---

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

JUDGMENT

Case No. C115/2009

(Not reportable)

In the matter between:

NUMSA obo X SAMENTE & 2 OTHERS ....................................................................Applicant

and

Z A GALVANIZING (PTY) LTD ...............................................................................Respondent

Heard: 20 February 2013

Delivered: 16 May 2013

Summary: Unfair dismissal claims for operational requirements granted.

JUDGMENT

Introduction

1. NUMSA referred a dispute on behalf of three employees (Messrs Samente, Hexana and Ms Madola) claiming that they were dismissed as a result of the operational requirements of their employer, the respondent, and that such dismissals were substantively and procedurally unfair.

Material evidence

2. The employees were employed by the respondent when, on or about 16 July 2008, they received a written notice from their employer purporting to be a retrenchment notice. The written notice was given to eighteen employees of the employer, including the three employees forming part of this dispute.It stated the following:

"Dear Workers

Outsourcing to 2MPower

In terms of its domain to run the business effectively, management made the decision to outsource certain areas of work to a labour broker: 2MPower, the rationale being its operational requirements.

The effective date of outsourcing will be 28 July 2008 and will only affect the persons listed above.

A meeting with all persons so affected and the trade unions will be held as indicated below at Stikland in order for us to consult about the issues at stake.

Boardroom ZA Galv - 10h15 - 25 July 2008

The agenda for the consultation meeting to be held on this day, will be as follows:

1. Rationale for outsourcing.

2. Terms and conditions of employment.

3. Retrenchment of those workers (if any) not in favour of the outsourcing arrangement.

The labour broker is registered and in good standing, so that the decision to outsource should not impact negatively on those concerned."

"the purported retrenchment notice"

3. On 25 July 2008the meeting, called for in the written notice, took place. The employer was represented by its general manager Mr StefanusBouwer ("Bouwer"). Heinformed the meeting that the employer was in financial difficulties and that it was considering either outsourcing or retrenching the employees. The labour broker 2MPower was also present at the meeting.The rationale for the proposed retrenchments, according to Bouwer,which was on the basis that the employer needed to cut costs as a result of its financial position that it found itself in. Mr Ngijima, NUMSA union official, attended the meeting. Heindicated in his evidence that during the meeting the union posed various questions to the employer for clarification purposes only. One of the questions that the union posed was that if the employer was going to retrench eighteen employees, the union wanted to know who will then take over the functions that the eighteen employees were performing. The employer did not give the union an answer and only spoke about the shot blasting department and the cleaner. The shot blasting department comprised Messrs Christopher Hexana and ZolaniSamente (two of the three employees forming part of this dispute).The cleaning department consisted of only one employee, Ms DumekeMadola, the third employee forming part of the dispute.

4. The union also asked at the meeting whether or not the labour broker, 2MPower,would take over the workers.When the labour broker did not want to commit to taking over the workers and the employer also failed to give such commitment, the union demanded that the labour broker leave the meeting because if the labour broker was not going to take over the workers there was no role for them at the meeting. The labour broker accordingly left the meeting.

5. Mr Ngijimafurther stated in his evidence that at the meeting he informed Bouwer that if the discussions concerned the retrenchment of the workers, it was a matter between the union and the employer. Outsourcing to a labour broker could only be an alternative to be discussed in the course of the retrenchment consultations according to Ngijima. At the meeting, all the non-union members, except for Madola, agreed that the union could negotiate on their behalf.After such agreement the non-members left the meeting. The meeting proceeded with the shop stewards, Mr Ngijimaand Ms Madola.

6. A second meeting was held on 13 August 2008. At this meeting the employer informed the union that the number of possible employees to be retrenched would now only be three employees instead of the eighteen. The employer informed the union that it has reconsidered its position and that thethree employeesto be retrenched comprised the two in the shot blasting department and the one cleaner. The union'sresponse was that although it appreciated the smaller number of workers now being considered for retrenchment, it needed to understand from the employer how it came about that the number was reduced from eighteen to only three employees. The union also requested further information. The union wanted to know whether the employees in shot blasting workedovertime? The union asked what the volume of work was in that department in light of the company stating that there was never enough work in that?The union wanted to know what shift the employees worked.

7. In respect of the cleaning section, the union enquired who would be doing the cleaning, dusting and tea if Ms Madola was retrenched.The union also asked what function Ms Madolawas doing at the time. The union also wanted to know how many "casuals" were employed by the employer at the time. Lastly, the union wanted to know whether the company wanted to outsource the shot blasting to 2MPower.The union wanted to know how much the company would spend on the contract for 2MPower in order to compare that cost with the wages the company paid the 2 employees affected in that department. The meeting ended with the employer giving an undertaking to provide the requested information.

8. Mr Ngijimastated that on 21 August 2008, eight days after the first meeting of 13 August, he had a feedback meeting with the workers. He informed them that the good news was that the eighteenworkers were reduced to only three. He further informed them that the union was waiting for information concerning the three workers including the information concerning how much the company will be spending on 2MPower to compare it to the wages of the workers in the shot blasting department. This was a general meeting at lunch time with all union members. Sometime after this meeting, he made a call to the employer and tried to speak to Mr Bouwer. He could not get hold of Mr Bouwer and left a message with the lady in Bouwer'soffice who took minutes at the meetings between the company and union. When the union did not hear anything from the employer, Samente,who was also a shop steward at the employer's business, contacted him telephonically and told him that he was worried because nothing was happening. He informed Samente that this is sometimes what happens with retrenchment exercises because once the union asks difficult questions, the employer sometimes decides to drop the retrenchments or the retrenchment process fizzles out. He indicated to Samente that the union was still waiting for the information from the employer.

9. On 28 August the respondent provided the three employees with termination notices.The three contacted the union's office to inform them of the termination notices they received. When the employees took copies of the termination notices to the union, the union immediately started preparing unfair dismissal disputes. It was the union's view that it was not right that the consultation process ended while the union was still waiting for the information from the employer.

10. In cross-examination, Mr Ngijima confirmed that the date and time of the second meeting were agreed to at the first meeting and that at the second meeting the company was accompanied by a legal advisor. He also conceded that at the first meeting, the discussions were that only the shot blasting department was earmarked to be outsourced and that the other workers would be retrenched. He further confirmed that he wanted the information with regard to the overtime work in the shot blasting department because he wanted to see in what way the cost could be reduced in order for the employer to retain the two employees. He further confirmed that on 8 September 2008 he wrote a letter to the employer wherein he complained about the termination, indicated that the company failed to justify that Ms Madola did not have enough work and, in respect of the two employees in shot blasting, the union wanted the LIFO principle to apply.

11. Mr Samente gave evidence by stating that he started working with the company in September 2006 initially as a casual, but then became permanent. When he started, he was a forklift driver and the company obtained the necessary licence for him to be a forklift driver. He also worked in despatch and in the quality control departments. It was only later that he was moved to the shot blasting department. He stated that before the first meeting of 25 July 2008, the employer gave the workers forms to complete which stated that if they signed it they would work for the labour broker. When the employees approached him with these forms he advised them not to sign the forms.He undertook to speak to the union about it. He then informed the employer that the employershould not provide the forms to the employees and that the employer should speak to the union about it. A week later the purported retrenchment notices were given to the employees and the union.

12. He confirmed that at the first meeting the discussion was for the shot blasting department to be outsourced and for the cleaning department to be closed down because the company did not have enough money. He also indicated that it was discussed at the first meeting that the people in the office would do the cleaning and therefore they would not need a cleaner. Nothing was however finalised at the first meeting.

13. He further confirmed what transpired at the meeting of 13 August 2008 and that there were no further meetings after that. He confirmed that the union asked what the employer was going to pay the labour broker to see how much savings would be achieved compared to the wages that the two workers were receiving. He stated that after the second meeting, the employees received the termination letter. He stated that after his retrenchment there were other people who were employed in the shot blasting department. He could not recall who they were.

14. In cross-examination he stated that in shot blasting there was enough work for two people and that it was not possible for one person to do the work due to the nature of the work that was performed. He also indicated that since he worked from 2006 as a forklift driver, in despatch and assisting in quality control, there were a number of employees that were employed after him.If the company wanted to retrench him, the company had to consider putting him back to where he worked before he moved to shot blasting. He did however concede that he never suggested this to the company in the two meetings. It was put to him that there were three meetings although no detail was given to him about the third meeting. He denied that there were three meetings.

15. Ms Madolain her evidence stated that she started working with the company in September 2006.She did cleaning work, filing and faxing in the office. She indicated that she attended various courses while she was employed. She attended an admin course that was paid for by the company. She also attended a data capturing course paid forby herself and of which the company was aware of.While she was working there a lot of people were employed and she confirmed that she received the purported retrenchment notice personally. She also stated that she was aware of only two meetings that were held on 25 July and 13 August.At the first meeting there was no outcome and the parties only discussed the agenda. After the second meeting, the company never discussed anything with her. She was told on the day she received the termination notice that it was her last day. She claimed that there were a number of people hired after her.A person by the name of Nadia, a relative of one of the foremen, was hired. She also claimed that she was never offered alternatives and that neither LIFO nor any selection criteria were discussed with her.

16. In cross-examination she emphasised that she was not only doing cleaning, she was also doing filing and that she was busy the entire day. She claimed that when Nadia started working there,Nadia was doing some of her functions two weeks after she was retrenched. She confirmed that the company gave the workers letters to sign and that the shop steward told her not to sign the letter.This all occurred before the first meeting when it was suggested to her that Mr Ngijimashould act on her behalf.

17. She further stated that she was never given the chance to talk at the meetings and nobody had asked her whether she was happy. When it was put to her that she had an opportunity to participate and consider alternatives, she indicated that the company also knew about her courses and the company never considered it. In re-examination, Ms Madola confirmed that she has matric and that she studied internal auditing at the Eastern Cape Technikon, but dropped out after the first year due to financial reasons.

18. The only witness for the company was Bouwer who was the general manager and the person responsible for arranging and participating in the meetings with the union and the employees.

19. Mr Bouwer indicated that as a result of the recession in 2008 the employer had to look at reducing staff cost because the operations could no longer sustain the high staff cost. One of the alternatives the respondent considered was outsourcing.If that did not work, then only would the employer consider retrenching staff. The labour broker that they had in mind was 2MPower.Originally 18 workers were earmarked, but in the end it was only the shot blasting and cleaning departments that formed the subject matter of the retrenchment process.

20. He stated that it was the employer's view that if the employees were transferred to the labour broker, then the labour broker could use them for other clients and the employer would also have the ability to hire the employees again once the business picks up.In doing so the employees would not be without work. He confirmed the meeting of 25 July 2008 and produced a minute of the meeting (this minute was not put to the employees during their evidence). He confirmed the first meeting was just an information sharing meeting. The idea was to discuss the matter further at the other meetings. At this first meeting he proposed three alternative dates for further meetings. After the first meeting, he personally had a difficulty with retrenching such a lot of employees and had another discussion with the director of the employer.He convinced the director to hold on to as much employees as they possibly could because he believed the employees were loyal to the employer. The result of that discussion was that it was only the two departments, shot blasting and cleaning that were affected.He was very "dankbaardat die hoof direkteur met systandpuntingestem het."

21. At the second meeting he informed Mr Ngijima that he would provide Mr Ngijima with a written response to all the queries and questions that Mr Ngijima raised at that meeting. It was his plan to prepare a memo for Mr Ngijima in respose to the questions that he raised at the second meeting. He claimed that at the second meeting it was agreed that a third meeting would be held. He did prepare a memo answering all the questions raised at the second meeting and he sent the memo to the NUMSA office. He indicated that the reasons for earmarking the shot blasting department and the cleaners were spelt out in detail in the memo.

22. His view was that as far as the cleaning lady was concerned, she was the only person cleaning the offices and he could see no reason why the staff occupying the offices could not do the cleaning and making the tea themselves. If they could do without the cleaning lady, it would provide the company with a saving in difficult economic times. Insofar as shot blasting was concerned, his view was that it was not a core function of the employer. The employer is a galvanising business and the shot blasting was a side activity which was in fact not making any profit. It was always its intention to sell that part of the business to a company that exclusively does shot blasting. It was his view that if they retrenched the employees in the shot blasting department, they could always use somebody in production to come and do the odd shot blasting job that may be required. In that way, they would save on the cost of the salaries of the two employees.

23. He claimed that the employer received no response from NUMSA with regard to the memo. There was a third meeting on 21 August at which meeting everybody agreed that the consultation process was finished.(The contents of this purported third meeting were never put to Mr Ngijima).

24. Mr Bouwer also stated that there were various people that were employed after the retrenchment of the employees and that Nadia was employed in January 2010 in order to do filing. The filing that she does is mostly job cards and invoices. Insofar as Ms Madola claimed the jobs of other people in the finance department, in marketing and that of a debit clerk, she was not capable of doing that work.

25. In cross-examination, he denied that 2MPower did not want to commit to taking over the employees. He indicated that because NUMSA showed no interest for the workers to be transferred, that is the reason why the labour broker left. He also denied that the union requested what the cost would be of the labour brokers if the shot blasting department was transferred in order to compare that with the cost of the wages of the two employees. When questioned why he did not put the information to Mr Ngijima at the first or the second meetings, Mr Bouwer answered that "Dit was in my kop. Die feite het bestaan op 13 Augustus 2008. Dit was net later meersinvol in 'n verslag." When it was put to him that the information in the memo was not everything that Mr Ngijima requested of him, he said that in his view it did answer all the queries raised by Mr Ngijima. When it was put to him that he never proved that the memo was faxed to NUMSA, he said that he did not know that he was required to prove that it was faxed, but he knows that it was faxed and that he accepts that it would have been better to provide proof of the fax. When it was put to him whether or not he looked at the CV's of the employees who were retrenched, he said that is normally something that is on the application form and is normally something that HR did. Insofar as Madola is concerned, he heard that she might have done some courses, but he never got the facts and he was not interested. He also said that he will be surprised if the company had paid for courses for her. He also confirmed that Mr Samente worked for the company before he started with the company. He indicated in the end that the company employed 105 people and that HR will eventually employ workers and that he is not interested in the simple nitty gritty of the workers that they employ.

26. When it was put to him that he did not look at the qualifications of the workers and that they could have been used in other departments, he indicated that the issue of LIFO was discussed or mentioned by Mr Ngijima but it was never taken further and that the company never reached agreement. In his view, LIFO is just one thing to consider, but there are also things like skills and "bekwaamdheid en gedrag"(ability and conduct). As far as Ms Madola is concerned, in his view LIFO was not applicable in her case. She was only doing elementary filing.

27. He confirmed in cross-examination that he was not aware of the skills that Mr Samente possessed and that it may have been possible that he did the other work that he indicated in his evidence he did. In his view, he could not just take Mr Samente and place him in another department because he has teams working in those departments.Those teams were intensively trained and there was a team cohesion that he did not want to upset. If he had to break up the team, it would go against the interest of the employer. Mr Bouwer also confirmed in cross-examination that various employees were employed after Mr Samente. One such employee was a casual that he saw and that he liked.He told HR to employ the casual and that even between 2006 up until the day of the trial various casuals were employed.

Legal Principles

28. The procedural requirements that an employer is required to follow before retrenching employees are contained in Section 189 (and Section 189A) of the LRA¹

29. Section 189 provides as follows:

"189 Dismissal based on operational requirements

(1) When an employer contemplates dismissing one or more employees for reasons based on the employer's operational requirements, the employer must consult -

(a) any person whom the employer is required to consult in terms of a collective agreement;

(b) if there is no collective agreement that requires consultation -

(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and

(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;

(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or

(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.

(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 -

(a) appropriate measures -

(i) to avoid the dismissals;

(ii) to minimise the number of dismissals;

(iii) to change the timing of the dismissals; and

(iv) to mitigate the adverse effects of the dismissals;

(b) the method for selecting the employees to be dismissed; and

(c) the severance pay for dismissed employees.

(3) The employer must issue a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information, including, but no limited to -

(a) The reasons for the proposed dismissals;

(b) The alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;

(c) The number of employees likely to be affected and the job categories in which they are employed;

(d) The proposed method for selecting which employees to dismiss;

(e) The time when, or the period during which, the dismissals are likely to take effect;

(f) The severance pay proposed;

(g) Any assistance that the employer proposed to offer to the employees likely to be dismissed;

(h) The possibility of the future re-employment of the employees who are dismissed;

(i) The number of employees employed by the employer; and

(j) The number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months.

(4) (a) The provisions of section 16 apply, read with the changes required by the context, to the disclosure of information in terms of subsection (3).

(b) In any dispute in which an arbitrator or the Labour Court is required to decide whether or not any information is relevant, the onus is on the employer to prove that any information that it has refused to disclose is not relevant for the purposes for which it is sought.

(5) The employer must allow the other consulting party an opportunity during consultation to make representations about any matter dealt with in subsections (2), (3) and (4) as well as any other matter relating to the proposed dismissals.

(6) (a) The employer must consider and respond to the representations made by the other consulting party and, if the employer does not agree with them, the employer must state the reasons for disagreeing.

(b) If any representation is made in writing the employer must respond in writing.

(7) The employer must select the employees to be dismissed according to selection criteria -

(a) that have been agreed to by the consulting parties; or

(b) if no criteria have been argued, criteria that are fair and objective."

30. Our courts have dealt with the manner in which an enquiry as to whether an employer complied with the procedural requirements in various decisions. I set out two of the more important decisions below.

31. In the case of Johnson and Johnson (Pty) Ltd vs CWIU² the Labour Appeal Court stated the following:

"The important implication of this is that a mechanical, "checklist" kind of approach to determine whether Section 189 has been complied with is inappropriate. The proper approach is to ascertain whether the purpose of the section (the occurrence of a joint consensus seeking process) has been achieved (cfMaharaj& Others vsRampersad 1964 (4) SA 638 (A) at 464; Ceramic Industries Limited t/a Betta Sanitary Ware (supra) at 701G-702H (BLLR); 67B-67C (ILJ); ex parte Mohuloe(Law Society Transvaal intervening) 1996 (4) SA 1131 (T) at 1137H-1138D).

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 this section would also have been achieved."

32. In the case of Maritz vs Calibre Clinical Consultants (Pty) Ltd & Another³, the Labour Court stated the following:

"Although it is not required that the procedural guidelines contained in Section 189 of the LRA be followed to the letter, it is nonetheless expected of the employee to engage in this process meaningfully and with an open mind. The important question that the court will ask is whether or not the employee, who was ultimately retrenched, had a proper and fair opportunity to consult over all issues that are relevant to his/her retrenchment and which may have an effect on his/her continued employment. It is thus for that reason that the LRA lists as topics for consultation appropriate measures to avoid the dismissal; measures to minimise the number of dismissals and selection criteria. There is thus a very thin dividing line between the requirements for a substantively and procedurally fair retrenchment.⁴Where a selection criteria is found to be unfair or not objective or where an employer fails to consult or consider proper alternatives to retrenchment, this Court may well come to the conclusion that the dismissal was also substantively unfair (emphasis added). Contextual support for the contention is to be found in Section 189A(19)(c) (albeit in the context of large scale retrenchments). Although it is accepted that non-compliance with some of the procedural requirements will not necessarily lead to a conclusion that a dismissal is also substantively unfair, a retrenchment which is procedurally unfair may also, in certain circumstances, impact on the substantive fairness of the dismissal (emphasis added). See in this regard KeilvsFoodgrow (a division of LeisureNet Limited) [1999] 4 BLLR 345 (LC) at para 10 where the court held:

"It is through the constructive engagement implicit in this process that the need to retrench is confirmed as well as the selection of those employees who are to be retrenched."

Was there procedural fairness?

33. If one has regard to the purported notice inviting the union to a consultation, the notice did not contain the information required to be disclosed in a written notice contemplated by Section 189(3)(a) to (j). In fact, the purported notice of 16 July 2008 contained a proposal for the outsourcing of the 18 employees and should that outsourcing exercise not be agreed to at the requested meeting, there would be the retrenchment of those employees that were "not in favour of the outsourcing arrangement." The evidence of Ngijima and the two employees as to what transpired at the first meeting between the employer and the union on 25 July 2008 is consistent with what the content of the notice. To the extent that there may be a conflict between the evidence of Bouwer,Ngijima and the two employees concerning what role 2MPower played, on balance I accept the version of Ngijima and the employees. That version was that the unions enquired whether the outsourcing party, 2MPower, was prepared to take over the employees.When there was no commitment to that request either by 2MPower nor the employer, the union insisted that there was no role to play for 2MPower and accordingly requested them to leave the meeting. That being the focus of the meeting on 25 July 2008, it can certainly not be said that that meeting could by any stretch of the imagination be a consultation envisaged by a Section 189(1) read with Section 189(2) of the LRA.

34. The second meeting, in my view, also fell well short of what is required for a consultation as contemplated by a Section 189(1) read with Section 189(2) of the LRA. Although the employer at this second meeting presented an almost complete turnaround to its position that was presented at the first meetingby announcing that the eighteen employees originally earmarked for outsourcing or retrenchment were now reduced to three employees, the respondent provided no explanation to the union as to why there was this complete turnaround of circumstances. I accept that the focus of the union after being informed by the employer of its new position was to try and ascertain to what extent the employer would save financially if the retrenchment only occurred in respect of the two employees in shot blasting and the one employee that did the cleaning functions. If the employer was claiming financial reasons for initially earmarking eighteen employees for outsourcing or retrenchment and then drastically reduce that number to three employees in the space of two weeks (from the first meeting on 25 July 2008 to the second meeting on 13 August 2008), it would be obvious for the union to then enquire what kind of cost saving the employer envisages by retrenching the two employees in shot blasting and one employee that was doing the cleaning functions.The request of this information in my view was not only reasonable and relevant, but makes complete sense in the context of the employer's proposed retrenchment exercise. This information was never provided to the union by the employer.

35. A factual dispute arose during the evidence of the employees and Bouwer on whether or not there was a third meeting relating to the retrenchments. The respondent never put its case that there was a third meeting to Ngijima in his evidence and only referred to a third meeting in the cross-examination of Samente without providing any detail of this alleged third meeting. It was only when the employer's witness, Bouwer, gave evidence that a copy of a purported minute of a third meeting was handed up to the court. Mr Ngijima was the protagonist on behalf of the employees and the union, in the meetings with the respondent. I therefore place very little weight on the allegation that there was an alleged third meeting and the minute of that third alleged meeting due to the fact that Ngijima was never given an opportunity to respond to the respondent's allegation in that regard when he gave his evidence. I have in any event gone through the minute of the alleged third meeting and in my view it does not deal with nor address the issues and questions raised by the union at the second meeting concerning the cost saving that the company envisaged it would achieve with the retrenchment or outsourcing of the two employees in the shot blasting department. Even if regard is had to all three meetings (although the third meeting has been disputed by the applicant and the employees), in my view, there was no compliance with Section 189(2) and (3). In the result, the retrenchment was procedurally unfair.

Was the retrenchment substantively unfair?

36. The extent to which a court can interrogate the reason for the employer's proposal to retrench employees has been the subject matter for various court decisions. In the case of SATAWU vs Old Mutual Life Assurance Company South Africa Limited⁵ the Court stated the following:

"The individual applicants enjoy protection against unfair dismissal and the employer is required to prove that the reason for dismissal was a fair reason based on the employer's operational requirements and that the dismissal was effected in accordance with a fair procedure, taking into account the relevant Code of Good Practice. Because retrenchment is a no fault dismissal, and because of its human cost, the Act imposes an obligation on employers to ensure that all possible alternatives to dismissal are explored. The employer should in all good faith keep an open mind throughout the consultation process and seriously consider proposals put forward. Section 189(3) of the Labour Relations Act (66 of 1995) is central to the process in that it defines the consultation agenda and obliges the disclosure of relevant information. …

The starting point is to enquire whether the employer has proven a fair reason for the applicant's dismissal. It is trite to say that employers are entitled to reduce staff for a variety of reasons, including pursuing what they may consider to be a better cost structure. That said, this Court remains duty-bound to exercise an appropriate level of supervision and review in relation to employers' decisions regarding the need for retrenchment.

The test formulated by the legislature in the 2002 amendments harkens back to the principle of proportionality or the rational basis test applied in constitutional and administrative adjudication in other jurisdictions. As a result, the test involves a measure of deference to the managerial authority for the purposes of attaining a commercially acceptable objective. Such deference does not amount to an abdication and, as stated in BMD Knitting Mills (Pty) Ltd⁶, the Court is entitled to look at the content of the reasons given to ensure that they are neither arbitrary nor capricious and are indeed aimed at a commercially acceptable objective … Thus there should be a rational connection between the employer scheme and its commercial objective, and through the consideration of alternatives an attempt should be made to find the alternative which least harms the rights of the employees in order to be fair to them. The alternative eventually applied need not be the best means, or the least drastic alternative. Rather, it should fall within the range of reasonable options available in the circumstances allowing for the employer's margin of appreciation to the employee in the exercise of its managerial prerogative. The formulation of the test in this way adds nothing new …"

37. Not much has been made of the rationale behind the proposed retrenchments by the respondent. Neither during the meetings was the rationale sufficiently canvassed nor during the evidence of Bouwer during the trial. This being the case, however, it did not appear to this Court that the applicant seriously challenged the economic rationale for the respondent's decision to no longer need the services of a person who cleaned the offices. The focus of the union's enquiry in this regard was on whether or not Madola could be used in some other capacity. I accept that in 2008 during the period where the recession was felt at its heaviest, in order to save costs by reducing head count the position of a cleaner in offices could easily be made redundant if the employer requires the occupants of the offices to attend to the cleaning and tea making themselves. It does not therefore seem to me that the union would have been able or in a position to counter the respondent's proposal in this regard by insisting that they should hold on to a cleaner whereas in fact the office occupants could attend to the duties done by Madola themselves. The same could however not be said with regard to the shot blasting department. In respect of this department, the union requested financial information to be provided to them in order to understand what the cost saving was going to be if the two employees were retrenched. It is perfectly in order for the union to want to compare the purported cost saving to the cost of the outsourcing entity would charge the Respondent.

38. Even if I accept that there was a rational basis for the respondent's decision to close the shot blasting department, I do not believe that the respondent applied itself properly by considering whether there would be alternatives to the retrenchment of the two employees involved. It does not go well for Bouwer to indicate to this Court that he was not aware of Mr Samente's history with the employer. One would expect an employer who embarks on a retrenchment exercise, initially comprising eighteen employees, to have done its homework with regard to the pertinent information relating to each of these employees earmarked for possible retrenchment that is relevant to any retrenchment exercise contemplated by Section 189. An important part of this information for purposes of the exercise of looking at alternatives would be the qualifications of the employees earmarked, the history with the employer and whether in fairness they should be considered to revert back to previous positions they occupied and the skills they have acquired in those positions as an alternative to their retrenchment. Mr Bouwer's attitude that he was not interested in the nitty-gritty of the workers and that it is HR's responsibility to keep track of their skills and previous positions they occupied with the employer is simply not good enough. His further evidence that he did not consider applying the fair criteria of last in and first out because he did not want to upset other teams in other parts of the business is in my view unfair to Mr Samente's rights. As SATAWU indicated, when an employer considers alternatives, the employer should make "an attempt … to find the alternative which least harms the rights of the employees in order to be fair to them. The alternative eventually applied need not be the best means or the least drastic alternative. Rather it should fall within the range of reasonable options available in the circumstances allowing for the employer's margin of appreciation to the employee in an exercise of its managerial derogative." In my view, the employer failed to consider an alternative that least harmed the rights of Mr Samente in order to be fair to him. In the result, the retrenchment of Mr Samente was also substantively unfair.

39. During the trial, this Court was informed that Mr Hexana has passed away since the referral of the dispute to this Court. The appropriate order in respect of Mr Hexana, as a result, should remain that his dismissal was procedurally unfair and that compensation should be awarded.

40. In conclusion, the dismissal of Ms Madola and Mr Hexana was procedurally unfair and the dismissal of Mr Samente was both procedurally and substantively unfair.

Compensation and costs

41. The overwhelming evidence, in my view, indicates that the respondent failed to comply with Section 189 of the LRA, let alone the Code of Good Practice dealing with retrenchments. Although I accept, as the authorities indicate, that a checklist approach to Section 189 is not what is required, I nonetheless find that the employer failed to meaningfully engage with the unions with regard to the proposed retrenchments. Not only was the notice and information given prior to the commencement of the process hopelessly inadequate, but the employer also failed during the meetings to properly disclose relevant information. In addition, not only did the employer fail to disclose the relevant information, but the employer also failed to provide the union with the information requested. More importantly, based on Bouwer's own evidence, the important information with regard to the employeee's background, levels of skill and previous positions they occupied by the employer, all of which are pertinently relevant before the employer can propose a lesser criteria, were not considered by the employer. In fact, the employer's witness indicated that he was not interested in that kind of information, which is normally dealt with by the HR department. For these reasons, I can find no reason why not to award the maximum compensation to the employees.

42. For the same reasons that this Court found the maximum compensation to be applicable, there is no reason why costs should not be awarded in favour of the applicant.

Order

[43] In the result, the following order is made.

43.1. The dismissals of Ms Madola and Mr Hexana were procedurally unfair.

43.2. The dismissal of Mr Samente was both procedurally and substantively unfair.

43.3. Mr Hexana and Ms Madola is awarded 12 months compensation; and

43.4. Mr Samente is reinstated in the position with retrospective effect.

43.5. The respondent shall pay the applicants' costs.

________________________________

AJ DEON VISAGIE

Judge of the Labour Court

APPEARANCES

For Applicant: Mr T Manasoe, NUMSA representative

For Respondent: Adv C J Vermeulen ofCaesar Employers Organisation

---