South African Commercial Catering and Allied Workers Union (SACCAWU) and Others v Gallo Africa (JS1495/01) [2005] ZALC 93; [2006] 1 BLLR 36 (LC); (2005) 26 ILJ 2397 (LC) (17 October 2005)

55 Reportability

Brief Summary

Labour Law — Unfair Dismissal — Procedural and Substantive Fairness — Applicants, represented by a trade union, challenged the fairness of their dismissals due to operational requirements of the respondent, a music industry company. The court found that the respondent had engaged in sufficient consultation with the union and had valid operational reasons for the retrenchments. The applicants' claims of unfair dismissal were dismissed as they failed to accept alternative employment offered by the respondent.

IN THE LABOUR COURT OF SOUTH AFRICA
BRAAMFONTEIN
CASE NO :  JS 1495/01
SOUTH AFRICAN COMMERCIAL CATERING
AND ALLIED WORKERS UNION (“SACCAWU”) 1ST APPLICANT
G HLANGU 2ND APPLICANT
J PHUNGULA 3RD APPLICANT
PROFESSOR MALINGA 4TH APPLICANT
PETER MAKHOMBE 5TH APPLICANT
AND 
GALLO AFRICA RESPONDENT
JUDGMENT
REVELAS, J:
[1] The first applicant  (a trade union) who represents four of its members, the  
second to fifth applicants (“the employees”) contends that the termination of  
their   services   by   the   respondent,   was   both   procedurally   and   substantively  
unfair. Their dismissals emanated from the respondent’s alleged operational  
requirements,   of   which   they   were   notified   on   9   May   2001.   The   unfair  
dismissal   dispute   subsequently   referred   by   the   applicants,   remained  
unresolved as at 23 August 2001, (despite conciliation) and a certificate to that  
effect was issued by the CCMA. The applicants seek financial compensation.
[2] The respondent conducts its business in the music  industry and it involves the  
production and distribution of music products. The second, third and fourth  
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respondents   (Hlangu,   Phungula   and   Malinga)   were   in   the   employ   of   the  
respondent   as   drivers   assistants.   The   fifth   respondent   (Makhombe)   was  
employed as a packing manager. The employees were employed at its Durban  
branch.
[3] It was common between the parties on the pleadings (the pre­trial minute) that  
there   were   consultative   meetings   between   the   respondent   and   the   first  
applicant (“the union”) on ten different days in March and April 2001 and a  
further   meeting   after   the   dismissal   on   12   June   2001.   In   the   same   pre­trial  
minute it is noted that meetings were called where the respondent informed  
them   of   its   decisions.   It   was   not   disputed   that   during   the   financial   year  
2000/2001   the   respondent   reflected   a   financial   loss   in   the   region   of   eight  
million   rand,   due   to   various   factors   which   included   a   40%   decline   in   the  
consumer   demand   for   audio   tapes   and   a   general   change   in   the   business  
environment of the respondent. The respondent then needed to restructure its  
business operations and foresaw the retrenchment of many of its employees.
[4] Following the several meetings held between the Union and the respondent,  
the second, third and fourth applicants each received a letter dated 3 May 2001  
wherein they were offered alternative positions with the respondent at its new  
branch in Johannesburg. They were notified to contact the respondent’s human  
resources official, Mr Gift Sibeko at a given telephone number before 8 May  
2001 if they were interested in taking up the positions (general assistant and  
scanner), failing which, their services would be terminated. According to the  
respondent, there was no response to the offer, and the services of the second,  
third   and   fourth   applicants   were   terminated.   A   similar   letter   containing   an

offer   of   a   position   in   Midrand   was   made   to   the   fifth   applicant.   Since,  
according to the respondent, he would not consult thereon, his services were  
also terminated.
[5] The following events preceded these letters. 
[6] In a letter dated 9 March 2001, the respondent addresses a letter to the Union,  
wherein   it   informed   the   Union   that   there   was   a   need   to   commence   with  
retrenchment consultations in view of the respondents financial problems. A  
letter   was   also   circulated   to   the   respondents   employers   three   days   later,  
wherein the respondents proposed retrenchment of some of its employees was  
announced.   The   respondent   undertook   in   these   letters,   to   consult   on   the  
decision   to   retrench   and   alternatives   to   avoid   retrenchment,   the   selection  
criteria,   severance   packages,   and   the   time   frame   wherein   the   retrenchment  
would take place. Disclosure of financial information pertaining to the need to  
restructure   and   an   opportunity   to   discuss   “follow   up   issues”   was   also  
promised.
[8] On   12   March   2001,   the   Union   requested   details   and   information  
pertaining to the reason for the retrenchments, its financial status including  
business plans for the next five years, details on all its employees (in particular  
to determine how LIFO would be implements), various types of organographs,  
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its income expenditure and recent savings. The Union also suggested times  
and dates for the proposed meetings, the first of which was held on 16 March  
2001.   The   information   was   provided   and   further   meetings   were   held.   The  
Union also wanted to know at which stage the respondent became aware that  
the   demand   in   audiotapes   began   to   diminish   and   that   re­assessment   of   the  
Trutone Industries Plant (there these tapes were manufactured) was required.  
This information was furnished.
[7] The Union, through Mr Khulekane Ngubane represented the second to fifth  
applicants   during   the   retrenchment   discussions   that   followed.   He   also  
represented   other   employees   affected   by   the   retrenchment   and   who   were  
members of the Union. Ms Freda Lowe, the respondent’s executive director,  
represented the respondent in these discussions.
[8] As stated, the first meeting was held on 16 March 2001. The Union was not  
present and neither was its present on 23 March 2001. The 16 March meeting  
centred mainly around the respondent’s financial situation. All the information  
which was requested was furnished in writing, together with other information  
not requested. When a meeting was scheduled : Mr Israel Mothobeki (a union  
member) was however present. At the 26 March 2001 meeting, Mr Ngubane  
was present together  with the relevant  shopstewards and explained  that his  
absence was due to time  constraints as he had ambitiously  overbooked his  
schedule. One of the main issues the respondent had to explain to the union at  
this   meeting   was   ,   how   the   costs   would   be   reduced   by   relocating   the  
respondent’s Durban operations to Johannesburg, and how it would affect the  
members. Ms Lowe advised that a feasibility study was on its way.
[9]  It was conveyed to the Union at his meeting that approximately 59 positions  
would be affected by the retrenchment. These included two general assistants,

would be affected by the retrenchment. These included two general assistants,  
the   managers,   sixteen   drivers,   eleven   van   assistants,   one   filing   clerk,   one  
calling  counter clerk, one secretary and several other positions which were  
listed   that   would   make   up   the   number.   I   mentioned   just   a   few,   and   in  
particular, those which included the positions of the applicants in question.
[10] The question of voluntary retrenchment packages were also discussed, as well  
as the positions of temporary employees and LIFO.
[11] As at 7 April it had been agreed that overtime would be banned except in  
emergency situations. And the suggestion that was debated at the insistence of  
the Union was reducing the working week from 44 to 40 hours. 
[12] As   could   be   expected,   there   was   concern   about   the   employees   from   the  
Durban branch that was to be closed. The second to fifth applicants would be  
included in a bumping exercise and transferred to Johannesburg. This decision  
led to a dispute between the parties. The respondent offered the positions in  
Johannesburg   but   individual   employees   did   not   want   to   fully   cover   their  
relocation  costs as this would prove to  be unaffordable  given  the financial  
constraints which resulted in their retrenchments in the first place.
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[13] The   applicant   contended   that   the   respondent   who   had   been   mala   fide  
throughout   the   consultations,   had   terminated   the   services   of   the   individual  
applicants whilst the question of relocation had not been resolved.
[14] According   to   the   applicants,   they   accepted   the   offer   of   re­employment   but  
were dismissed notwithstanding.
[15] The second respondent testified on behalf of the applicants at the trial. His  
testimony was that apart from dismissing them pre­maturely, the respondent  
failed to offer himself and the other applicants assistance after they had been  
dismissed.   No   employer   is   obliged   to   give   post   dismissal   assistance   to  
employees who had been retrenched. That is trite. There is no merit in this  
argument.
[16] In addition,  he stated that the respondent should have consulted with them  
directly. This was however not put to Ms Lowe when she testified. In any  
event even if it is correct that the respondent did not consult directly with the  
employees, it was under no obligation to do so since they were at all relevant  
times represented by a trade union. 
[17] The fifth respondent’s case is different, in that he says that his dismissal was  
unfair in that the respondent should not have consulted with him without his  
representatives being present, and further, that no alternative employment was  
offered to him.
[18] On   the   evidence   that   was   presented,   I   accept   that   there   was   a   need   to  
restructure and to close down the respondent’s coastal plants and to retrench  
some employees. It would appear from the minutes of the meetings that the  
union accepted the respondent’s reasons to close down the coastal plants, in  
particular   the   Durban   branch   where   the   four   individual   applicants   were  
employed.   The   Durban   branch   had   shown   a   61%   decline   in   business.   Ms  
Lowe gave extensive evidence hereon which remained largely unchallenged.

Lowe gave extensive evidence hereon which remained largely unchallenged.
[19] The only two issues remaining unresolved at the end of the consultations with  
the   Union,   were   reduced   salaries   and   the   insistence   by   the   individual  
applicants on relocation assistance. Ms Lowe persisted in her stance that the  
respondent could not afford it. The second applicant was present at a meeting  
held on 19 April 2001, when this aspect was discussed. It was indicated by the  
respondent that it would assist by virtue of loans. The respondent’s decision  
not to provide relocation allowances, was based on the fact that the employees  
would   not   be   filling   vacancies,   but   will   take   up   positions   of   retrenched  
employees.
[20] At the meeting of 25 April 2001, it was made clear that the respondent would  
consult individually affected employees who, if they do not accept alternative  
employment, will be dismissed. This was also contained in the letters of 3  
May 2001, where assistance in the form of a loan was offered.
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[21] According to Ms Lowe, the fifth respondent did not participate in the meeting  
scheduled for him to be consulted with, on an individual basis. This is also  
borne out by the letter sent to him. He reasoned that he would not participate  
without his representatives being present. It appeared from the evidence that  
Mr Mothobeke of the Union had been invited to attend the meeting but failed  
to attend because the convenor, Mr Moloi, was not invited. This was because  
of the deadlock on the question of severance pay and the reduction in salary.  
The stance of the Union was that the consultation process was not over, until  
the outstanding issues (salaries and relocation costs) were addressed.
[22] The services of the fifth respondent were then terminated. 
[23] The other individual applicants were advised in the letters of 3 May 2001 to  
contact Mr Gift Sibeko before 8 May 2001 to indicate whether they would  
accept alternative employment or not. They were advised that their failure to  
accept the offer would result in their retrenchment.
[24] The first applicant corroborated Mr Gift Sibeko’s testimony that none of the  
applicants   contacted   Mr   Sibeko.   Mr   Ngubane   testified   that   he   phoned   Mr  
Sibeko about the offer of alternative employment in Johannesburg for the four  
individual employees. According to him Mr Sibeko said he would revert to  
him, but did not. This was disputed by Mr Sibeko who said he heard nothing  
from the Union or the individual employees. Firstly, Mr Sibeko did not give  
the impression of a lying witness, whereas there were several examples which  
indicated   that   Mr   Ngubane   was.   Secondly,   making   a   telephone   call   to   Mr  
Sibeko  would  be inconsistent  with  the  stance  he  held  from  March  to May  
2001, namely that members would accept transfers, provided their relocation  
costs are paid by their employer. According to him it was the main dispute

costs are paid by their employer. According to him it was the main dispute  
between the parties. None of the letters written by the Union after the letters of  
3 May 2001 (those referring to Mr Sibeko) make reference to an acceptance of  
the   offer   of   employment.   It   also   remains   curiously   unexplained   why   Mr  
Ngubane did not phone someone else who worked for the respondent when Mr  
Sibeko failed to revert to him, if he was indeed serious about accepting the  
transfer offer. Mr Ngubane simply did not take the consequences of the 3   May 
2004 letters seriously. He thereby jeopardised the positions of the individual  
applicants who were retrenched as a consequence.
[25] Prior to 3 May 2001, when the last crucial meeting was held in an attempt to  
resolve  the outstanding  issues, ten consultative  meetings  were  already  held  
between the union and the respondent. The minutes of these meetings show  
the   respondent’s   generally   upfront   and   co­operative   approach   to   the  
retrenchment.   Therefore   the   allegation   of   mala   fides   on   its   part,   remains  
unsupported by fact.
[26] During   the   trial,   I   raised   my   concerns   about   the   fairness   or   otherwise,   of  
presenting the employees in question with an offer of employment in another  
province and refusing to pay their relocation costs. I was persuaded that the  
  5

respondent’s conduct was not unfair in this regard.
[27] The respondent did offer in writing, that it would assist the four employees by  
means   of   a   loan.   It   is   also   of   significance   that   they   would   be   taking   up  
positions of employees who had been retrenched in the course of a bumping  
exercise, agreed upon with the union. The retrenchment exercise was effected  
countrywide   at   several   branches.   To   pay  transfer   costs   for  employees   who  
were   relocated   as   a   means   of   avoiding   retrenchment,   would   be   adding   to  
existing financial difficulties. Furthermore, the employees in question failed to  
participate in the final discussions with Ms Lowe and Mr Beecham ( in the  
case of the fifth applicant) and Mr Sibeko (in the case of the other applicants).  
Once they had accepted the alternative positions, the question of transfer costs  
and the loans offered could be revisited.
[28] In my view, the respondent complied properly with the provisions of section  
189 of the Act, in so far it could. It did all it could to achieve the kind of  
consultation envisaged by the Act and the law.
[29] Consultation  in terms of section 189 of the Act, is a two­way process. No  
meaningful   consultation   can   take   place   if   one   party   withdraws   from   the  
process. There should also ultimately be finality in the consultation process. It  
cannot   be   held   in   abeyance   by   a   party   who   insists   that   the   process   is   not  
finalised when it is quite clear that the process had been.
[30] The applicants are not entitled  to any financial  compensation  as they were  
dismissed for a fair reason and in accordance with a fair procedure.
Accordingly, the application was dismissed with costs on 15 November 2004.
___________________________
E. REVELAS
JUDGE OF THE LABOUR 
COURT OF SOUTH AFRICA
REPORTABLE
DATE OF HEARING: 8 NOVEMBER 2004
DATE OF JUDGMENT: 15 NOVEMBER 2004
REASONS: 17 OCTOBER 2005

DATE OF HEARING: 8 NOVEMBER 2004
DATE OF JUDGMENT: 15 NOVEMBER 2004
REASONS: 17 OCTOBER 2005
ON BEHALF OF THE APPLICANT: Mr MJ Molefe of SACCAWU
ON BEHALF OF THE RESPONDENT: Mr T Ngcukaitobi of Bowman Gilfillan  
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Inc.
  7