IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG

Case No: JS 326/05

In the matter between:

THOMAS, KEITH ASHLEY WATTS 		       APPLICANT

AND 

FIDELITY CORPORATE SERVICES 
(PTY) LTD                                                                       RESPONDENT

REASONS FOR ORDER OF 1 DECEMBER 2006

REVELAS AJ

[1]	The applicant had been employed by the respondent as its Human Resources Director when his services were terminated on 31 January 2005, for alleged operational reasons due to a restructuring exercise. 

[2]	Restructuring was apparently first mentioned by the respondent in September 2004. It was explained to the applicant that the Fidelity Services Group of which the respondent was a component, was to unbundle because of “BEE” arrangements. Certain key positions would be retained for a period of 6 to 12 months to ensure continuity and to transfer their functions to other subsidiaries of the group. This was all set out in a “restructuring” letter which was further discussed on 27 September 2004. The applicant alleged that he was assured that his position was not under threat.

[3]	Several discussions took place thereafter and letters were sent between parties. Ultimately the applicant referred a dispute about his dismissal to the Commission for Conciliation, Mediation and Arbitration (“the CCMA”). Thereafter he referred a dispute about the alleged substantive unfairness to this court. He had dealt with the procedural aspect of his challenge by way of notice of motion.

[4]	In this application the applicant seeks to introduce his challenge to the alleged procedural fairness (in motion proceedings), into the trial proceedings which will be aimed at resolving the dispute about of the alleged substantive unfairness of the applicant’s dismissal. This objective is to be achieved by referring the matter to oral evidence and incorporating those proceedings into the trial proceedings.

[5]	In NUMSA and others v SA Five Engineering & others [2005] 1 BLLR 53 (LC), Murphy AJ held that referrals to the Labour Court are restricted by sub-sections 189A (7)(b)(ii) and 189A (8)(b)(ii)(bb) of the Labour Relations Act, 66 of 1995, as amended (“the Act”), to substantive fairness disputes. Disputes about alleged unfair procedure in cases falling within the ambit of section 189A, cannot be referred to the Labour Court by way of statement of case, but must be dealt with by way of motion proceedings as contemplated in sub-section 13. Consequently, where employees have opted for adjudication rather than strike action, “providing instead for a mechanism to pre-empt procedural problems before the substantive issues become ripe for industrial action”, they cannot have the procedural aspect brought on trial. The learned judge granted relief similar to that sought by the applicant, in that he ordered that the application on procedural aspects be referred to oral evidence and the latter proceedings be incorporated in the trial proceedings on substantive fairness. 

[6]	To determine this matter will require some discussion about section 189A of the Act. Time constraints prevent me from writing a detailed judgment so I will give a very short one, even though the issues are complicated and warrant more discussion.

[7]	Section 189A (13) of the Act provides that, if an employer contemplates retrenchment, but fails to follow fair procedure, the aggrieved employees may approach the court on application for four types of relief, being interdicts to the effect that a fair procedure must be followed by the employer before any employee’s services may be terminated, and awarding damages if there is non-compliance with fair procedure or if the employees have been already dismissed. The relief is procedural in nature and is aimed at forcing parties to sit down and consult properly. 

[8]	Sub-section 18 provides specifically that the Labour Court may not adjudicate a dispute about the procedural fairness of a dismissal based on the employer’s operational requirements in any dispute referred to it in terms of section 191(5)(b)(ii) (operational requirements). That is why the applicant brought his case (application) by way of motion proceedings on this aspect. The aforesaid sub-section separates the procedural and substantive components of challenging a retrenchment. It appears that the only basis on which the employee may challenge the procedural fairness of a retrenchment is by way of application.

[9]	When individuals are retrenched, particularly senior employees, the distinction between the procedural and substantive aspects of a retrenchment is less clear, than would be the case in a collective dismissal of employees who are represented by a trade union. This is so because more often than not, senior employees have more specific knowledge of the advent of the restructuring and the reasons for it. Any retrenchment discussions in respect thereof are often conducted on a more personal level. The nature of, and solution to redundancy, in the case of an individual employee is often more complex than a mass retrenchment. Individuals are unable to exercise the strike option provided for in section 189A. The latter section is also applicable to employers who employs over a certain number of employees. These factors in themselves render the nature of the procedure too difficult to monitor, because it is often tied up with substantive issues.

[10]	Quite plainly, the drafters of section 189A had mass retrenchments in mind when introducing it into the Act. Even though the consequences of a mass retrenchment might be more serious and often more severe, the retrenchment process which precedes it, is in most cases more simple than the retrenchment of individuals, because of the trade union involvement. Consultations have a more structured character. The personal interaction with the retrenchees is greatly diminished by union representation. The participants at the consultation table are more in number and do not have a direct personal interest in the outcome. The main reason behind a collective retrenchment is usually to cut the wage bill. That is an issue which is more likely to remain separate from the consultative process, when measuring fairness. The reasons for the redundancy of an individual are mostly more complex and the outcome of the consultation process depends very much on the nature of the discussions. 

[11]	In my view, the authors of section 189A could not have intended to non-suit individual employees from raising procedural fairness in trial proceedings, even if he or she had referred the aspect in terms of section 189A of the Act. It would often be impractical to do so. There is no reason why the two aspects could not be heard simultaneously, particularly since the individual may not invoke strike action.     

[12]	In this application the warning against the artificiality of placing the “procedural” and “substantive” aspects of a dismissal into separate pigeonholes as expressed in Unitrans Zululand (Pty) Ltd v Cebekhulu [2003] 7 BLLR 688 LAC, is most apt if one has regard to the facts of the matter. In the Unitrans matter Du Plessis AJA makes the very valid point that there will be circumstances in which the procedural fairness and the substantive fairness of a dismissal are so inextricably linked, that the dismissal cannot be fair in the absence of a fair procedure.

[13]	The aforesaid sentiments seem to be applicable to the present matter. Without examining the facts in too much detail, I believe that it would be unfair to non-suit the applicant on procedure, when the papers indicate that the merits are not disconnected therefrom. I therefore find Murphy AJ’s solution in the SA Five matter, to vary the order so that the two aspects be heard together, a sound one.

[15]	I will give similar relief in this matter. 

__________________
Elna Revelas
Acting Judge of the Labour Court

Date of hearing:
Date of order:
Date of reasons:

On behalf of the Applicant:
Ms M Jardim of Mary Jardim Attorney 

On behalf of the Respondent: 
Adv. M van As, instructed by Johan Joubert Attorneys