REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG JUDGMENT
Case No: JS 529/12
In the matter between:
RAWU OBO NDOU & 1 OTHERS Applicant And
ON THE BRIGHT SIDE (PTY) LTD T/A LIGHT SPORT Respondent
Heard: 21 August 2014
Delivered: 21 November 2014
Summary: Dismissal for operational reasons. Principles to apply in determining the fairness of the dismissal for operational reasons.
- The individual applicant represented by their union claims that they were unfairly retrenched by the respondent. They seek reinstatement in the even their unfair dismissal was successful.
- The employment contracts of both the individual applicant, Mr Rakau and Mr Ndou (the employees), were terminated for operational reasons by the respondent. It is common cause that at their dismissal, both had relative long services with the respondent.
- The employees were initially prior to the retrenchment dismissed for misconduct by the respondent. They successfully challenged the fairness of that dismissal at the CCMA. The Commissioner concluded that the dismissal was unfair and ordered that the employees be reinstated.
- Following the outcome of the arbitration hearing, the individual applicant reported for work on 02 April 2012. On arrival at the workplace Mr Coetzee of the respondent proposed to them that they should take on three months’ salary offer and resign. The applicants rejected the offer.
- The individual applicants reported for work again on 03 April 2012 and on that day they were served with notification of the contemplated retrenchment and also informed that the consultations meeting for the purposes of retrenchment would be on 11 April 2012. On their arrival at work on 11 April 2012 the applicants met with Mr Jordan who informed them to report again on 16 April 2012.
- On 16 April 2012 Mr Jordan informed the employees services were terminated and served them with the notices to that effect.
- In support of its case that the dismissal of the applicant was for a fair reason the respondent presented the testimony of two witnesses, namely Mr Jordan and Mr Beeton, the managing director. The essence of the testimony is that the individual applicants were offered an opportunity to participate in the consultation process but failed to do so. It is also contended that the employees were offered an opportunity to inform the union about the consultation and have it participate in the process but failed to do so.
- The process that ended with the dismissal of the employees started with a notice of the contempt retrenchment from the respondent dated 03 April 2012 which reads as follows:
“Notice to Employees
NOTIFICATION OF CONTEMPLATED RETRENCHMENT
Due to restructuring and relocation of the business it has become necessary to contemplate possible retrenchments based on the operational requirements of the business.
Your position is one that may be affected by this decision. In order to consult on the matter the following information is provided.
The business relocated mainly for two reasons. The first is security related and the second is to streamline the warehouse section to reduce costs and stock loses.
In addition, the manufacturing of goods in the workshop was terminated.
The position of puller is also no longer viable as the work normally Done by the employee is now shared by others.
No employees were retrenched in the last 12 months.
You are invited to attend consultation meeting to be held on 11 April At 12:00 at Light and you must please come prepared. In order to assist you are relieved from duties pending the finalisation of the retrenchment consultation process.’
- As indicated earlier the process which the respondent purportedly embarked upon ended with the notices of termination for both employees’ contracts, the contents of which are the same reads as follows:
RE: DISMISSAL BASED ON OPERATIONAL GROUNDS
We refer to our previous correspondence regarding a possible Retrenchment:
We have been instructed by the CCMA to re-employ you as from 1 April 2012. We have done so, due to the fact that we do not have a position for you as indicated in our notice of retrenchment, we had no choice but to consider retrenching you.
We have not received any proposals on how to avoid the proposed retrenchment at our meeting dated 11 April 2012. We therefore have to advise you that it is now confirmed that your services will terminate on 30 April 2012. You will be relieved of duties for your notice months with full pay in order to assist you in finding alternative employment.
In terms of labour legislation you are entitled to the following:
- Certificate of service;
- UIF certificate;
- Pro rata leave pay;
- Final pay;
- Severance pay of one week for each year of completed service Please find the calculations of the severance pay package attached to
Final pay will be paid directly into your account/paid per cheque on your last work day.
Please ensure that the office has your contact details should any possibility of Future employments arise.’
- The case of the respondent as per the testimony of Mr Jordan is that the employees were told to inform their union about the consultation process. He also stated that the employees refused to participate in the consultation process saying that the union told them not to participate because the arbitration was in their favour.
- In the heads of argument, the respondent states the reason for the retrenchment of the employees in the following terms:
- The demand for particular items manufactured by Rakau has become obsolete due to the market trends and demand which need be said can never be under the control of the Respondent;
- Beeten testified that the Respondent had to write off the substantial amount of stock manufactured by Rakau;
- The workshop was not financially viable and was closed down;
- No new personnel are employed;
- Personnel are being moved laterally between shops in an effort to save expenses and revenue to avoid further retrenchments.
- As concerning the selection criteria, the respondent contends in the heads of argument that the job categories of both employees had fallen away and their skills were no longer needed. Another point raised by respondent in the heads of argument is that the consultation process was frustrated by the union and the employees in failing to corporate.
- The broad principles governing dismissal based on operational reasons can be summarised as follows:
- That an employer has the right to terminate the employment of an employee on the ground of operational requirements.
- The dismissal for operational reason is regarded as a no fault dismissal.
- The employer has a duty to consult an employee/s or their registered union when retrenchment is anticipated.
- The employer should consult on the selection criteria otherwise should apply a criteria that is fair and objective.
- The dismissal for retrenchment should be a last resort when all other alternatives have been considered.
- The onus to show that the dismissal for operational reasons was fair is on the employer.
- The procedural requirements for a fair dismissal are set out in section 189 of the Labour Relations Act of 1995 (the LRA) which imposes a duty on the employer to consult with either the representative of the affected employees or the employees themselves on a number of issues including alternativeness to retrenchment.
- The consultation has to be conducted with the objective of reaching a consensus on the appropriate measures to avoid the dismissal, to minimise the number of dismissal, to change the timing of the dismissal if possible and to mitigate the adverse effects of the dismissal. In Oosthuizen v Telkom SA, Ltd1held that:
1 (PA5/04)  zalac 6 (29 June 2007) at para 4.
“Implicit in sections 189 (2) (a) (i) and (ii) of the Act is an obligation on the employer not to dismiss an employee for operational requirements if it can be avoided. According, these provisions envisage that the employer will resort to dismissal as a measure of last resort. Such obligation is understable because dismissals based on the employer’s operational requirements constitutes so called no fault terminations.”
- In terms of section 189 of the LRA, the employer who contemplates dismissing one or more employees for reasons based on operational requirements needs to any or other consult with the trade union and this as was the case in the present instance.
Section 189 of the LRA reads:
“(2) The employer and the other consulting parties must in the consultation envisaged by subsections (1) and (3) engage in a meaningful joint consensus-seeking process and attempt to reach consensus on:
- Appropriate measures –
- to avoid the dismissals;
- to minimise the number of dismissals;
- to change the timing of the dismissals; and
- to mitigate the adverse effects of the dismissals;
- the method for selecting the employees to be dismissed, and
- the severance pay for dismissing employees.
- The facts of this case reveal even on the version of the respondent that there exist no good and fair reason for retrenching the employees. The reason for dismissing them was because they refused to accept a proposed compromise by the respondent subsequent to the arbitration award which has ordered their reinstatement. When asked during cross examination, s to the reason for retrenchment Mr. Jordan stated that the retrenchment was because the employees refused to accept the proposal for voluntary retrenchment. Their dismissal is substantively unfair on this ground alone.
- The facts in this matter further reveals that the respondent was required to involve the union in the consultation process but failed to do so. In this respect, it was put to Mr. Jordan that he never invited the union to the consultations process. His response was:
“I told the members that they must involve the union as I was aware that they were members of the union.”
- He further stated during cross examination that he was told the reason for the dismissal by Miss. Beeton but could not say whether they were valid or not.
- The dismissal of the employees would still remain unfair even if the reason given by the respondent was accepted. The main reason for the retrenchment, according to the respondent, was due to the relocation of warehouse to a different venue. Mr Beeton testified that after the first dismissal of the employees, it because clear that the workshop which manufactured the products was no longer needed as the expense exceeded the income. It was for this reason that the decision was taken to move the warehouse from where it was to Silverton. The jobs of the two employees became redundant as a result.
- Mr. Beeton conceded during the cross examination that the two employees had long service with the respondent, with Mr Rakau about 18 years and Mr Ndou 8
years. Mr Ndou was a puller and a packer and Mr Rakau was an assembler and did other jobs in addition.
- It is trite that in our law one of the requirements for a fair retrenchment is that the criteria for selection of those affected by the retrenchment should be for fair. The general principle is that the employer has to consult with the consulting parties on the selection criteria. Where no consensus is not reached, the employer is obliged to apply fair criteria in selecting those who have to be dismissed. It is also generally accepted that in the absence of any other fair criteria the last-in-first- out (LIFO) is to be applied as a fair as a fair criteria. The other criteria that has been applied frequently where LIFO is not applicable is skills and experience.
- Having accepted that the employees had the longest services with the respondent, it goes without saying that in the absence of evidence justifying the selection their dismissal for operational reasons was unfair. Their selection could also not have been due to lack of skills because Mr Beeton conceded during cross examination that the two employees were multi-skilled.
- In light of the above analysis, I find that the dismissal of the employees to have been both procedurally and substantively unfair. There is no reason not to grant the relief of reinstatement as prayed for by the employees in light of there being no evidence that the trust relationship between the parties have broken down.
- In the premises, the following order is made:
- The dismissal of the individual Applicants, Mr Ndou and Rakau, by the Respondent was both procedurally and substantively unfair.
- The Respondent is ordered to reinstate the individual Applicants retrospective to the date of their dismissal without loss of benefits and salary.
Judge of the Labour Court of South Africa
For the Applicants: Mr W Khoza, the union official. For the Respondent: Advocate W P Venter.
Instructed by: Portgieter, Penzhorn and Taute Inc.