South Africa: Labour Court

acceptance. Annexure “A” to the Notice of Motion, the alternative letter, was retracting

the voluntary retrenchment letter dated June 1998 and also giving an undertaking that the

Respondent would consult with the Applicant in respect of employees employed by the

businesses as listed as nos 1-6 at pp 1-2 of the said letter in terms of s189 of the Labour

Relations Act and with the employees of subsidiaries of Perskor & CTP Caxton

(Pty) Ltd and to whom Annexure MD1 was handed or sent.

[2] This dispute has arisen as a result of the proposed retrenchment of staff which has become

necessary because of the merger which took place on 30 June 1998 between the

Respondent and CTP Caxton (Pty) Ltd (“Caxton”).

BACKGROUND :

[3] The Applicant is S.A. Typographical Union, a registered trade union which represents

the majority of the newspaper, printing and packaging sector of the market and which

enjoys majority representation in the companies which form part of the Respondent’s

group of companies. The Applicant’s principal place of business within the jurisdiction

of the Above Honourable Court is SATU HOUSE, PRETORIA. The Applicant is the

majority Union at the Respondents Group of Companies.

[4] The Respondent is the PRESS CORPORATION OF SA LTD, with its principal

place of business within the jurisdiction of the Above Honourable Court at

DOORNFONTEIN, JOHANNESBURG. The Respondent, as a holding company, has,

at all times, acted on behalf of its group of companies and has acted as their representative

when conducting discussions with the Applicant. The Respondent was also authorised

to act on behalf of its subsidiaries with regard to the application.

[5] On or about 13 February 1998 the Applicant and the Management of the Respondent had

a discussion regarding the possible merger between the Respondent and Caxton. On or

about 24 February 1998 further discussions between the parties were held regarding the

possibility of retrenchments within the Perskor Group.

[6] On 25 March 1998 the Respondent addressed a letter to Mr Martin Deysel, the Organiser

and General Secretary of the Applicant in terms of which he confirmed that the possible

retrenchment which the Managing Director had initiated in their discussion of 24

February 1998 had become a reality at, one of the subsidiaries of the Respondent,

Republic Press(Pty) Ltd. In this letter the Applicant was being advised that the

Respondent wished to enter into consultations with them in terms of “Section 189 of the

Labour Relations Act to reach a consensus” on, the issues referred to in section

189(2)(a), (b) and (c) of the Act. The Respondent also confirmed that it wished “To

comply with Section 16 of the Labour Relations Act regarding the disclosure of

information.” Furthermore it was indicated in the said letter that the number of

employees to be affected by the retrenchments was unknown, at that stage. Dates for a

possible meeting were also suggested.

[7] On 14 April 1998 a memorandum setting out the framework for the information to

be disclosed in terms of Section 189 (3) of the Act to the affected employees was sent by

Messrs C van Heerden (Personnel Manager) and H Cornelius (Assistant Personnel

Manager) to Mr W Eitler (General Manager of Republic Press) disclosing, inter alia,

reasons for proposed dismissals, alternatives considered, number of employees likely to

be affected by the retrenchments and their job categories, method of selection of

employees to be retrenched, time or period during which retrenchments are likely,

severance pay proposed, assistance to be given to retrenched employees and future re-

employment. The reason for the proposed retrenchments was set out as the loss of market

share by the Respondent at Republic Press. This information was submitted in

preparation for the meeting on 29 April 1998.

[8] On 29 April 1998 a meeting was held in Durban. Those present were the executive

management of the REPUBLIC PRESS, namely, Mr D Cochius, Mr W Eitler, Mr C van

Heerden and Mr H Cornelius, three executive members of the Applicant and Mr Deysel,

representatives of Paper Printing Wood and Allied Workers Union (PPWAWU), Media

Workers Association of South Africa (MWASA), Mr R Wilson and Mr P Lafferty, both

who represented non-unionised employees. Mr Cochius chaired the meeting. On 26 May

1998 Applicant sent a letter to Mr Cochius in which, inter alia, concern was raised about

the meaning of retrenchment and redundancy which the Applicant stated that it needed

to be clarified at the next meeting. On 4 June 1998 a follow up letter was sent to the

Respondent by the Applicant requesting a reply to its letter of 26 May 1996.

[9] On 12 June 1996 the Respondent sent a letter to the Applicant in which they referred to

the Caxton merger, which had been discussed between them on 13th February 1998. The

Respondent also indicated that the merger, which was to be finalised on 30th June 1998,

could lead to retrenchments and invited the Applicant to consultations regarding all

relevant issues at its Doornfontein premises on 17th June 1998. The issues to be

discussed which were set out in this letter were more or less the same as those contained

in the Respondents letter of 25 March 1998 above, namely :-

“ appropriate measures to avoid dismissals;

to minimise the number of dismissals;

change the timing of the dismissals; and

to mitigate the adverse effects of the dismissals;

the method for selecting the employees which could possibly be dismissed;

as well as the severance pay which would be payable to such affected

employees.”

[10] Pursuant upon the above-mentioned letter on 17th June 1998 the representatives of the

Applicant and the Respondent had a meeting at Respondent’s Doornfontein premises.

The meeting was attended by Messrs D Cochius (General Manager of Human Resources

of Respondent), D.O Pretorius (Attorney for Caxton), D.S. Wes (Attorney for Caxton),

B.J. van Wyk (Secretary), M.Deysel (General Secretary for the Applicant), K.F.

Sebothoma (SATU Doornfontein), P.C. Manzini (SATU Doornfontein) and A. Vorster

(Secretary SATU Doornfontein). The proposed merger between Caxton and the

Respondent and retrenchments were discussed. (Further details on this meeting would

be discussed later in this judgement).

[11] On 19th June 1998 Mr Deysel, on behalf of the Applicant, sent a letter to the Managing

Director of the Respondent raising his concerns about the reasons for the retrenchments

and also placed on record that the information at his disposal is that the company is

targeting a monthly saving of R1m through these retrenchments. Furthermore Mr Deysel

was of the view that the retrenchments were not necessary and made a number of

suggestions to improve the financial position of the company, including, “An immediate

stop to the use of casual labour, restricting overtime work to the minimum,

implementing proper control measures, engaging SATU in the management of the

Company for a specified period of time, engaging an external auditor to investigate

all these allegations.”

[12] Following upon the agreement which was reached at the meeting of 17th June 1998

between the Respondent and the Applicant, on 18th June 1998 Mr Cochius addressed the

workforce at the Respondent’s Doornfontein Plant.

[13] On 23rd June 1998 the Respondent sent a letter to the Applicant in which the

Respondent’s rationale for the restructuring of the Respondent was contained. In this

letter the Applicant was also invited to a meeting of 2nd July 1998. The Applicant

requested the Respondent to put this memorandum on the notice boards of all the affected

subsidiary companies and branches. The said memorandum, contrary to the Applicant’s

suggestion, was put on the notice board of the Respondent’s Doornfontein plant only.

[14] On 25th and 26th June 1998 “the voluntary retrenchment offer” letter was included in the

Respondent’s employees pay envelopes, including, Applicant’s members. On 25th June

1998 the Applicant wrote to the Managing Director complaining about the above-

mentioned voluntary retrenchment offer as an agreement had not been reached on the

package, also demanding the withdrawal of the letters and Management to advise

employees that the package was a unilateral offer by Management. It was also demanded

that the company comply with Section 189 of the Act.

Subsequent to that, Management put up a notice on all notice boards to the effect that this

was a unilateral offer by Management and that none of the Unions had been consulted

on this issue.

[15] On 26th June 1998 the Applicant sent another letter to the Respondent’s Managing

Director complaining about their actions regarding the offer and also their failure to put

the memorandum with the rationale for the restructuring following the merger at all the

other affected companies as the Applicant had requested.

[16] On the same day, Attorneys Fluxman Robinowitz Raphaely - Weiner replied to

Applicant’s letter dated 25th June 1998 and refused to withdraw the voluntary

retrenchment offer letter. They also contended that, in their view they don’t have to

consult with the Union on the voluntary package and that it was indicated at the meeting

of 17th June 1998 that a retrenchment package would be reflected in the letter to be

included in the individual employees pay packet. They also advised that Section 189

would be followed in future negotiations relating to retrenchments which are likely to

follow.

[17] On 25th June 1998 Applicant wrote a circular which was put on all notice boards,

explaining its position and suggesting to its members not to accept the package before

they give them the advice to do so. In the interim various newspapers in the country

carried articles regarding the retrenchments at the Respondent’s businesses. Some of the

press reports were speculating that 3 000 employees would lose their jobs as a result of

the merger.

[18] On the 30th June 1998, the Applicant sent two letters to the Respondent relating to the

proposed application to the Labour Court. On the 1st July 1998 the Respondent’s

Attorney of record replied to the Applicant’s letters of the 30th June 1998 disputing the

urgency of this matter, amongst other things. On 2nd July 1998 an official notice in

terms of the Johannesburg Stock Exchange Rules appeared in the Citizen regarding the

merger.

URGENCY :

[19] The Applicant brought this matter before Court on an urgent basis because it was of

the view that the letter which was enclosed in the individual employees pay packets

created panic and confusion amongst its members. This was caused by the fact that the

letter had a deadline within which the package should be accepted failing which their

members would not benefit from same. It also created an impression that those

employees who did not accept would be retrenched on less favourable terms. Mr

Sutherland, on behalf of the Respondent, argued that the matter was not urgent and the

said letter was not meant to create confusion as alleged.

[20] The relevant paragraph in the said letter read “the voluntary package needs to be

applied for by the 7th July 1998. This is a once off offer, and will not be repeated.”

[21] I have read the letter and considered the context and the manner in which the letter was

sent and I do accept that it may have caused confusion to the employees. The letter may

create the impression that if you don’t accept the offer there is a possibility that you may

be retrenched on different terms. Those terms may not necessarily be favourable.

[22] The Respondent Attorneys in their letter to the Applicant of 1st July 1998 also raised the

issue of the Urgency of the Application as they had already indicated that the offer

would not be withdrawn. This was conveyed to the Applicant on 26th June 1998.

The application papers were signed on 1st July 1998 and issued and served on 2nd July

1998. In my view there wasn’t any lengthy delay so as to affect the urgency of the

application. The Applicant acted diligently. The application was moved four (4) court

days later after the Respondent had confirmed that they would not be withdrawing the

offer letter and there was an intervening week-end in between.

[23] Furthermore if I consider the above-mentioned submissions together with the number of

employees involved, and the possible consequences of the retrenchments upon them,

the matter is serious enough for me to exercise my discretion in favour of hearing this

matter.

APPLICATION :

[24] The parties (and especially Ms Jansen on behalf of the Applicant) agreed that, even

though the relief sought was couched as set out above, the Applicant was, in fact, seeking

a final interdict against the Respondent. It is trite that the three (3) requirements which

need to be satisfied for final interdicts to be granted are, namely, : a clear right; a

reasonable apprehension of harm; and the absence of a satisfactory alternative remedy.

Accordingly that will have to be satisfied in this matter. These requirements have been

enunciated by the Appellate Division and later accepted by this Court. See Setlogelo v

Setlogelo 1914 AD 221 at 227, Malandah v SABC (1997) 5 BLLR 555 at 557 and

FAWU v Premier Food Industries Ltd (Epic Food Division) (1997) 5 BLLR 753 at

756.

[25] It is apparent that the Respondent started consulting with the Applicant and other Unions

regarding restructuring during February 1998. The said consultations were originally

confined to the proposed retrenchments at Republic Press but they were later extended

to the other companies within the Respondents group of companies as set out in the

Respondent’s letter of 12th June 1998, namely; Vendiko Ink Factory, a division of

Republican Press (Pty) Ltd, situated at Doornfontein and Durban; Aurora Newspaper

Printers, a division of Promedia (Pty) Ltd, situated at Pretoria; Perskor Printers - the

commercial, newspaper and book printing, sheetfed and Web Divisions, situated in

Doornfontein, Johannesburg; Republican Press in Durban; Commercial and Newspaper

Printing in Pietersburg, Kroonstad, Klerksdorp and Middelburg.

[26] The main issue which needs to be decided relates to the status of the Voluntary

Retrenchment offer letter which was enclosed in the employees pay packets on 25th and

26th June 1998 i.e. Should the Voluntary Retrenchment Offer comply with the

provisions of Section 189 of the Act and whether the Respondent contravened the

provisions of the Act so as to warrant the granting of an interdict against it.

VOLUNTARY RETRENCHMENT OFFER

[27] It was common cause that the offer was “a unilateral offer” by the company and none of

the Unions had been consulted on this issue. Mr Sutherland submitted that a company

doesn’t have to consult with the union or employees and doesn’t have to comply with

section 189 when making a voluntary retrenchment offer to its employees. Ms Jansen

disputed this.

[28] Section 189 of the Act provides that

“(I) When an employer contemplates dismissing one or more employees for reasons based on 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)

(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;

(d) ......

(2) The consulting parties must 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; and

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

(c) the severance pay for the dismissed employees.

(3) The employer must disclose in writing to the other consulting party all relevant information, including, but not 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) .........

(d) .........

(e) .........

(f) the severance pay proposed

(g) .........

(h) .........

(4) ...........

(5) The employer must allow the other consulting party an opportunity during consultation to make representations about any matter on which they are consulting.

(6) 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.

(7) ...........”

[29] Section 189 (1) states that “when an employer contemplates dismissing one or more

employees for reasons based on the employers operational requirements, the

employer must consult” with the parties referred to therein. Section 186 of the Act

defines the various notions of dismissals. Voluntary retrenchments, are not referred to

within that definition. Retrenchments are also not defined in section 213 of the Act.

[30] In National Union of Mineworkers and others v Free State Gold Mines (Operations)

(Pty) Ltd (1994) 15 ILJ 1161 at 1165 G - 1166 J a definition of retrenchments (the

verb) as extracted from the Oxford Dictionary is given as meaning “cut down, reduce

an amount (especially expenses), economise, reduce expenses.” Voluntary

Retrenchments can, as suggested by the Respondents counsel, be regarded as a mutual

agreement between the employer and employee to terminate a contract of employment

for operational requirements. If one were to regard voluntary retrenchments as a

dismissal it would be categorised as a dismissal with mutual understanding or agreement

between the employer and the retrenched employees. Therefore there would be no basis

on which to challenge the dismissal. However, it is the reason for the termination of the

contract of employment (whether mutual or not) which brings it within the ambit of the

provisions of section 189 of the Act.

[31] Section 213 of the Act defines operational requirements as meaning “ requirements

based on the economic, technological, structural or similar needs of an employer.”

In this matter at the time when the voluntary packages were discussed by the Respondent

with the Applicant, the Respondent was already considering dismissals for operational

reasons. The merger referred to earlier was based on both an economical and

structural need of the employer, that is, to improve the Respondents profitability and to

deal with the ailing printing production facilities of the Respondent. This is apparent

from the Respondent memorandum on the merger. Section 189 states that the employer

needs to consult when he contemplates dismissing for operational reasons, as indeed was

the case with the Respondent.

[32] It follows then, that the consultation stage anticipated in section 189, is preceded by a

recognition by the employer that, he needs to take certain steps to improve his financial

position and then retrenchments become one of, if not, the only solution to the problem.

It is apparent in this matter that when the Respondent offered voluntary retrenchments

to the employees on 25th June 1998 he had contemplated or thought about dismissing

employees for operational reasons, but then chose to offer voluntary retrenchments, as

an alternative to dismissals or to avoid dismissals. It is that contemplation or thought

which triggers off the provisions of section 189 of the Act.

[33] In this matter the Voluntary Retrenchment offer, it is clear, was made after

the retrenchment need had crystallised and was voiced out by Mr Cochius on behalf of

the Respondent, firstly, in the letter of 12th June 1998 wherein he stated that “we

envisage that should the merger become a reality on 30th June 1998, that certain of our

businesses might be affected thereby which could possibly lead to retrenchments having

to be considered.” (This statement was also contained in the Voluntary Retrenchment

Letter of 25th June 1998.) Secondly, this was also conveyed at the meeting of 17th June

1998. Obviously, once the thought or contemplation of retrenchments had crystallised,

the Respondent was bound to consult in terms of section 189 before proceeding with the

voluntary retrenchments. The provisions of Section 189 are pre-emptory once an

employer contemplates retrenchments [see CWIU v Johnson and Johnson (Pty) Ltd

(1997) 9 BLLR 1186 at 1202 A-C]. The consultations have got to be done in good faith

and they should be meaningful, that is, with the intention of resolving the issues before

the parties.

[34] Mr Sutherland, on behalf of the Respondent, also submitted that this offer was an

invitation by the Respondent to employees to consider voluntary retrenchments and not

a final offer. The employees were to put their names forward, if they wanted to be

considered and thereafter they would be considered for same. Thus it can never be

regarded as improper if the Respondents had not consulted the Unions on the offer. Mr

Sutherland also submitted that the offer was a fresh start by the Respondent and was not

part of the original consultation process. It might be of assistance at this stage to refer

to the relevant passages of the letter :

“ PERSKOR

June 1998

Dear Employee

MERGER OF PERSKOR AND CTP

You might have noticed an advertisement in the newspapers regarding the terms of a merger of

Perskor’s Publishing and Printing Businesses with those of CTP.

After having carefully considered our position within our industry, the company has come to the conclusion that in order to maintain its viability and competitiveness and to continue adding value, that the proposed merger would ensure that it achieves all the aforesaid goals. The merged

business would be in a far better position to compete within the industry and according to our operational requirements, the merger is viewed as in the interest not only to shareholders but also of employees of the company.

We envisage that should the merger become a reality as at 30 June 1998, that certain of our businesses might be affected thereby which could possibly lead to retrenchments having to be considered.

The merger would unfortunately necessitate some reduction in the number of employees

as well as the streamlining of operations and in some instances even the closure of certain

operations. To this end, consultation has commenced, with affected employees and their representatives (i.e. recognised trade unions), during which employees will be given a full an proper opportunity of consulting on all the relevant issues. We have written to the relevant trade unions informing them about the merger and invited them to consultations with us.

It seems to us that once the merger has taken place, that the following businesses might be affected thereby and that these businesses retrenchments might have to occur. The businesses are:.............

As a result of the merger, and once same has been implemented, it might be that the aforesaid businesses would become superfluous in the larger organisation which would come into existence. This could lead to the probable closure and or right sizing of some of some of these businesses with the consequent redundancy of employees.

Once the merged business has become fully operational, it might also be that other parts of the business may be affected, and we have to address that situation as and when it occurs. The businesses which we believe would be affected immediately are those set out above.

In anticipation of the above we have accordingly decided to first offer employees the option of taking a voluntary retrenchment package on the clear understanding that management reserves the right to decline any application due to operational requirements and skills retention.

The package offered is as follows :

Monthly paid staff Weeklyy paid staff

............

The voluntary package needs to be applied for by the 7th July 1998.

This is a once off offer, and will not be repeated.

Employees will be kept informed of developments .....

Yours sincerely

P G GREYLING

GROUP MANAGING DIRECTOR (own emphasis)

[35] It is apparent from the last three paragraphs of the above-mentioned letter that this was

a final offer and not an open invitation as the Respondents submitted. If it was an open

invitation there wouldn’t have been a deadline with the threat it would not be repeated.

Another veiled threat regarding the deadline was also contained in the Attorneys of

Records letter of 26th June 1998 in which it was said :

“ we to advise that should the time limit for acceptance thereof expire, and

should your members have allowed such time limit to expire as a result of

your advice to them, we will consider our client’s obligation to find

alternatives to minimise the number of retrenchments as having been

satisfied in respect of the option of voluntary retrenchment.”

[36] I will now deal with the other submission of the Respondent that the Voluntary

Retrenchment letter was initiating a fresh process and was not part of the original

retrenchment process. Firstly, the seventh and eighth paragraphs (i.e. before the package

which was offered) clearly show that the offer was being made “in anticipation” of the

restructuring and retrenchments which might occur as a result of the merger.

Accordingly this was being done as a result of operational requirements as defined in

section 213 of the Act. Secondly, I would like to refer to the context in which this offer

was made. The Respondent in its letter of 25th March 1998, invited the Applicant to

consult with it regarding the proposed retrenchment (then at the Republic Press) in terms

of “the requirements of Sec 189 of the Act to reach consensus on,” inter alia, the issues

referred to in section 189 (2) (a) to (c) of the Act. The same issues were referred to in the

Respondent’s letter of 12th June 1998 when the retrenchments were to be discussed in

respect of the rest of the Respondents group of companies. In the letter of 12th June

1998 the Respondent invited the Applicant to take part in consultations during which he

would be given “a full and proper opportunity of consulting on all relevant issues.”

[37] The Respon