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IN THE LABOUR COURT OF SOUTH AFRICA

HELD AT JOHANNESBURG

CASE NO. J1130/97

In the matter between:

NICOLA.JANE.WHALL APPLICANT

and

BRANDADD MARKETING (PTY) LTD RESPONDENT

____________________________________________________________________

JUDGMENT

___________________________________________________________________

[1] This is an application in terms of section 191(5)(b)(ii) of the Labour Relations Act 66 of 1995 ("the Act"). The applicant alleges that she was dismissed without being consulted as required by section 189 of the Act. In her statement of claim, she sought compensation and re-instatement, but her representative informed the Court from the bar that she abandoned the latter relief.

[2] The respondent is an agency, the sole function of which at the time was to market a particular product, Superkings cigarettes, for an overseas company, Imperial Tobacco (UK) ("Imperial"). Prior to the commencement of this arrangement, a memorandum of agreement setting out the terms of the relationship between the respondent and Imperial was drawn up. It was never signed by the parties. The agreement provided, inter alia, that after an initial period of 12 months, the relationship could be terminated by either party on six months' notice.

[3] The applicant commenced employment with the respondent on 1 April 1996. Her position was styled "brand manager". As such she was responsible for overseeing the marketing and merchandising of Superking, and attending to the administration thereof. She reported to the respondent's general manager, Mr W A Nel.

[4] Sometime in 1997 Imperial Tobacco (UK) decided to withdraw from its South African operations, and accordingly from the agreement with the respondent. This decision was verbally communicated to Mr Nel early in August 1997. It was confirmed in writing on 12 August. Imperial's action was in breach of the notice provision of the agreement with the respondent. However, Imperial justified its withdrawal on the basis that the memorandum of agreement had not been signed. On the following day, 13 August, Imperial confirmed that it would pay the respondent some R5m in order to enable the respondent to meet its obligations (including the costs attendant on retrenching its staff), wind up its operations, and meet its bank loans. It was further agreed that the respondent would continue to administer a promotion scheme styled Quest in accordance with Imperial's instructions. This scheme entailed the redemption of vouchers that had been issued to customers of Superkings. Imperial issued the necessary instructions for the administration of the scheme on 19 September 1997. The respondent accepted these instructions three days later.

[5] The applicant was on leave when the respondent received the news of Imperial's decision to cancel the agreement. On her return to work on 15 August 1997, she was informed of Imperial's decision, and instructed by Mr Nel to take immediate steps to halt the marketing and sales of Superkings and to cancel all advertising.

[6] On 26 August 1997 the applicant was handed a document headed "Notice of Possible Retrenchment", in which, under the heading "The Reasons for the proposed retrenchments" it was stated that the respondent had lost the Imperial account, and consequently some R16m in income. The notice further set out the various alternatives to retrenchment that had purportedly been considered and rejected by the respondent, stated that about 34 employees were "likely to be affected", and that the "proposed" retrenchments were "likely to take effect" by close of business on 31 August 1997. The notice further stated that the services of certain employees might be required to assist in the respondent's undertaking to Imperial to "clear the market" by 30 September 1997, and that this would be "discussed with the retrenchees at consultation stage". Under the heading "severance pay proposed" it is was stated that, although the Act stipulated one week's remuneration for every completed year of service, the respondent would "consider the possibility" of giving each worker "one month's severance pay". Finally, the notice gave an undertaking to re-employ retrenchees if and when positions became available, but added that this possibility was "extremely unlikely".

[7] Three days later, on 29 August 1997, the applicant received a letter confirming that her retrenchment was effective from 31 August 1997, and that severance pay of "one month" together with any other benefits owing would be transferred into her bank account on 1 September 1997.

[8] The first question for decision in this matter is whether the respondent complied with section 189 of the Act.

[9] The procedures set out in that section are detailed. They provide that when an employer contemplates dismissing employees for operational reasons it is required to consult with them or their representatives over a range of issues. During the course of such consultations, the employer must disclose relevant information to make the consultation effective. It is trite that the purpose of such consultation is to enable affected employees to make representations as to whether retrenchment is necessary, whether it can be avoided or minimised, and, if retrenchment is unavoidable, the methods by which employees will be selected and the severance pay they will receive.

[10] The Labour Appeal Court has cautioned in Johnson & Johnson (Pty) Ltd v CWIU (Case No. PA 154/97, dated 21 September 1998, unreported) against treating the requirements of section 189 as an inflexible "checklist" (see at paragraph 29 of the unreported judgment). The proper approach, according to Froneman DJP, is "to ascertain whether the purpose of the section (the occurrence of a joint consensus-seeking process) has been achieved". The learned Deputy Judge President observes in this regard (at paragraphs 30 and 31 - emphasis added):

"If that purpose is achieved, there has been proper compliance with the section. If not, the reason for not achieving the purpose must be sought. If the employer alone frustrated the process in some way or another, there can be no compliance. If the employer was not at fault and did all it could, from its side, to achieve the kind of consultation referred to above, the purpose of the section would also have been achieved.”

Mention has already been made that section 189 is inextricably linked to the issue whether a dismissal based on operational requirements is fair or not. In testing compliance with its provisions by determining whether the purpose of the occurrence of a joint consensus-seeking process has been achieved or frustrated, a finding of non-compliance by the employer will almost invariably result also in the dismissal being unfair for failure to follow a proper procedure. It is difficult to envisage a situation where the result could be different. Non-compliance would not, however, necessarily result in the dismissal being substantively unfair, as the facts of this case show."

[11] The thrust of this passage appears to be that, when seeking to ascertain whether an employer has complied with the provisions of section 189, the determinative question is not whether or not a joint consensus-seeking approach has been achieved, but whether the employer can be blamed if it was not.

[12] With this in mind, I return to the facts in casu. After she returned from leave on 15 August 1997, the applicant had met Mr Nel. How many times they had met is in dispute. But nothing turns on this. I accept that in the next few days the applicant was fully appraised of the implications of Imperial's decision, including the fact that her position as brand manager of the Superking account must inevitably become redundant. The evidence given by the applicant indicates that she had resigned herself to this before she received the notice of 26 August 1997. According to the applicant, when she discussed the matter with Mr Nel on that date, she had raised the possibility of being employed in the "mopping up operation" after 31 August 1997 - in particular whether she could continue to be employed for at least a further month administering the Quest scheme. It appears that during the discussion, the possibility of her working on a "consultancy" basis for a firm called Brandlink - a separate company under the control of the respondent - had been mooted.

[13] Can it be said that events outlined above amounted to a joint consensus-seeking process as envisaged by the Act? The applicant was aware that her position would become redundant from the moment she was informed of Imperial's decision to withdraw from the agreement. The only uncertainty in her mind from then until 29 August 1997, when the final decision to terminate her employment was communicated to her, was when her employment would end.

[14] The formal process of consultation in regard to the retrenchment was set in motion on 26 August 1997. It is patently clear that the notice issued to affected employees on that day was drafted to conform with the requirements of section 189(3). That sub-section, however, merely outlines the information that an employer is required to disclose during the process of consultation. The issues over which the parties are required to consult in the light of this information are outlined in section 189(2).

[15] I accept that, after she was handed the notice, the applicant mooted the possibility of extending her employment, if only on a consultancy basis, to the end of September. What happened subsequently in regard to that proposal is in dispute. The applicant says she was "promised" such a position by Mr Nel. Mr Nel claims that he simply suggested to the applicant that she discuss the matter with the managing director of Brandlink, Mr Paul Coulson, and that he (Mr Nel) had asked her to revert to him thereafter. His version is the more probable. Mr Nel could not have finalised an arrangement with the applicant then because Imperial had not at that stage issued its instructions for the administration of the Quest scheme. At that stage, he accordingly had no budget from which to work.

[16] Whatever the truth, however, it is significant that the applicant expressed the following views in a letter to Mr Nel on 25 September 1997:

"Dear W.A.

I was deeply saddened to find myself unemployed at the end of August having been assured on several occasions that there was a position for me with BrankLink (sic).

Notwithstanding, I reluctantly agreed to take a retrenchment package on the basis that I would be employed as a consultant during the month of September (this was communicated to Thinus). This was a satisfactory arrangement as it meant that I'd have an income at the end of September as well as time to find alternative full time employment.

Regrettably the work you promised me never materialised and I now find myself in a position where I have no income this month. I feel that I've been treated most unfairly and believe that I should be compensated in some way, as was agreed.

I know you are exceptionally busy, but I would be most grateful if we could resolve this problem this month."

She received a written reply from Mr Nel on the same day, which stated, inter alia:

"Your retrenchment from BrandAdd Marketing was inevitable due to the withdrawal of Imperial Tobacco from the South African market. We could therefore not keep you employed in the marketing capacity of Superkings and had to retrench you from BrandAdd Marketing. Such a retrenchment was given to you at the end of August 1997, with your salary for August being paid into your bank account on 25 August and the severance benefits of one month's salary paid by cheque of 3 September 1997.

To that effect you were given a retrenchment letter that you have still to return....

Apart from the retrenchment package, the possibility of further employment with BrandLink was discussed. It was made clear that such discussion could only take place between yourself and Paul Coulson. Concerning this matter I have had no feedback from either yourself or Paul Coulson regarding such a possibility.

You have requested that we investigate making use of you during September to administer Quest that would supplement your income from October onwards.

We have made it clear that we would only consider this issue based on Imperial's relationship with ourselves on an ongoing basis on Quest. In other words, should they have decided to use another company, we would have handed Quest over to them during September. Alternatively, should they decide to use BrandAdd Marketing for a contractual period, our first priority would be to how to structure Quest within the ongoing resources available within Brandlink. Such negotiations have only been finalised on 22 September 1997.

In conclusion therefore it is my opinion that you have taken the retrenchment from BrandAdd Marketing and as such were paid for August as an additional month's payment."

This correspondence was exchanged after the applicant's dismissal, which in terms of section 190(1) of the Act must be deemed to have taken place on 31 August 1997, that being the day on which she left the service of the respondent.

[17] As is apparent from the terms of his letter and his evidence, Mr Nel was of the view that the respondent had complied with the provisions of the Act when he issued the "letter of retrenchment" to the applicant on 29 August 1997. What he had in fact done, however, was to issue instructions to the applicant in her capacity as brand manager to take steps to halt further sales of Superkings. It may well have been that the applicant fully realised, and accepted, that her employment would have to be terminated. But the Act does not require consultation with employees only over methods of avoiding retrenchment. It also requires consultation over the consequences of retrenchment and possible methods of alleviating the personal consequences thereof for affected employees.

[18] The timing of the applicant's dismissal, the selection criteria, and the severance pay, were neither raised nor discussed with her. Indeed, the notice makes it quite clear that the respondent had already taken a firm decision to pay one month's severance pay, and to complete the process by the end of August. It also appears from the evidence of Mr Nel that the respondent had already concluded that the applicant would have to be retrenched at the end of August. There was no further meeting between the applicant and Mr Nel in the three days between the day on which the notice was issued and the day on which she was given her notice of retrenchment. On Mr Nel’s version, he merely told the applicant that she should discuss with Coulson the possibility of continuing to work for BrandLink for a time. He asked neither Coulson nor the applicant whether there was such a possibility before issuing the letter of retrenchment. Mr Nel therefore had no basis for assuming, as he put it in the letter, that the applicant had "taken" retrenchment - if indeed this was intended to suggest that the applicant had volunteered for retrenchment.

[19] It follows, therefore, that a joint consensus-seeking process in regard to severance pay and the timing of the retrenchment was not achieved.

[20] According to the approach advocated in Johnson & Johnson supra, however, the above finding is not the end of the inquiry. The next question is why the purpose of section 189 was not achieved. And in asking that question, the circumstances must be taken into account. These include the conduct of the parties and, I would think, the pressure that was on the respondent at the time.

[21] The reality of the situation in which the respondent found itself in August 1997 was that its only client had withdrawn. Its very raison d'etre had accordingly ceased to exist. Mr Nel testified that he had immediately sought legal advice on whether it could hold Imperial to the agreement. This had taken some time. The advice ultimately given by senior counsel was that any effort to hold Imperial to the notice period would not be worth the cost.

[22] Had the respondent been able to hold Imperial to the notice period, it would naturally have had more time to consult with its employees. As things were by the middle of August, however, it was faced with the choice of releasing staff or retaining them at its own expense without income. Mr Nel said his choices were dictated entirely by Imperial. It had indicated that sales were to be halted by the end of August and that all ancillary obligations to customers should be fulfilled by the end of September. Imperial had paid fixed sums to the respondent to enable it to wind up its operations. This money was intended to be, and in fact has been, spent for this purpose.

[23] The respondent claims, in essence, that it had no option under these circumstances but to act with extreme decisiveness. While an employer in extremis may not be required to consult as comprehensively over the various issues stipulated in section 189(2) as it would otherwise be obliged to do, it does not follow that it is relieved entirely of its obligation to consult with affected employees.

[24] The respondent suggested that it had consulted sufficiently with the applicant because there was nothing in the circumstances that could be done other than to retrench her. This suggestion echoes the "no difference" principle that has been consistently rejected by the Courts as a defence to violations of the audi alteram partem principle. The point of the consultation required by the Act is to enable employees facing retrenchment to suggest alternatives or ameliorative measures, and to encourage the employer to consider them. Such a process has a value even if the fate of the employee is apparently sealed.

[25] I am not convinced that the respondent consulted the applicant adequately in respect of severance pay and the possibility of alternative, if interim, employment. I have already noted that the "notice of proposed retrenchment" presented the amount of severance pay as a fait accompli. With regard to the possibility of retaining the applicant on a consultancy basis for the purposes of administering the Quest programme, it appears that Mr Nel expected the applicant to make independent inquiries with Brandlink. He should at the very least have asked the applicant about the outcome of such inquiries before issuing the termination letter on 29 August 1997.

[26] The dismissal was accordingly procedurally unfair.

[27] I turn now to the question of relief. As indicated above, the applicant has abandoned her claim for reinstatement. It emerged during evidence that she has done so because she found new employment in March 1998.

[28] The remedies this Court may grant if it finds that a dismissal is unfair are set out in section 193, the applicable provisions of which read:

"(1) If the Labour Court ... finds that a dismissal is unfair, the Court or the arbitrator may -

(a) order the employer to reinstate the employee from any date not earlier than the date of dismissal;

(b) order the employer to re-employ the employee...;

(c) order the employee to pay compensation to the employee.

(2) The Labour Court ... must require the employer to re-instate or re-employ the employee unless -

(a) the employee does not wish to be reinstated or re-employed;

(b) ....

(c) it is not reasonably practicable for the employer to reinstate or re-employ the employee; or

(d) the dismissal is unfair only because the employer did not follow a fair procedure.

(3) If a dismissal ... based on the employer's operational requirements is found to be unfair, the Labour Court in addition may make any other order that it considers appropriate in the circumstances."

Section 193(1) clearly indicates that the Court has a discretion as to whether to order any of the forms of relief specified therein. Sub-section 2 compels the Court to order re-instatement or re-employment unless none of the exceptions applies. This does not mean, however, that the Court must order reinstatement or re-employment if one of the exceptions applies, since the sub-section clearly regulates the exercise of the discretion conferred by sub-section 1 only once the Court decides that relief should be granted. Sub-section 3 appears to be intended to permit the Court only to grant orders that are ancillary to the forms of relief specified in sub-section 1, such as an interdict aimed at protecting a re-instated employee (see footnote 43 of the Act). Neither sub-section 3 nor the general powers conferred by section 158(1) appears to give this Court a discretion to order relief other than re-instatement, re-employment or compensation in the case of unfair dismissals. It is also noteworthy that the Court is given a discretion to decide on the extent to which orders of reinstatement or re-employment in terms of sub-sections 193(1)(a) or (b) may be made retrospective.

[29] Apart from the fact that the applicant has abandoned her claim for re-instatement, it would clearly not be reasonably practicable for the respondent to re-instate or re-employ her in view of the fact that it has survived the loss of the Imperial account only by turning itself into a franchise operator. Furthermore, the dismissal of the applicant was only unfair for want of compliance with a fair procedure. The only remaining option is therefore compensation.

[30] In regard to compensation, the Labour Court's judgment in Johnson & Johnson supra has brought to an end the division in this Court over the meaning of section 194(1), which governs the amount that must be granted if a dismissal is found to be only procedurally unfair : see Chothia v Hall Longmore & Co. (Pty) Ltd [1997] 6 BLLR 739 (LC); National Union of Mineworkers of South Africa v Precious Metal Chains (Pty) Ltd [1997] 8 BLLR 1068 (LC); Heiger v UPC Retail Services [1998] 1 BLLR 45 (LC); Keller v Transnet [1998] 1 BLLR 62(LC); Steynberg v Coin Security Group (Pty) Ltd (1998) 19 ILJ 304 (LC); Manning v Metro Nissan and another, case no. J1034/97 (LC).

[31] The relationship between sections 193 and 194 is summed up by the Court as follows (at paragraph 40):

"If a dismissal is found to be unfair solely for want of compliance with a proper procedure the Labour Court, or an arbitrator appointed under the LRA, thus has a discretion whether to award compensation or not. If compensation is awarded it must be in accordance with the formula set out in s. 194(1); nothing more, nothing less. The discretion not to award compensation in particular cases must, of course, be exercised judicially."

Section 194(1) requires that in the case of a dismissal which is only procedurally unfair, "compensation must be equal to the remuneration that the employee would have been paid between the date of dismissal and the last day of the hearing of the arbitration or the adjudication, as the case may be, calculated at the employee's rate of remuneration on the date of dismissal". Once it is decided that compensation should be awarded, the only basis for granting less than the aforesaid amount is if the employee had unreasonably delayed initiating or prosecuting his or her claim.

[32] The Labour Appeal Court explains as follows why the legislature has laid down a formula for determining compensation in such cases (at para 41):

"The compensation for the wrong in failing to give effect to an employee's right to a fair procedure is not based on patrimonial or actual loss. It is in the nature of a solatium for the loss of the right, and is punitive to the extent that an employer (who breached the right) must pay a fixed penalty for causing that loss. In the normal course a legal wrong done by one person to another deserves some form of redress. The party who committed the wrong is usually not allowed to benefit from external factors which might have ameliorated the wrong in some way or another."

However, the Court adds in the same paragraph:

"The nature of an employee's right to compensation under s. 194(1) also implies that the discretion not to award that compensation may be exercised in circumstances where the employer has already provided the employee with substantially the same kind of redress (always taking into account the provisions of s. 194(1)), or where the employer's ability and willingness to make that redress is frustrated by the conduct of the employee."

[33] I do not understand the Labour Appeal Court to have intended to suggest that the two examples it provides of cases in which compensation may be refused are exhaustive. To refuse compensation on the ground, for example, that the employee immediately obtained alternative employment at a salary higher than he was previously earning would, in my view, be consistent with the examples provided by Froneman DJP. If the intention behind section 194(1) is punitive, the degree of the employer's departure from the requirements of procedural fairness must also be relevant.

[34] The sole guiding principle mentioned by the Labour Appeal Court on whether not to grant compensation (or indeed whether to grant it) is that such decision must be exercised judicially. Guidance as to how such a discretion should be exercised must be derived from the purposes of the Act as a whole, read within the broader Constitutional context, and of sections 193 and 194 in particular.

[35] When exercising the discretion as to whether to grant compensation the Court must, in my opinion, have regard to what is fair to both the employee and the employer. One of the purposes of the Act is to protect employees against unfair dismissal (section 185). Others are to advance economic development (section 1) and to effectively resolve labour disputes (section 1(d)(v)). While the punitive effects of section 194(1) may be ameliorated by the (implicit) limit of compensation to the equivalent of 12 months' remuneration, the decision as to whether to order compensation must nevertheless in my view be exercised with the above considerations in mind.

[36] As section 194(1) prescribes a minimum, establishing what fairness in this context requires must entail comparing what the Court considers the employee should have received had there been no statutory minimum with what the employee must receive in terms of that statutory minimum. If there is a substantial difference between the two figures, the Court must decide whether denying compensation would be more unfair to the applicant than granting the prescribed compensation would be to the respondent. The assessment of what the employee should have received must, in turn, require the Court to examine factors such as the actual patrimonial loss suffered by the applicant in consequence of his or her dismissal, his or her length of service with the employer, his or her prospects of finding alternative employment, the financial position of the employer, and so on: see the criteria listed by the Court in Ferodo (Pty) Ltd v De Ruiter (1993) 14 ILJ 974 (LAC) at 981 D-G.

[37] In the present case, more than 20 months have elapsed between the date of the applicant's dismissal and that of the hearing of this matter. Although section 194(1) does not expressly limit the compensation that may be awarded for a dismissal that is procedurally unfair, I assume, contrary to the view expressed in Smangele v Bhamjee, Bhana, Nkosi CC t/a Baragwanath Pharmacy and another Labour Court Case No. J963/97 dated 13 October 1997 at paragraphs 52 and 53, that the limit of 12 months' remuneration stipulated in section 194(2) is intended to apply also to section 194(1). I say this because if a 12-month limit were not implicit in sub-section 1, the limit in sub-section 2 should not be applied in cases, like the present, where the time between the date of dismissal and that of the adjudication exceeds 12 months. If the applicant is to be awarded compensation she would therefore be entitled to compensation equivalent to 12 months' remuneration in terms of the formula prescribed by section 194(1). It was rightly conceded by the respondent that the applicant was not responsible for the lapse of time between her dismissal and the date of the hearing.

[38] There are a number of factors in the present case that are to my mind relevant to deciding what compensation the applicant would have been entitled to had there been no statutory minimum.

[39] The first is that the applicant found new employment six months after her dismissal at much the same remuneration as she had previously earned. Having regard to the common law principle that an unlawfully dismissed employee is obliged to mitigate her loss, this would have limited the compensation to which the applicant was entitled (compensation being understood in the ordinary sense) to the equivalent of six months' remuneration. It is noteworthy that in her application for conciliation by the CCMA, the applicant states that she would be satisfied with six months' compensation.

[40] Second, it is clear from the communication that the applicant addressed to Mr Nel on 25 September 1997 (quoted above) that her only complaint at that stage was that she had not been retained in employment until the end of September 1997 - i.e. for one month after the date on which she had been dismissed. The applicant frankly acknowledged in response to a question from the Court that had the respondent kept her in its service until the end of September, she would not have launched this application. The respondent is of course to blame for not discussing this proposal with the applicant before dismissing her, and for forcing her to seek to recover the amount she felt was owing to her by litigating. It cannot be said that the applicant's limited expectation purged the respondent's conduct of its unfairness. However, the letter does indicate that immediately after her dismissal the applicant would have been satisfied had she been given one further month’s remuneration to tide her over while she looked for new employment.

[41] Third, the applicant had at the time of her dismissal only been in the respondent's service for a relatively short period and had good prospects of finding alternative employment.

[42] Fourth, the respondent had compelling reasons that were entirely beyond its control, to declare the applicant's position redundant.

[43] Fifth, the haste with which the respondent was required to act, and the fact that events were to a large extent dictated by Imperial, to some extent mitigates its non-compliance with the provisions of section 189.

[44] Finally, the severance pay to which the applicant is entitled is also a relevant factor in assessing the compensation to which she is in fairness entitled: Ferodo v De Ruiter supra at 981G. In this case, it is four times the statutory minimum.

[45] Although the determination of compensation properly-speaking on the basis of fairness can never be an exact science, I am of the opinion that given the factors mentioned above an award of two months' remuneration would fairly compensate the applicant for her unfair dismissal.

[46] When this figure is compared to that which the Act prescribes, I am of the view that to deny compensation would be less unfair to the applicant than an award of 12 months' compensation would be to the respondent. I accordingly hold that this is a case in which no compensation should be granted.

[47] There remains the issue of severance pay. In the present case, the respondent unilaterally decided that the employee should be given "one month's severance pay". The applicant was contractually entitled to one month's notice. The respondent conceded during the course of the hearing that it had confused severance pay with notice pay. The Act clearly states that severance pay is distinct from amounts to which an employee is contractually entitled. The respondent should accordingly have paid the applicant an additional one month's remuneration in terms of its undertaking.

[48] Section 196(10) provides that when this Court is adjudicating a dispute about a dismissal based on the employer's operational requirements, it may inquire into and determine the amount of severance pay to which the employee may be entitled. Although prior to the implementation of the current Labour Relations Act there was some uncertainty as to employees' entitlement to severance pay if they were retrenched, it was generally agreed that it could be ordered where fairness so required. Thus in Imperial Cold Storage & Supply Co Ltd v Field (1993) 14 ILJ 1221 (LAC), Joffe J observed at 1228I-1229:

"[A] court does not in appropriate cases shirk from determining fair recompense.... Furthermore, retrenchment packages are, just as compensation awards of the Industrial and Labour Appeal Courts, expressed in mutiples of monthly or weekly emoluments. It is the amount of that monthly or weekly emoluments that is a proper subject for collective bargaining ... and an improper area for the Court to intervene in under its unfair labour practice jurisdiction. But non constat that, once the parties have bargained or otherwise determined those emoluments, a court is not entitled to determine what multiples thereof might or might not have fairly to be paid by an employer to an employee to cushion the blow of retrenchment."

The learned judge sums up the position with regard to severance pay at 1229E-F (emphasis in original):

"Each case will have to be determined on its own merits, and one can well conceive that in a case where an employee has found suitable alternative employment, the court would decline to hold that he was in fairness entitled to expect severance pay over and above such re-employment. The point remains that to the extent that fairness requires payment of a severance package over and above the application of the other guidelines including fair notice of the retrenchment, there is no reason why the Industrial Court should not be able to determine this and, where appropriate, the amount of such severance package...."

[49] It has been generally accepted, too, that the purpose of severance pay is to cushion the shock of retrenchment and to serve as a gratuity for services rendered. In other words, severance pay is a form of "compensation" for employees who fall victim to economic forces and the loss of employment : Cele & others v Bester Homes (Pty) Ltd (1990) 11 ILJ 516 (IC); Jacobs v Pre-Built Products (Pty) Ltd (1988) 9 ILJ 1100 (IC); Lloyd v Brassey (1961) All ER 312; Wynes v Southrepps Hall Broiler Farm Ltd [1968] ITR 407 (IT). Apart from confirming employees' right to severance pay and the minimum amount thereof, I do not understand the Act to have been intended to alter the principles underlying these cases.

[50] Section 196(10) merely confirms that retrenched employees are entitled to severance pay equal to at least one week’s remuneration for each completed year of service. This provision does not preclude an employer from agreeing to pay more. Nor, in my view, does it preclude this Court from ordering an employer to pay more than the statutory minimum in appropriate circumstances. Unlike sub-section 6 of section 196, sub-section 10 does not limit the Court's discretion to deciding upon severance pay "in terms of this section". It follows, in my opinion, that this Court retains a discretion to order the payment of severance pay higher than the statutory or contractual minimum in appropriate circumstances.

[51] In my opinion, the circumstances of this case justify such an order. The applicant should have been retained in employment until consultation was completed. This would have meant that her notice period would have extended to the end of October 1997. This justifies her being awarded four weeks' severance pay in addition to that to which she was entitled in terms of the respondent's undertaking.

[52] Since both parties were partially successful, no order is made as to costs.

It is accordingly ordered:

1 The dismissal of the applicant was unfair for want of compliance with a fair procedure.

2 The respondent shall pay to the applicant within 14 days of the date of this judgment a sum equivalent to two month's remuneration (i.e. R13 510.56) as severance pay.

3 For purposes of the aforegoing order, "remuneration" shall include only the salary compent thereof - namely, R6 755.28 per month.

______________________

GROGAN A J

ACTING JUDGE OF THE LABOUR COURT

For the applicant: Mr McLaren, of McLaren & Associates

For the respondent: Advocate Killian, instructed by Goldman Judin & Werner

Date of hearing: 10 December 1998

Date of judgment: 15 December 1998

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