the procedural unfairness of the company in the present case
was serious. I am of the view that, procedurally, there was very little open
for debate with the union at the beginning of 2001 at Newlands. The model
of restructuring and the entry level specifications for the new jobs had been
fixed nationally by the company in a unilateral fashion at a very early stage
of the WCM exercise.
224. Importantly, the selection criteria for retrenchment contained in the
collective agreement between the parties was completely ignored by the
company. The effect was that some of the company’s most loyal and
longest serving employees were dismissed. Many of those were people
who had helped the company attain its dominance in the local beer market
and to build up the extraordinary wealth with which it has been able to
aggressively pursue its international acquisitions. They would rightfully have
reason to be aggrieved by their treatment.
225. On the other hand the retrenchment packages stipulated in the collective
agreement are not insignificant and exceed the minimum stipulated in the
LRA quite handsomely. In addition, the company put Project Noah in place
at a relatively early stage of its retrenchment initiative and has attempted
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thereby to soften the blow of the dismissals and to provide some sort of
safety net.
226. In the circumstances, I consider that compensation of 9 month’s
remuneration would be fair and reasonable in relation to the applicants
whose dismissals have been found to be procedurally unfair.
Substantive Fairness
227. The primary remedy for a dismissal which is found to be substantively
unfair in reinstatement. Section 193(2) of the LRA obliges a court to
reinstate an applicant in the event of substantive unfairness unless
227.1. the employee does not wish to be reinstated. In the instant case two
applicants indicated this, but since they are not category 2
employees, it is not necessary to consider compensation in lieu of
reinstatement in their cases;
227.2. the circumstances relating to the dismissal make continued
employment intolerable. This does not arise in the present case;
227.3. “it is not reasonably practicable for the employer to reinstate” .
228. I was informed that five of the applicants have died since their dismissals.
Of this number two: (Victor Nazo applicant no. 71 and Israel Mcebisi
Silcweza applicant no. 95) are category 2 employees.
229. The company adduced the evidence of Boesenberg to avoid reinstatement
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on the basis of reasonable impracticability. He stated that the introduction
of WCM produced a seachange in the work structure at Newlands, that
efficiency had been greatly enhanced and that reinstatement would cause
intractable problems for the company.
230. On the other hand, there was ample evidence to show that a vast number
of retrenched employees have subsequently been reemployed by the
company in terms of service agreements with labour brokers. The irony of
this situation is that dismissed employees’ services are still required by the
company during periods of higher production demand, notwithstanding their
apparent lack of training and/or insufficient ABET levels.
231. I was told that these employees (colloquially known under the LRA as
TES’s temporary employment service employees in terms of section
198) are utilised by the company on nonWCM lines and that they perform
precisely the same work as before their retrenchment. The evidence was
also that many of the TES’s had worked for protracted periods of time
between 6 and 9 months in many instances.
232. In such circumstances I am of the view that the company has not
established, on a balance of probabilities, that the primary remedy is “not
reasonably practicable” . Accordingly, I am satisfied that the category 2
applicants, with the exception of those who are deceased, are entitled to
reinstatement.
233. As far as the deceased category 2 applicants are concerned, it seems to
me that compensation in the maximum amount of 12 months would be
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appropriate. In terms of a midtrial conference minute the parties agreed
that any sums payable to deceased applicants would be paid to the union
which would receive same on behalf of the executors and/or beneficiaries
of such deceased persons.
COSTS
234. The parties were both of the view that this was an appropriate case for the
award of costs. The union and the individual applicants have been
substantially successful and are accordingly entitled to their party and party
costs, including the qualifying expenses of their expert, McLean, and the
costs of two counsel where employed.
235. Costs orders in relation to interlocutory proceedings stood over for
determination at the conclusion of the matter.
236. On 26 November 2002 this matter was set down on short notice to the
parties for hearing on 10 January 2003, i.e. during Court recess. The
Applicants indicated that the date did not suit them while the Respondent
said it was ready to run. The Registrar of this Court was not amenable to
removing the matter from the roll and directed that an application for
postponement should be brought if necessary.
237. The Applicants duly lodged an application for postponement which was
vigorously opposed by the Respondent. After several reams of paper had
been exchanged, Rogers AJ granted a postponement on 19 December
2002. He reserved the question of costs, to be determined in the light of
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“events which occur in terms of preparation or at the trial which will cast
light on the positions the parties adopted” before him.
238. Mr Gauntlett accepted during argument that these costs should be costs in
the cause. I agree with this submission. I should add that I had considered
making a punitive costs order against the Respondent because of the
opportunistic manner in which it approached the unusual set down of the
matter and forced the parties to incur costs which could easily have been
avoided had a more accommodating approach been taken. I have,
however, decided against such an order.
239. At the commencement of the trial before me, Mr Kahanovitz moved an
amendment to the Applicants’ statement of claim, part of which was
opposed by the Respondent. In view of the opposition, the Applicants did
not proceed with the contested part of the application.
240. When the matter became partly heard before me at the end of July 2003, it
was postponed for further hearing until the end of September 2003. Not
unexpectedly, the Applicants renewed their application to amend the
objectionable parts of their statement of claim.
241. Several further reams of paper were exchanged and a special sitting of the
Court was convened early in September 2003 to deal with the opposed
amendment. The fiery opposition at that stage frizzled out like a damp
squib. I consider that the conduct of the Respondent in this interlocutory
application is worthy of censure. It involved an extensive opposed
application which could have been avoided had sense prevailed and had
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tactical stratagems been put to one side. The Respondent complained
about the lateness of the amendment and the severe prejudice it would
suffer if it had to call witnesses from the four corners of the globe. Yet all
these protestations were in vain and the prejudice came to naught. Litigants
in this Court are to be dissuaded from flexing their financial muscle in
attempts to embarrass their opponents.
CONCLUSIONS
242. In the light of the aforegoing I make the following order:
A. The dismissal of the category 2 applicants (whose names are set out in annexure
“A” hereto) is declared to have been substantively unfair;
B. The dismissal of the category 5 applicants (whose names re set out in annexure
“B” hereto) is declared to have been substantively unfair;
C. The dismissal of all the individual applicants is declared to have been procedurally
unfair;
D. The applicants whose names appear in annexures “A” and “B” hereto are to be
reinstated with retrospective effect on the same terms and conditions that pertained prior
to the dates of their dismissal;
E. In the event that any of the applicants who are to be reinstated have been
employed since dismissal in the Respondent’s business in terms of temporary
employment service contracts as contemplated in section 198 of the Labour Relations
Act, the Respondent shall be entitled to set off all amounts actually received by such
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employees from their employer(s) under the aforementioned section 198, against any
amounts which may be due to them by way of arrear remuneration;
F. The Applicants, excluding those whose names appear in annexures “A” and “B”
hereto, are awarded compensation of 9 months’ remuneration calculated at each
employee’s rate of remuneration on the date of dismissal;
G. All amounts due by the Respondent in terms of this order to any applicants who
are deceased, are to be paid to the applicants’ attorneys of record who are requested to
deal with any such monies in terms of the relevant provisions of the Administration of
Estates Act;
H. The Respondent is ordered to pay the Applicants’ costs of suit herein, such costs
to include the costs of two counsel where employed, the qualifying expenses of Daryl
McLean, as well as the costs of the application for postponement heard in December
2002 and the application to amend heard in September 2003;
I. All costs are to be on the party and party scale, save for the costs in relation to the
lattermentioned application to amend which shall be on the scale as between attorney
and client;
J. In the event that either annexures “A” or “B” hereto incorrectly reflect the names of
the applicants concerned, the parties are requested to approach the Court within 10 days
for a correction of this order in terms of Rule 16A.
P.A.L. GAMBLE
Acting Judge of the Labour Court
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Legal Representatives :
For the Applicants :
Advocates C.S. KAHANOVITZ and M.L. NORTON
instructed by Chennels Albertyn, Cape Town\
For the Respondent :
Advocates J.J. GAUNTLETT and L.F. FICHARDT
instructed by Bowman Gilfillan, Cape Town
ADDENDUM :
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN Case No: C1008/2001
In the matter between:
FOOD AND ALLIED WORKERS UNION First Applicant
CLINT ABRAHAMS AND 113 OTHERS Further Applicants
and
SOUTH AFRICAN BREWERIES LIMITED Respondent
ORDER IN TERMS OF RULE 16A(1)(a)(ii) MADE ON 16 SEPTEMBER 2004
Gamble, AJ
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1. The judgment in this matter was handed down on 3 September 2004.
2. The Respondent has now filed an application for leave to appeal against
that order.
3. In paragraphs 2 and 3 of the Notice of Appeal the Respondent has raised
certain grounds of appeal which, in my view, highlight two obvious errors in
the judgment.
4. In the first place, it is suggested that I erred in finding, at paragraph 168 of
the judgment, that there was sufficient evidence to show that the dismissal
of the category 1 applicants was substantively unfair. I have reread the
judgment and have observed a typographical error in that paragraph,
namely that the word “sufficient” should read “insufficient”. I believe that
the construction of the paragraph in question otherwise supports the
corrected version. The fact that no order in relation to the substantive
unfairness of the dismissals of the category 1 applicants was made is
consistent with the corrected version.
5. Secondly, it is alleged that the order in paragraph 242.B of the judgment
declaring the dismissal of the category 5 applicants to be substantively
unfair is inconsistent with my finding in paragraph 189 of the judgment in
which I held that I was unable to find the dismissals of that category of
employees to be substantively unfair.
6. Once again there is a typographical error in this portion of the judgment.
The reference in paragraph 242.B to category 5 applicants should, of
course, be to category 4 applicants. This error is confirmed by the list of
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names set forth in Annexure “B” to the judgment, which records the six
“other” applicants who resorted under category 4 (as opposed to the two
deaf mute applicants who were described in the judgment as category 5
applicants).
7. These patent errors may be corrected in terms of Rule 16A(1)(a)(ii) of the
Rules of the Labour Court which provide that I am empowered to vary my
order or judgment of my own motion. In the present circumstances I do not
consider it necessary to hear the parties on these points since the errors
are patently of a typographical nature. It is appropriate, too, that these
corrections be made before the application for leave to appeal is heard in
order that the parties may consider their respective positions and if
necessary amend their documents.
8. I shall accordingly exercise my powers under the Rule mero motu and vary
the judgment and order accordingly. The parties are, of course, free to
exercise their rights under the same Rule should they so wish.
9. In the circumstances, I make the following order under Rule 16A(1)(a)(ii):
9.1. Paragraph 168 of the judgment in this matter is varied by the
deletion of the word “sufficient” in the penultimate line thereof and
the substitution of the word “insufficient” therefor;
9.2. The order contained in paragraph 242.B of the judgment in this
matter is varied by the deletion of the phrase “category 5
applicants” and the substitution of the phrase “category 4
applicants” therefor.
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P.A.L. GAMBLE
Acting Judge of the Labour Court
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