(1) Reportable No
(2) Of interest to other Judges: No
(3) Revised
____________ ______________
Signature Date
IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case No: JS15/2022
In the matter between:
SOUTHERN AFRICAN CLOTHING
AND TEXTILE WORKERS UNION First Applicant
MALULEKA, E & 170 OTHERS Second to Further Applicants
and
GLENCAROL (PTY) LTD Respondent
Heard: 17, 18 and 19 March 2025
Delivered: 28 August 2026
JUDGMENT
MAHOMED, AJ
2
Introduction
[1] This is a claim by the first applicant, the Southern African Clothing and Textile
Workers Union (“the union”), on behalf of the second to further applicants (171
individual employees), against the respondent, Glencarol (Pty) Ltd (“the
company”), a manufacturer of socks for the retail and wholesale market. The
individual applicants were dismissed by the company for operational
requirements, the first batch with effect from 27 September 2021 and the
remainder with effect from 1 October 2021, pursuant to a large- scale
retrenchment exercise which began in May 2021.
[2] The applicants do not seriously contest that the company followed a process
of consultation. What is in dispute is the substantive fairness of the dismissals.
The applicants contend that the company has failed to discharge the onus
imposed upon it by section 192(2) of the Labour Relations Act
1 (“the LRA”), of
proving that the dismissals were for a fair reason related to its operational
requirements. They advance four broad grounds, any one of which, they
submit, is sufficient to render the dismissals substantively unfair: first, that the
company was itself unable to articulate a consistent operational rationale for
the retrenchment; second, that it failed to prove any operational requirement
through credible evidence; third, that it rejected, without proper justification, a
range of viable alternatives which were available to it; and fourth, that the
retrenchment was, in any event, grossly disproportionate to the operational
requirement relied upon.
[3] The company disputes each of these contentions. It says that it had a genuine
and consistently held commercial rationale for the retrenchment, namely a
substantial and demonstrable decline in its order book, compounded by an
escalating cost burden arising from its obligation to pay employees leave and
bonus benefits regulated by the Clothing Industry Bargaining Council (“the
Bargaining Council” or “the CIBC”) notwithstanding that employees were
Bargaining Council” or “the CIBC”) notwithstanding that employees were
working reduced hours. It says that it consulted extensively and in good faith
over a period of some four months, that it made relevant financial information
available to the union, that the union failed to take up the opportunity to
1 Act 66 of 1995, as amended.
3
inspect that information or to compel its disclosure, and that the union itself
obstructed at least one alternative, a proposal to accrue leave and bonus on a
pro rata basis according to hours actually worked, which, on the company's
version, would have avoided the retrenchment altogether. It submits that the
court should not second- guess a rational commercial decision, and that the
dismissals were both procedurally and substantively fair.
[4] I heard oral evidence from the company's Chief Executive Officer, Mr Raj
Shunmugam, and its Human Resources Manager, Mr Freddy Sethosa. The
applicants called no witnesses, electing instead to test the company's case
through cross -examination and to rely on the pleadings, the documentary
record and argument. I deal later in this judgment with the significance, if any,
of that election.
[5] The following is common cause or was not seriously disputed. On
12 April 2021, an arbitrator of the Bargaining Council made an award against
the company, holding it liable to pay employees their full leave and bonus
benefits for 2020, notwithstanding that many employees had worked reduced
hours during the COVID -19 lockdown. On 21 May 2021, the company
launched an application to review and set aside that award. Three days later,
on 24 May 2021, it issued a notice in terms of section 189(3) of the LRA, read
with section 189A, initiating a large- scale retrenchment consultation proc ess
and inviting facilitation. Six facilitation meetings followed on 8 June, 17 June, 2
July, 19 July, 11 August and 6 September 2021. On 13 September 2021, the
company issued the first notices of termination, effective 27 September 2021;
a second batch followed, effective 1 October 2021. In total, 171 of the 252
employees initially identified as being at risk were ultimately retrenched. On 5
October 2021, a matter of days after the retrenchment , the company launched
an urgent application to compel the Bargaining Council to issue it with a
an urgent application to compel the Bargaining Council to issue it with a
compliance certificate; that application was settled on 13 October 2021, and
the certificate was issued shortly thereafter. The company recalled a number
of the retrenched employees to employment from around November 2021,
once new orders (including from a major customer, The Foschini Group)
began to materialise. On 8 November 2021, the company applied to the
Bargaining Council for, and was granted, an exemption permitting it to pay
4
2021 benefits on a staggered basis. On 7 December 2022, this court reviewed
and set aside the 2020 arbitration award, relieving the company of the very
liability said to lie at the heart of its operational difficulties.
[6] It is against this factual matrix, largely undisputed as to its bare chronology,
that the rival characterisations of the company's conduct , as either a genuine,
if imperfect, exercise of a difficult commercial judgment, or as an opportunistic
and poorly justified resort to retrenchment in circumstances where less drastic
measures were readily at hand, must be assessed.
The Applicants’ Case
[7] The applicants’ case has four components.
[8] First, they say the company was unable to settle on a consistent rationale for
the retrenchment. The section 189(3) notice itself advanced three overlapping
reasons: reduced orders, the cost of Bargaining Council -regulated benefits,
and general financial distress. Thereafter, the applicants submit, the
company’s representatives shifted between these and other formulations at
different stages of the process and even during the trial , at times emphasising
the order book, at times the 2020 benefits liability, at times the 2021 benefits
liability, and at times the absence of a compliance certificate, without ever
settling on, or substantiating, any one of them consistently. This vacillation, the
applicants argue, is itself indicative of the absence of a genuine operational
requirement, and, in any event, undermined the union’s ability to engage
meaningfully in consultation, since it could not know what it was truly required
to address.
[9] Second, the applicants say that whatever the true rationale, the company
failed to prove it through admissible, credible evidence. It did not place its
order book before the court. The only documentary evidence bearing on the
order book was a summary table, contained in a letter dated 15 July 2021,
reflecting aggregate percentage declines (41% in Rand value and 54% in
reflecting aggregate percentage declines (41% in Rand value and 54% in
pairs) without any underlying source data, and without any evidence as to
whether the position had since improved. Nor did the company adduce its
financial statements, audited or otherwise, in evidence. Mr Shunmugam’s
5
explanation for this , that he had not been advised the order book would be
required, is, on the applicants’ submission, difficult to accept in circumstances
where the company introduced other documentary material during the trial and
where the order book was, self-evidently, central to its own case.
[10] Third, the applicants contend that there were at least five viable alternatives to
retrenchment which the company either did not pursue, or pursued only
belatedly and half-heartedly: (a) awaiting the outcome of the review application
in respect of the 2020 arbitration award, which on the company’s own
evidence would have obviated the need to retrench altogether, and which in
fact succeeded some fourteen months later; (b) applying to the Bargaining
Council for an exemption to pay 2021 benefits on a pro rata basis, which the
company did apply for, and obtain, but only after the retrenchment; (c)
timeously applying to this court to compel the issue of a compliance certificate,
an avenue the company knew of by 28 July 2021 (when the union declined to
consent to the certificate’s issue) but pursued only on 5 October 2021, days
after the retrenchment, and which then resolved the matter within eight days;
(d) participation in the COVID -19 Temporary Employer/Employee Relief
Scheme (“TERS”); and (e) the Unemployment I nsurance Fund’s Reduced
Working Time benefit (“the UIF scheme”). As to the last two, the applicants
say the company’s stated reasons for not implementing them, that they offered
only short-term relief, and (at points) a mistaken belief that it was unlawful for
employees to claim while still in employment , do not withstand scrutiny, not
least because the company’s own evidence was that it required only short -
term relief to bridge the gap until the review application or the compliance
certificate application was resolved.
[11] Fourth, the applicants say the retrenchment was, in any event, grossly
disproportionate. The 2020 benefits liability which Mr Shunmugam identified
disproportionate. The 2020 benefits liability which Mr Shunmugam identified
as the root cause of the company’s difficulties was calculated at approximately
R1 million; spread over the 171 retrenched employees, this amounts to some
R5 847,95 per employee, or R487,33 per employee per month, a saving which
the applicants describe as incommensurate with the devastating impact of the
loss of employment on the individual applicants and their dependants,
6
particularly where the company made no attempt to show that it could not
simply have paid the amount.
[12] On the strength of these submissions, the applicants seek an order that the
dismissals were substantively unfair, that the individual applicants be
retrospectively reinstated, and that the company pay costs, including the costs
of counsel, on Scale C.
The Respondent’s Case
[13] The company’s case, in short, is that it had a genuine, rational commercial
reason for the retrenchment , a substantial decline in its order book,
compounded by an escalating and, on its account, involuntary cost burden,
and that this court should be slow to second -guess that judgment provided it
was rationally and honestly arrived at. It relies on the well -established line of
authority, including Kotze v Rebel Discount Liquor Group (Pty) Ltd 2 and
Telkom SA SOC Ltd v Van Staden ,3 to the effect that the function of the court
is not to decide whether the employer made the best decision, but whether the
decision was a genuine, rational commercial one, properly informed by what
emerged in consultation.
[14] The company disputes that it vacillated in any legally significant sense. It says
that the underlying rationale was, at all times, the diminished order book, and
that references to the Bargaining Council -regulated benefits went to a related
but distinct cost pressure rather than a different reason altogether. It cautions
against a “checklist” approach to section 189, relying on SACU and CWU v
Telkom SA SOC Ltd
4 and Tetley v Caterplus (Pty) Ltd ,5 and submits that the
correct enquiry is a holistic one.
[15] As proof of the operational requirement, the company says that it did in fact
disclose relevant financial information, including, by letter of 15 July 2021, a
comparative breakdown showing declines of 41% in Rand value and 54% in
2 Kotze v Rebel Discount Liquor Group (Pty) Limited [1999] ZALAC 41; [2000] 2 BLLR 138 (LAC);
(2000) 21 ILJ 129 (LAC).
(2000) 21 ILJ 129 (LAC).
3 Telkom SA SOC Limited v van Staden and Others [2020] ZALAC 52; (2021) 42 ILJ 869 (LAC).
4 South African Communication Union and Another v Telkom SA SOC Ltd [2020] ZALCJHB 56; (2020)
41 ILJ 1425 (LC).
5 Tetley v Caterplus (Pty) Ltd [2010] ZALC 166.
7
units sold, together with wage and salary summaries and projections. It further
says that from 4 August 2021, it made its full financial statements available for
the union to inspect at its premises, subject only to a restriction on copying
without consent, and that the union, notwithstanding being on the company’s
premises on other occasions during this period, never took up that invitation,
never brought an application to compel disclosure under section 16 of the
LRA, and never sought an order under section 189A(13) to suspend the
process pending disclosure. In these circumstances, the company submits
that it is not open to the applicants to complain, after the fact, of an evidentiary
deficiency they made no effort to cure when the opportunity existed, and the
court should draw an adverse inference from the union’s own passivity.
[16] The company places particular emphasis on a chronology it says
demonstrates that the true cause of the retrenchment was the union’s own
conduct. It points out that, on 8 June 2021, at the very first facilitation meeting,
it proposed that leave and bonus be accrued on a pro rata basis according to
hours actually worked, rather than in full notwithstanding short time, a proposal
it repeated on 14 July 2021, and that, had the union agreed, the retrenchment
could have been avoided in its entirety. It says the union instead pressed for
the TERS and UIF alternatives while declining to consent to the company’s
own proposal, and that this, together with the union’s refusal on 28 July 2021
to consent to the issuing of a compliance certificate (notwithstanding that the
Bargaining Council itself was willing to issue one), was the proximate cause of
the impasse that led to retrenchment. It invokes Viljoen v JSE Ltd
6 for the
proposition that a party who refuses a reasonable alternative to dismissal
cannot complain of unfairness.
[17] On the TERS and UIF alternatives specifically, the company says it did not
[17] On the TERS and UIF alternatives specifically, the company says it did not
reject either proposal outright. It says it agreed, in principle, to the TERS
scheme, subject to it not entailing an additional cost burden, and points to Mr
Sethosa’s evidence that, years later, the company remains on short time with
no turnaround strategy in place, a prerequisite for the scheme, such that it
could not, in truth, have qualified. As to the UIF scheme, the company says it
6 Viljoen v Johannesburg Stock Exchange Ltd [2016] ZALCJHB 361; (2017) 38 ILJ 671 (LC).
8
was the individual employees, not the company, who were reluctant to make
use of it, out of concern that doing so would deplete their personal
unemployment insurance credits, and that this reluctance cannot fairly be laid
at the company’s door.
[18] Finally, the company submits that the applicants led no evidence of their own,
relying solely on cross-examination, and that the court should draw a negative
inference from their failure to call witnesses to explain, among other things,
why the union did not pursue disclosure through the mechanisms available to
it, or why it declined to consent to the compliance certificate or the company’s
pro rata proposal. On this basis, it submits that the dismissals were both
procedurally and substantively fair, and that the claim should be dismissed.
Legal Framework
[19] Section 188(1)(a)(ii) of the LRA requires a dismissal for operational
requirements to be for a fair reason; section 189 sets out the consultation
obligations applicable where an employer contemplates such a dismissal,
including the duty to disclose relevant information and to consult over
measures to avoid, minimise or delay the dismissals, and over their timing and
the selection criteria to be applied. Section 192(2) places the onus on the
employer to prove that the dismissal was fair.
[20] The test to be applied is well settled. In BMD Knitting Mills (Pty) Ltd v
SACTWU,
7 the Labour Appeal Court held that the enquiry is not confined to
whether a proper consultation process was followed, but extends to whether
the ultimate decision is “ operationally and commercially justifiable on rational
grounds”, assessed in a manner that is fair to the affected employees as well
as the employer: “ the word ‘fair’ introduces a comparator, that is a reason
which must be fair to both parties.” The court is entitled to examine the content
of the reasons given, not merely to defer to the employer’s ipse dixit, although
the enquiry remains one of fairness and not of correctness.
the enquiry remains one of fairness and not of correctness.
7 BMD Knitting Mills (Pty) Limited v South African Clothing & Textile Workers Union (SACTWU ) [2001]
ZALAC 19; [2001] 7 BLLR 705 (LAC); (2001) 22 ILJ 2264 (LAC).
9
[21] This is to be read together with the caution, expressed in Kotze v Rebel
Discount Liquor Group (Pty) Ltd 8 and reiterated in Telkom SA SOC Ltd v Van
Staden,9 that a court’s function is not to second- guess the commercial or
business efficacy of a rational decision, but to determine whether it was
genuine and not a sham. These two lines of authority are not in tension: a
court neither substitutes its own commercial judgment for the employers, nor
abdicates its duty, recognised in CWIU v Algorax (Pty) Ltd ,10 to determine the
fairness of the dismissal objectively, without deferring to the employer on that
question.
[22] Both of these enquiries, genuineness on the one hand, and proof on the other,
depend on evidence. As was explained in Ndhlela v Sita Information
Networking Computing BV (Incorporated in the Netherlands) ,11 an employer
who relies on a reduction in operating costs, or a decline in orders, must
ordinarily go further than assert the fact; it must, at least, “put forward
evidence showing the actual operating costs which it sought to reduce ... by
producing financial information which demonstrates the relevant operating
costs,” since “any sensible employer wishing to reduce costs must first know
what costs are to be reduced.” This accords with BMD Knitting Mills , relied on
by both parties, in which “clear figures were presented to the court to prove the
claim of downturn in production,” permitting the court to draw the necessary
connection between the operational justification and the decision to dismiss.
[23] As to consultation, I accept, as the company submits, that section 189 does
not impose a rigid, sequential checklist ,
12 and that an employer is entitled to
approach consultation with a predisposition towards a particular outcome
provided it remains genuinely open to persuasion . 13 I also accept that
8 Kotze v Rebel Discount Liquor Group (Pty) Limited [1999] ZALAC 41; [2000] 2 BLLR 138 (LAC);
(2000) 21 ILJ 129 (LAC).
(2000) 21 ILJ 129 (LAC).
9 Telkom SA SOC Ltd v Van Staden supra.
10 Chemical Workers Industrial Union & Others v Algorax (Pty) Ltd (2003) 24 ILJ 1917 (LAC).
11 Ndhlela v SITA Information Networking Computing BV (Incorporated in the Netherlands) [2014]
ZALCJHB 64; (2014) 35 ILJ 2236 (LC).
12 See SACU and CWU v Telkom SA SOC Ltd supra, see also Tetley v Caterplus (Pty) Ltd).
13 See National Education Health and Allied Workers' Union and Others v University of Pretoria [2005]
ZALAC 7; [2006] 5 BLLR 437 (LAC); (2006) 27 ILJ 117 (LAC).
10
consultation is a two- way process ,14 that a union may not adopt an entirely
passive stance and then complain of a checklist -style failure by the employer,
and that a party who declines a genuinely reasonable alternative that would
have avoided dismissal cannot ordinarily be heard to complain of unfairness.15
[24] Where the substantive fairness of a retrenchment is impugned on the grounds
that the employer failed to explore or properly consider alternatives, the
enquiry, as this court explained in Shushu v Distell Ltd (Springs) ,
16 is
essentially one of proportionality: “ a determination of the extent to which the
parties’ respective interests have been realised, with a view to comparing the
degrees of proportional fulfilment .” The Constitutional Court’s judgment in
SACCAWU obo Members v Woolworths (Pty) Ltd 17 confirms both that a
genuine failure to consider alternatives renders a retrenchment substantively
unfair, and that reinstatement is the primary remedy for a substantively unfair
dismissal, from which a court will depart only in limited circumstances, the
onus for which rests on the employer.
[25] It is against this framework , genuineness of reason, proof of the operational
requirement by evidence, proper consideration of alternatives measured
proportionately, and the employer’s onus throughout, that I turn to evaluate the
rival cases.
Evaluation
Consistency and genuineness of the stated reason
[26] I do not consider the shifting emphasis on the company’s explanations, taken
alone, to be decisive. Mr Shunmugam’s evidence, read as a whole, does
disclose an underlying , if inelegantly and inconsistently expressed , narrative:
that the company’s order book had weakened, that it was simultaneously
burdened by the obligation (as it then stood) to pay full 2020 and 2021
14 See Association of Mineworkers & Construction Union & Others v Tanker Services (Pty) Ltd (2018)
39 ILJ 2265 (LC).
15 See Viljoen v Johannesburg Stock Exchange Ltd (2017) 38 ILJ 671 (LC).
39 ILJ 2265 (LC).
15 See Viljoen v Johannesburg Stock Exchange Ltd (2017) 38 ILJ 671 (LC).
16 Shushu and Others v Distell Ltd (Springs) [2024] ZALCJHB 527; (2025) 46 ILJ 1000 (LC).
17 South African Commercial, Catering and Allied Workers Union and Others v Woolworths (Pty)
Limited [2018] ZACC 44; (2019) 40 ILJ 87 (CC); 2019 (3) BCLR 412 (CC); [2019] 4 BLLR 323 (CC);
2019 (3) SA 362 (CC).
11
benefits regardless of short time, and that these two pressures were, on the
company’s own telling, interlinked, in that the absence of a compliance
certificate (itself a consequence of the benefits dispute) inhibited its ability to
secure new orders from customers such as TFG who required proof of
compliance. I accept the company’s submission that section 189 is not to be
approached as a rigid checklist, and I am not persuaded that the re-
formulation of a single underlying commercial narrative, in response to
different questions at different times, is by itself fatal.
[27] What is more troubling, however, is the inconsistency as to which of these
interlinked pressures was said to be decisive, and in particular the company’s
own evidence, elicited in cross -examination, that it would not have needed to
retrench at all had it been relieved of either the 2020 liability (through the
review application), or the 2021 liability (through the exemption it later, in fact,
obtained), or the compliance certificate impasse (through the application it
later, in fact, brought successfully). Each of these was, on the company’s own
account at different points, independently sufficient to obviate the need to
retrench. That evidence bears less on the genuineness of the underlying
commercial pressure, which I am prepared to accept was real , than on the
second and third enquiries to which I now turn: whether the company proved
that pressure by evidence, and whether it properly explored the alternatives
which, on its own version, would have resolved it.
Proof of the operational requirement
[28] Here, I am satisfied that the company’s case falls short. The only order book
evidence before the Court is the aggregated percentage summary contained
in the 15 July 2021 letter. I accept that this letter was disclosed to the union
during the consultation process, and I return below to what significance that
has for the company’s compliance with its consultation obligations. But the
has for the company’s compliance with its consultation obligations. But the
question presently under consideration is a different one: whether the
company proved its operational requirement in evidence at trial ? A bare,
aggregated percentage decline, unaccompanied by the underlying order data,
unaudited, and untested by reference to source documents, is precisely the
kind of evidence which Ndhlela holds to be insufficient. Mr Shunmugam was
12
unable, in cross -examination, to offer any satisfactory explanation for the
company’s failure to place the order book itself before the court, particularly
where it went to the trouble of introducing other documentary material
(including material relating to the urgent compliance certificate application)
during the trial. Nor was any audited financial statement, or indeed any
financial statement at all, placed in evidence to substantiate the company’s
alternative or additional reliance on general financial distress.
[29] The company’s answer, that the union had every opportunity to inspect the
financial statements during consultation, and failed to do so, does not, in my
view, meet the point. The union’s conduct during consultation may be relevant
to whether the consultation process was procedurally fair. It does not relieve
the company of its independent, and separate, onus at trial to prove the
operational requirement upon which it relies. An employer cannot convert an
opposing party’s failure to inspect information voluntarily tendered during
consultation into a substitute for its own obligation to adduce, at trial, the
evidence necessary to discharge the onus imposed by section 192(2). If the
underlying order book and financial statements existed and supported the
company’s case, as Mr Sethosa’s evidence that he had personally seen them
suggests, there was no apparent obstacle , once litigation had commenced, to
their production before this court, whatever difficulties may have attended their
production for inspection by the union some years earlier.
[30] I accordingly find that the company has not proved, by credible evidence, the
existence of the operational requirement on which it says it relied. That finding
is, on its own, sufficient to dispose of the substantive fairness enquiry in the
applicants’ favour. I nonetheless deal, for completeness and because the point
was fully argued, with the parties’ submissions on alternatives and
proportionality.
was fully argued, with the parties’ submissions on alternatives and
proportionality.
Alternatives to retrenchment
[31] I accept that an employer approaching retrenchment is not required to await
the outcome of every conceivable legal remedy before acting, and that a
degree of latitude must be afforded to a commercial party managing genuine
13
uncertainty. I do not, for that reason, find it inherently unreasonable that the
company proceeded with retrenchment while the review application was still
pending, rather than waiting an indefinite period for its outcome.
[32] What is more difficult to reconcile with a genuine last -resort approach to
retrenchment is the timeline concerning the compliance certificate. On the
company’s own chronology, by 28 July 2021 it knew that the Bargaining
Council was prepared to issue a compliance certificate, and that the only
obstacle was the absence of the union’s consent, which had by then been
refused. It knew, in other words, by the end of July, substantially what this
Court would in due course be asked, and would be prepared, to order , as is
demonstrated by the fact that when the company did bring the urgent
application, on 5 October 2021, the matter settled within eight days on terms
consistent with what the company had proposed as early as 8 June 2021. No
satisfactory explanation was offered, either by Mr Shunmugam or Mr Sethosa,
for the delay of some nine weeks between the union’s refusal of consent and
the launch of that application, a delay which spanned, and outlasted, the first
batch of dismissals. Where an alternative is not merely available but is in fact
pursued, successfully, within days once finally invoked, an employer’s failure
to invoke it before, rather than after, retrenching calls for explanation. None
was forthcoming.
[33] As to the company’s own proposal, pro rata accrual of leave and bonus based
on hours worked, I do not accept that the union’s refusal to agree to it can be
characterised, as the company would have it, as obstructive conduct falling
within the mischief identified in Viljoen v JSE Ltd .
18 The benefits in question
were not a matter of the company’s largesse; they had, by the time of the
8 June 2021 proposal, already been the subject of an adverse arbitration
award holding the company liable to pay them in full for 2020, an award the
award holding the company liable to pay them in full for 2020, an award the
company was in the process of challenging on review. A union cannot fairly be
criticised for declining, mid- litigation, to agree by consensus to a departure
from Bargaining Council -regulated entitlements which were themselves the
subject of a pending review , particularly where, as events transpired, that
18 Viljoen v JSE Ltd supra.
14
review vindicated the company’s underlying commercial position without
requiring any sacrifice of the entitlement in question. The proper avenue for
relief from that liability was the one the company was already pursuing, and, in
respect of 2021, the exemption application it did eventually bring, successfully,
after, rather than before, the retrenchment.
[34] I turn to TERS and the UIF scheme. The company’s own evidence is that it
“did not reject the proposals made”. If that is correct, then the question is not
why the company rejected them, but why, having not rejected them, it did not
implement either as an interim measure. The explanations offered, a
conditional agreement to TERS subject to there being no additional cost
burden, and the suggestion, raised by reference to matters some years after
the retrenchment, that the company could not have satisfied a turnaround-
strategy requirement , sit uneasily with the contemporaneous record, which
shows the schemes being resisted, during consultation, principally on the
basis that they offered only short -term relief. That objection is difficult to
sustain in circumstances where the company’s own evidence is that its
underlying difficulties were, on its version, capable of complete resolution
through processes (the review application, the exemption application, the
compliance certificate application) each of which was, in the event, resolved
within periods ranging from days to some seventeen months , precisely the
kind of interval which short -term bridging relief exists to cover. As to the UIF
scheme, I accept that individual employees may have held reservations about
depleting their own unemployment insurance credits; but a legitimate concern
raised during consultation is not, without more, a rejection, and the record ,
including the union’s follow -up correspondence maintaining the proposal as
viable, does not establish that the scheme was definitively taken off the table
viable, does not establish that the scheme was definitively taken off the table
by the workforce, still less that the company itself gave the proposal the
serious, good-faith consideration which last-resort status demands.
[35] Taking these alternatives together, I am satisfied that at least the compliance
certificate application, and arguably the bridging relief available through TERS
and the UIF scheme, were viable measures which could have avoided or at
least materially deferred the retrenchment , and which the company did not
pursue, or pursue timeously, without adequate explanation. This constitutes an
15
independent basis on which the retrenchment falls to be found substantively
unfair.
The request for a negative inference against the applicants
[36] I do not consider it appropriate to draw a negative inference against the
applicants from their decision not to call witnesses. The onus, throughout,
rests on the employer. An applicant is entitled to test an employer’s case by
cross-examination and legal argument alone, and is not obliged to lead
evidence in order to avoid an adverse inference where it is the respondent, not
the applicant, who bears the onus of proof on the central issue. Nor do I
consider that the union’s acceptance of an informal invitation to inspect
documents on the company’s premises, rather than pursuit of a formal
application under section 16 or section 189A(13), bears materially on the
company’s own, separate failure to prove its case at trial, for the reasons
already given.
Proportionality
[37] The evidence, such as it is, indicates that the liability said to underlie the
retrenchment, the 2020 benefits award, amounted to some R1 million, a sum
ultimately spread, on Mr Shunmugam’s own reckoning, across the 171
individual applicants at a rate in the order of R5 847,95 per employee per
annum, or roughly R487,33 per employee per month. The company led no
evidence that it could not have afforded to meet this liability pending the
outcome of its review application, nor evidence of its overall financial position
from which such an inference might otherwise be drawn. Weighed against the
severe and often irreversible consequences of retrenchment for the individual
applicants and their dependants, and bearing in mind that the liability was,
within some seventeen months, set aside on review in any event, I am
satisfied that the retrenchment was disproportionate to the operational
requirement relied upon, and that this constitutes a further, independent basis
for a finding of substantive unfairness.
Selection criteria
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[38] The applicants did not, in argument, press the fairness of the selection criteria
applied as an independent ground of challenge, and I say no more about it
save that nothing in the record suggests that the criteria applied were unfair, or
that this issue affects the outcome.
Conclusion
[39] For the reasons set out above, I am satisfied that the company has failed to
discharge the onus, imposed on it by section 192(2) of the LRA, of proving that
the dismissal of the individual applicants for operational requirements was
substantively fair. That failure is established, independently, on three bases:
the company did not prove, through credible evidence, the operational
requirement on which it relied; it did not properly pursue, or timeously pursue,
alternatives which were, on its own version, available and capable of avoiding
or materially deferring the retrenchment; and the retrenchment was, in any
event, disproportionate to the operational requirement relied upon. Any one of
these findings would suffice to dispose of the matter in the applicants’ favour.
Relief
[40] Reinstatement is the primary remedy for a substantively unfair dismissal, and
a court will depart from it only in the limited circumstances contemplated by
section 193(2) of the LRA, the onus for which rests on the employer
(SACCAWU obo Members v Woolworths (Pty) Ltd). The company led no
evidence, and made no submission, directed at establishing that reinstatement
would be inappropriate. I am not persuaded that the fact that a number of the
individual applicants were subsequently re -employed provides any basis to
withhold reinstatement, since re- employment on new terms, without continuity
of service or backpay, is not equivalent to the restoration of the original
employment relationship which reinstatement affords. There is no basis, on
the record before me, to depart from the primary remedy.
[41] I therefore order that the individual applicants be retrospectively reinstated into
[41] I therefore order that the individual applicants be retrospectively reinstated into
the employment of the respondent, on the terms and conditions of
employment applicable to them immediately prior to their dismissal, with effect
from the date of their respective dismissals.
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Costs
[42] Costs in this court do not follow the result automatically, and regard must be
had to the requirements of the law and fairness, and to considerations
including the relative resources and conduct of the parties. Having regard to
the fact that this was a large- scale retrenchment affecting 171 individual
employees, that the company’s own failure to adduce readily available
evidence lies at the heart of the outcome, and to the ongoing relationship
between the parties, I consider it fair that costs follow the result, on Scale C,
including the costs of counsel.
Order
[43] In the circumstances, I make the following order:
1. The dismissal of the second to further applicants for operational
requirements is declared to have been substantively unfair.
2. The respondent is ordered to reinstate the second to further applicants
retrospectively, with effect from the dates of their respective dismissals,
on the terms and conditions of employment applicable to them
immediately prior to their dismissal.
3. The respondent is ordered to pay the applicants’ costs, including the
costs of counsel, on Scale C.
N. Mahomed
Acting Judge of the Labour Court of South Africa
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APPEARANCES
For the Applicants: R. Itzkin, instructed by Cheadle Thompson & Haysom Inc.
For the Respondent: Mr PHH Loyson Service and Manufacturing Industries
Employers' Organisation