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REPORTABLE
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN Case No: C1008/2001
In the matter between:
FOOD AND ALLIED WORKERS UNION First Applicant
CLINT ABRAHAMS AND 113 OTHERS Further Applicants
and
SOUTH AFRICAN BREWERIES LIMITED Respondent
JUDGMENT DELIVERED ON FRIDAY, 3 SEPTEMBER 2004
Gamble, AJ
INTRODUCTION
The Respondent, SOUTH AFRICAN BREWERIES LIMITED (hereinafter “the company”) has for many decades dominated the local beer market. It currently controls approximately 98% of that market and through a process of international corporate acquisition to be discussed below, is now the second largest brewer in the world. One of the company’s best known local brands is marketed under the adage “The taste that stood the test of time”. This judgment will examine whether the company’s human resources and employment practices measure up to the same standards.
The First Applicant (hereinafter “the union”) is a trade union duly registered in accordance with the Labour Relations Act, 66 of 1995 (“the LRA”) and represents workers employed in the food, beverage and hospitality industry. For more than a decade it has had an on-going relationship with the company, representing the rights of its members in regard to a myriad of labour relations issues. The relationship between the union and the company is, of course, governed at various levels by the LRA.
In mid-2001 the 2nd to 113th applicants (hereinafter “the individual applicants”) were all employed in various blue collar positions at the company’s Newlands brewery in Cape Town. The individual applicants were retrenched by the company (some at the end of May 2001 and the rest at the end of August 2001) for reasons which the company claims were legally justified. The union contends that the dismissal of the individual applicants was unfair, both substantively and procedurally, and it claims appropriate relief consequential upon a finding by the Court in its favour.
The hearing of this matter lasted some 23 days with the bulk of the evidence being presented by the company in pursuance of its attempt to discharge the onus which it attracted in terms of section 192 of the LRA. The union and the individual applicants were represented by Advocates COLIN KAHANOVITZ and MICHELLE NORTON while the company was represented by Advocates JEREMY GAUNTLETT SC and LIESL FICHARDT. The Court is indebted to both sets of counsel and their respective attorneys for the thorough manner in which the case was presented, particularly in respect of the documentary evidence. The very detailed heads of argument filed by the parties have greatly facilitated the writing of this judgment.
The relevant facts of the case, and the legal conclusions to be drawn therefrom, are unusual, and in many ways, unique. On certain of the crucial issues there is a paucity of precedent. Given the broad nature of the issues debated between the parties at the end of the case, a fairly comprehensive exposition of the material facts is unavoidable. Fortunately these are largely common cause and have been extensively detailed in the heads of argument. The necessity to resort, in this judgment, to the use of much of the corporate jargon which permeated the hearing is unavoidable.
THE MATERIAL FACTS
Corporate Structure:
The company now operates numerous breweries throughout the world: from America, through Europe and Africa to the Far East. Its South African operation has breweries in all the major commercial centres. Included in this number are the following breweries which were referred to during the evidence given in this case: Pietersburg, Alrode (in Gauteng), Rosslyn (near Pretoria), Prospecton (in Durban), Port Elizabeth and Newlands in the Western Cape.
The company’s organisational structure is such that each brewery has a general manager who assumes overall responsibility for the operational side of the facility, and who is given wide powers in relation to issues affecting his/her particular brewery. The company’s main board of directors apparently met on a six-weekly basis during the years relevant to this case, while the day to day running of the company’s business at a head office level was managed by its operating committee (“the OC”).
While the events described below led to a number of retrenchments throughout the company’s South African brewing operations, this case relates only to the Newlands brewery. Nevertheless, developments at certain of the other breweries in the run up to the retrenchments are relevant.
At the commencement of the trial, the Court conducted a thorough inspection in loco of the Newlands brewery (the only notable omission being the necessity to sample product). From this it was apparent that the brewery operates in clearly defined manufacturing units, including a brewing section, a fermentation section and a bottling and packaging section. The latter are colloquially referred to as “lines” and are randomly allocated distinguishing numbers.
The Newlands brewery is a highly mechanised operation with extensive hi tech and computerised equipment and includes large items of plant and machinery. The daily volumes of beer produced on the continuous 24 hour shifts (and there were several of them on the individual lines) are of exceptional magnitude.
Changing Circumstances:
In 1992 the company, then the biggest brewer in South Africa, was confronted with a political and economic environment which it says was radically different to that in which it had operated previously. With the end of economic sanctions, the South African markets opened up for international companies to compete in South Africa with local entities. At the same time, international markets also opened up for local companies to position themselves to compete globally. The company says that it realized that if it was to survive it would have to compete internationally. There were apparently two important “drivers” for change. Firstly, the company had to determine how best to protect its local market share against international competition. Secondly, it says it was also forced to compete with a global market in order to expand internationally.
The company says that it found that its local labour practices were outdated compared to trends in the rest of the world and that, given the change in competitive environment in which it operated, it had to improve operating costs to ensure ongoing competitiveness. As a result, the company faced the likelihood that it would become less competitive in the local market and would not be able to compete in the international market.
At that time, the company utilised an operating practice which later became colloquially known as “BOP I”. (“BOP” is the acronym for “best operating practice”.)
The company’s strategy in addressing the post-apartheid challenges was not only disclosed to, but actively canvassed with, the union. It was first formally discussed during the 1994 national wage negotiations; indeed, a National Substantive Agreement (“NSA”), a collective agreement as contemplated in section 23 of the LRA, was signed. In terms thereof, the parties expressly committed themselves to “work together to make the company a successful world class manufacturer”.
Various of the company’s witnesses attempted to convey their understanding of the concept of world class manufacturing (“WCM”). I must confess that no clear explanation was given as to what is clearly a chameleonic concept best understood by those familiar with current “corporate-speak”. As I understand it, WCM’s central feature is the need to be internationally competitive: to manufacture products which consumers consider to be “world class”, in content, pricing and presentation. This in turn apparently has implications for the calibre of the workforce, as the union had been told since at least 1994.
Attempts at Joint Problem Solving:
Over an extended period after 1994 representatives of the company and the union engaged in joint information-gathering opportunities and consultations. This process included the following:
The company and the union embarked upon a joint overseas study tour during February 1995 to investigate and evaluate various options to achieve WCM. They visited, inter alia, international breweries in Germany and the USA. During this tour the parties (according to the company) learned that it was essential to the WCM process to build a team-based, multi-skilled and process-driven structure.
In March 1995 a joint “relationship building” WCM workshop was held at the Riverside Sun resort near Vanderbijlpark to enable the study team to give feedback to management and the union officials. The conference was addressed by a cross-section of speakers representing corporate and union interests, and highlighted the concern on the part of both parties in relation to the issue of job losses, retrenchments and job security as part of the WCM process.
At this workshop the company’s erstwhile managing director, Norman Adami, laid emphasis on the role played by the company in society - stressing that it could fulfill this role by having “enlightened employment practices” which involved investment in the training and development “of all staff” and in so doing “develop a positive relationship with the community” and “become SA’s favourite company”. Emphasis was laid on the building of a co-operative partnership with the union to meet the challenges of the future. Job security came up at the workshop as the number one issue to deal with.
Derek van der Riet, the company’s erstwhile manufacturing consultant, told the workshop that a world class company was one that had developed and empowered all employees with the required skills, performance measures and awards to enable constant improvement. He also spoke of “world class competitiveness with a social conscience”.
The participants understood that threats to job security could be minimised with a proper understanding about how people would be up-skilled to meet the challenges of the future - an understanding of the necessity to define the time horizon for education and training and to prepare a proper plan. There was implicit acceptance that standards of education and training at the company had in the past not been good enough to enable it to compete as a world player. However (as one of the company’s witnesses later testified), at this stage “nobody had a clue exactly what we were going to be doing, we didn’t have BOP 2 yet, we didn’t know what it was.”
As pointed out above, during April 1995 and during the national wage negotiations, the parties amended clause 21 of the NSA to record that they committed themselves to engage in constructive discussion and to work together to make the company a successful world-class manufacturer. In particular the parties agreed that skills development was essential in order to achieve the status of a successful world class manufacturer and they agreed not to boycott training at any level. There was also consensus that joint taskforces be established to deal with, inter alia, WCM and job grading.
During April 1996 to 1998 a WCM pilot project was implemented on Line 12 at the Alrode Brewery where the learnings from the international “benchmarking” tour referred to in paragraph The company and the union embarked upon a joint overseas study tour during February 1995 to investigate and evaluate various options to achieve WCM. They visited, inter alia, international breweries in Germany and the USA. During this tour the parties (according to the company) learned that it was essential to the WCM process to build a team-based, multi-skilled and process-driven structure. were implemented in the local environment. (This project subsequently became known as “the Alrode Line 12 pilot”.)
The Alrode Line 12 Pilot was run by a team comprising representatives of both parties. The project represented an opportunity to experiment with the structure of the operating teams. The outcome of the pilot was that the company favoured a very different packaging line which comprised of four “building blocks”, namely the positions described as “BOP operators”, “process operators”, “process artisans” and “team leaders”. The structure entailed that the three core processes of work (operating, maintaining and performing quality control (“QC”) checks, including data capturing) were performed by a single team with competencies vested in non-functional positions. The central idea was that an employee could progress incrementally up the corporate employment structure from one “building block” to another.
The Alrode Line 12 pilot team suggested, as part of the project, entry level specifications suitable for the positions developed during the pilot. Thereafter, a joint project team (under the leadership of the company’s erstwhile human resources specialist, Denise Smith (“Smith”)) was tasked to consider these entry level specifications. In addition, an independent company, Flagship Consulting, was approached to recommend actual entry level specifications relating to the proposed positions. The company's board eventually accepted the recommendations of Flagship Consulting.
In evidence, Smith described her role as being an important actor and influencer of the way in which the WCM process evolved. She was the person tasked to initiate the redesigned manufacturing process. She conceded that BOP I was already “team-based” - evidently a central component of WCM. BOP I was therefore already a WCM strategy, but the trigger for BOP II (as the revamped model was later known) was that by 1996 the revised manufacturing strategy (introduced in 1992) was not “delivering”. The “numbers” in respect of training investment, when compared to time and the related performance improvement, “filled the business with unease as it was taking too slow”.
In November 1996 another company/union workshop was held at Gordon's Bay. At this workshop all parties again agreed to continue to work towards WCM and attempt to address the major issues, including job security, competency acquisition and job losses.
In February 1997 the parties conducted a joint workshop in Geneva under the auspices of the International Labour Organisation. The focus there was the issue of job security. In terms of an agreement reached subsequently between the company and the union, “Project Noah” was established. The object of this structure was to provide a security net and assistance for employees who lost their jobs as a result of any restructuring connected to the implementation of WCM. Project Noah (no doubt so-called to provide a safe haven against the consequences of the anticipated deluge) was strongly promoted by management because it understood that retrenchments were coming. It also formed an important part of the “communication phase” of the WCM implementation strategy - which had as a focal point the following:
“To position SAB management in a positive light i.e. as a socially responsible employer who has done all in its power to address the negative side of WCM – here the work done in Project Noah is our best weapon (as it was intended to be!)”.
In August and September 1997 a national strike took place as a result of a deadlock in wage negotiations. This interrupted discussion between the parties on WCM.
On 8 April 1998 the company and the union met at the Monkey Valley conference centre in Noordhoek near Cape Town to discuss progress on the WCM initiative. It was then agreed to move from joint workshopping to negotiating a Workplace Change Agreement ("WCA"). The deadline for completing negotiations for the WCA was set for 31 July 1998. Clearly the company wanted to reach consensus on issues which would otherwise have to be dealt with under section 189 of the LRA.
Pursuant to the Monkey Valley discussions, the company presented a draft agreement. The parties, however, failed to reach agreement as a result of the union's insistence on a moratorium on retrenchments: the union wanted the inclusion of a clause which said that the company should “impose a moratorium on retrenchments for a two to three year period during the period of negotiation and implementation of workplace change”. In the company’s opinion this was not a reasonable proposal because it meant that it would have to put WCM implementation on hold for another three years. The parties, however, agreed that in the absence of a WCA, they would be bound to follow the agreed procedures set out in the National Recognition Agreement and the relevant clauses in the LRA.
I pause to mention that the breakdown of the WCA negotiations in mid-1998 at a national level meant that any pre-retrenchment consultation processes under the LRA would thereafter have to be conducted at plant level. The potential site of conflict was therefore removed from a national to a local level. Smith described this change, from endeavouring to implement WCM by consensus to implementing it through a retrenchment procedure, as “simply a change in implementation methodology”.
During the national wage negotiations that were held during July 1998 the parties again confirmed the existing terms of clause 21 of the NSA.
BOP II Implementation
After considering its position, the Main Board of the company decided to implement the WCM “learnings” from the Alrode Line 12 Pilot. The new operating practice which had been developed at Alrode was then referred to as “BOP II”. BOP II was first implemented at the Prospecton Brewery on Line 4. While the union raised no disputes during this particular implementation, either of a substantive or procedural nature, it bears mention that neither this implementation nor Alrode Line 12 had any implications for reduction of jobs.
In about May or June 1999 the OC decided that BOP II would proceed at Newlands as per its “implementation plan”. This decision enjoyed the confidentiality of the boardroom and was not conveyed to the union. Implementation then took place in three separate phases:
The first phase related to Line 1 only and was completed in August 1999. During this implementation, the union was informed in the company’s business case that it was the start of the process and that further implementations would take place at a later stage as the restructuring was “rolled out” to all the manufacturing lines at the Newlands brewery. The company’s business case for Line 1 records the following at p 17 thereof:
"As the learnings from Line 1 are implemented in other business areas, redundancies may result:
- Further redeployment will be sought;
- Phased implementation will allow time for employees to enhance basic education -- thus improving their chances of meeting selection criteria in future restructuring processes;
- Voluntary versus forced retrenchment options will be discussed when consultation for other business areas takes place .....".
The company decided that the parties would consult only in relation to line 1 at that stage to ensure a wide level of understanding of the restructuring process and the impact thereof once implemented, and also to learn from the implementation on this line. Once again, this implementation did not have any impact on staffing levels as all/any redundancies were accommodated on other lines at the brewery.
The second phase at Newlands related to engineering which was implemented in 2000. The business case in respect of this phase again reiterated the principles of WCM and the need for restructuring.
The third phase, which is the subject-matter of this enquiry, took place during 2001 and involved the following work areas:
Lines 2 and Draught;
Lines 3 and 4;
Packaging Engineering, Training and Raw Materials;
Brewing;
Quality Control; and
Other non-core business.
The company’s business case in respect of this phase again reiterated the principles of WCM.
As stated above, the consultation process in relation to each of these phases at Newlands was preceded by a decision, at national level, by the company's board. Implementation at each plant was, however, determined at that level pursuant to a consultation process with the union. The reason for this was that each brewery had its own particular requirements and the details of implementation differed depending on the layout of the lines and the technology involved.
Generally, implementation at regional level occurred after a business case was presented in respect of each region by the relevant general manager to the OC. (One business case was not presented in respect of the whole country.) The OC then approved in principle the individual business cases presented to it, whereafter the particular region entered into a local consultation process with the union.
Newlands 2001 Restructuring:
It is common cause that the consultation process in respect of the 2001 restructuring at Newlands commenced on 18 January 2001. At this meeting the business case was presented to the union. (On 20 December 2000 the company had invited the union to a consultation meeting which was, at that stage, scheduled for 10 January 2001. The union requested that the latter meeting be postponed in view of the alleged unavailability of union representatives.)
Prior to the invitation to the union to consult, the company conducted an internal “Change Planning Workshop” at Newlands in mid-November 2000. This was exclusively for management and dealt meticulously with the process to be followed, highlighting the anticipated hurdles and pitfalls which may be encountered during the consultation phase. The company was evidently anticipating strong resistance from the union.
The Human Resources Manager at Newlands, Barbara Pinto, prepared the company’s business case - which was subsequently presented to the union at the first consultation meeting of 18 January 2001 - in November-December 2000. This document was intended to constitute compliance by the company of its obligations under section 189(3) of the LRA.
At the meeting of 18 January 2001 the parties agreed that joint communication sessions be held on 19 January 2001 and 26 January 2001. At these communication sessions the business case was presented to the assembled employees (both unionized and non-unionized) by the company and questions were answered.
At the same meeting (on 18 January 2001), the union requested that it be given a period of one month "to study management's proposals and to come up with viable options or alternatives". The company said that it did not wish to delay the process and requested on-going weekly consultation meetings. As became apparent later, the union did not attend these meetings.
On 24 January 2001 the union was notified of the second consultation meeting scheduled for 25 January 2001. In this notification the company again reiterated its perceived need to consult on an ongoing basis. The next consultation meeting was held on 25 January 2001. The union did not attend.
The following consultation meetings were held on 1 February and 8 February 2001. The union failed to attend these meetings. Various letters were addressed by the company to the union during January and February 2001 inviting them to participate.
Thereafter, the next meeting was held on 15 February 2001. This was also not attended by the union. At this meeting the company took the decision to implement the proposal set out in the business case in its erstwhile current form.
Despite the decision to implement, the company maintained that it was prepared to consider any proposals made by the union. The company indicated such willingness in its letter dated 22 February 2001. Accordingly, various further meetings followed:
On 20 February 2001 the union requested the company to meet on 26 February 2001. It requested the company to withdraw the implementation of the proposal and to consult. The company replied and stated that it had scheduled consultation meetings to be held on 22 February and 1 March 2001 and was willing to meet on those dates. The union did not attend the consultation meeting on 22 February 2001.
At the next consultation meeting held on 1 March 2001, both parties were represented. During this meeting, the union made certain demands that had to be met before presenting its proposal to the business case.
On 8 March 2001, both parties attended a consultation meeting. At this meeting it was minuted that the union had intentionally stayed away from the consultations. The union tabled its proposals to the business case at that meeting.
A further consultation meeting was held on 15 March 2001. The company tabled its comments in relation to the union's response to the business case.
Then followed two meetings on 22 and 29 March 2001. They were also not attended by the union. Various meetings were thereafter held in April 2001.
The company proceeded to implement the proposals set out in the business case. The recruitment and selection process was already in place and was similar to that used in respect of the 1999 and 2000 restructuring processes at Newlands Brewery.
The evidence relating to the selection procedure is also largely undisputed. This procedure entailed the following:
On 16 February 2001 an internal memorandum was distributed to all employees informing them of management's decision to implement the proposed business case in its current form.
On 19 February 2001, once the decision had been taken to implement the proposal as presented by management, the recruitment process commenced.
On 22 February 2001 a personal letter was handed to each employee whose position was affected by the decision to restructure the organisation. This letter outlined the process that was followed to date, the attempts to consult with the union and the fact that the position had become redundant.
The first recruitment process took place from 19 February 2001 to 30 March 2001 and the second process took place from 15 March 2001 to 30 April 2001.
In both these processes the following steps were taken:
All new positions were advertised internally for a period of two weeks. These were placed on notice boards and circularised via e-mail.
All applications were submitted to one central source and a recruitment database was maintained for all applicants to monitor their progress through the recruitment process.
Initial screening took place during this period to determine whether applicants possessed the required entry level qualifications as set out in the advertisements. Where the applicants were unable to provide documentary evidence of their highest educational qualification, Adult Basic Education and Training (“ABET”) screening was conducted to determine their ABET levels.
Oral feedback was provided to those applicants who were unable to demonstrate the requisite ABET level based on screening results.
Applicants who did not have the minimum entry level qualification as applicable to the position applied for were handed documents, euphemistically termed "regret letters".
Those applicants who proved to be at the required ABET level were included in the list of potential candidates and proceeded to the next stage of the recruitment process.
In respect of successful candidates, panel interviews were conducted in all instances. Panels consisted of two to three members, including an HR specialist, in most cases. The applicants were also required to undergo psychometric assessment.
A standard recruitment interview guide was used for all the different positions throughout the process to ensure consistency.
A short list for each position was compiled, based on the outcome of interviews, recognition of prior learning, attributes and psychometric assessment results.
The selection panel, with the involvement of the head of department, considered the shortlist and arrived at a decision as to who the most suitable candidates for the new positions were.
All unsuccessful applicants received verbal feedback from the recruiting manager, in addition to being handed a “regret letter.”
As a result of the restructuring, a total of 164 positions were declared redundant: 26 employees were successfully redeployed and 138 employees were retrenched by 31 August 2001.
The individual applicants before Court who were affected by this process are listed in an agreed schedule. In total there are 115. They can usefully be classified in the following categories:
Those applicants who failed to apply for any new positions, who were not screened and whose ABET levels were not known to the company. There are 46 in total. For the sake of convenience I shall hereinafter refer to these persons as “category 1 applicants”;
Those applicants who did apply for the new positions, but who failed to meet the entry level specifications. In total, 55 applicants fall into this category. (One applicant who applied for redeployment but who was unsuccessful is included in this number). These will be referred to as “category 2 applicants”;
Those applicants who did apply for the new positions, who met the entry level specifications and entered the recruitment process, but who were found to be unsuitable for the new positions. In total, there are 6 applicants in this category. These will be termed “category 3 applicants”;
Those applicants whose positions were declared redundant and who were dismissed for reasons unconnected to the introduction of WCM. They number 6 and will be termed “category 4 applicants”.
Two deaf mute applicants. These employees will be referred to as “category 5 applicants”.
RELEVANT STATUTORY PROVISIONS
The union claims that the individual applicants' dismissals were based on operational requirements. The procedure for a fair dismissal based on the employer's operational requirements is found in section 189 of the LRA, which reads as follows in the form in which it was prior to amendment in 2002 (it being common cause that this is the applicable wording):
“189. Dismissals 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;
...
(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;
(b) the method for selecting the employees to be dismissed; and
(c) the severance pay for 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;
the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;
the number of employees likely to be affected and the job categories in which they are employed;
(d) the proposed method of 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 proposes to offer to the employees likely to be dismissed; and
the possibility of the future re-employment of the employees who are dismissed.
...
(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) 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 agreed, criteria that are fair and objective."
Section 189 regulates the exercise of the competing fundamental rights of an employee not to be unfairly dismissed and that of an employer to rely on fair labour practices and, where appropriate, to dismiss for operational reasons. The respective obligations under the section are geared to a specific purpose, namely to achieve a joint consensus-seeking process. This section does not impose obligations only on the employer. All consulting parties have a duty to attempt to reach consensus. (Johnson & Johnson (Pty) Ltd v CWIU (1999) 20 ILJ 89 (LAC)).
A dismissal for operational requirements is a no fault dismissal, unlike dismissals for misconduct or incapacity. The Code of Good Practice: Dismissal (Schedule 8 to the LRA) provides as follows:
"Dismissals for operational requirements have been categorised as "no fault" dismissals - in other words, the employee is not responsible for the termination of employment, the effective cause of termination is one or more external or internal factor related to the employer's business needs. For this reason, together with the human costs of retrenchment, this Act places particular obligations on an employer, most of which are directed toward ensuring that all possible alternatives to dismissal are explored and that those employees to be dismissed are treated fairly." (Emphasis added)
As set out above, section 189 provides a list of the various issues in respect of which the parties should attempt to reach consensus and information which is required to be provided in writing. While a purposive approach may be adopted, fairness is always to be regarded as the touchstone in relation to the whole process. A mechanical “check list” approach to determine whether section 189 has been complied with is inappropriate (Johnson & Johnson (Pty) Ltd v CWIU, supra). The proper approach by a court considering a complaint of unfair dismissal under section 189, is to ascertain whether the purpose of the section (the occurrence of a joint consensus-seeking process) has been achieved.
It is the union’s case that the company has failed to prove:
that the reason for the dismissals was a reason based on its operational requirements;
alternatively and in any event, even if the reason was one based on operational requirements, that the reason was a fair one; and
that the dismissals were effected in accordance with a fair procedure.
I shall proceed to analyse the case along these broad categorizations.
SUBSTANTIVE FAIRNESS : THE LAW
The test for substantive fairness in dismissals for operational reasons has traditionally been described by the Labour Appeal Court as being whether the retrenchment is “properly and genuinely justified by operational requirements in the sense that it was a reasonable option in the circumstances”.
Decision Surveys International (Pty) Limited v Dlamini [1999] 5 BLLR 413 (LAC).
See also: SACTWU v Discreto (A Division of Trump & Springbok Holdings) (1998) 19 ILJ 1451 (LAC).
More recently the Labour Appeal Court endorsed a less deferential test for proof of substantive fairness – an approach which calls for a more rigorous or exacting examination by the courts of the reasons advanced by the employer. This requires the employer to show that the dismissals were “a measure of last resort” which “could not be avoided”. (See CWIU and Others v Algorax (Pty) Ltd (2003) 11 BLLR 1081 (LAC).) To the extent that they may previously have been the subject of debate, the following guidelines have now been laid down by the Judge President in the Algorax case:
Whether the dismissal is fair or not is a question which must be answered by the court and the court must not defer to the employer for purposes of answering that question (para 69);
The court should not hesitate to deal with an issue that requires no special expertise or business knowledge. Some problems require simple common sense and do not involve any complicated business transactions or decisions (para 70);
If there is a way in which the employer could have addressed the problems by using solutions which preserve jobs rather than which cause job losses (or which could lead to further job losses), the court should not hesitate to deal with the matter on the basis that the employer should have used that solution, rather than the one which causes job losses:
“This is especially so because resort to dismissal, especially so-called no fault dismissal, which some regard as the death penalty in the field of labour and employment law, is meant to be a measure of last resort.” (at para 70).
See also:
W.G. Davey (Pty) Ltd v NUMSA (1999) 20 ILJ 2017 (SCA) at 2024F.
Referring to sections 189(2) and (3) the Judge President held as follows in the Algorax case:
“It seems to me that the reason for the lawmaker to require all of these things from the employer was to place an obligation on the employer to only resort to dismissing employees for operational requirements as a measure of last resort. If that is correct, the court is entitled to intervene when it is clear that certain measures could have been taken to address the problems without dismissals for operational reasons or where it is clear that dismissal was not resorted to as a measure of last resort.” (at para 70). (Emphasis added.)
In County Fair Foods (Pty) Ltd v OCGAWU and Another (2003) 7 BLLR 647 (LAC), a judgment handed down before the decision in the Algorax case at p.656, para 27 it was held by the Judge President that:
“If the employer relies on operational requirements to show the existence of a fair reason to dismiss, he must show the dismissal of the employee could not be avoided. That is why both the employer and the employee or his representatives are required by section 189 of the Act to explore the possibilities of avoiding the employee’s dismissal.”
In reply, Mr Gauntlett argued strenuously against the “measure of last resort” approach. He said that to do so would require words to be read into the statute which postulates simply a test of fairness cast in wide and unrestricted language (see sections 188(1)(a) and (b)). He argued that the Algorax case did not lay down general principles, but that the remarks of the Judge President are to be restricted to the facts of that case.
I cannot agree with Mr Gauntlett on this score. The dictum in the Algorax case is one of general application and is based on a thorough analysis of sections 189(2)(a)(i) and (ii) read with subsections (3)(a) and (b). The County Fair case is to the same effect. In the W.G. Davey case the Supreme Court of Appeal suggested a similar approach in respect of a strike dismissal - why then should there be any lesser test in respect of a no fault dismissal?
In the recent decision in General Food Industries Ltd v FAWU [2004] 7 BLLR 667 (LAC) at p.682J, para 55, Nicholson JA summarised the position as follows:
“The loss of jobs through retrenchment has such a deleterious impact on the life of workers and their families that it is imperative that even though reasons to retrench employees may exist they will only be accepted as valid if the employer can show that all viable steps have been considered and taken to prevent the retrenchments or to limit these to a minimum.” (Emphasis added.)
Finally, I am enjoined by the aforementioned Code of Good Practice to consider whether “all possible alternatives to dismissal ... [have been] ... explored.”
Prior to the 2002 amendments to the LRA, the provisions of section 194 accentuated the distinction between substantive and procedural unfairness in relation to retrenchment dismissals. For purposes of compensation, that distinction has now largely disappeared, except that a finding of procedural unfairness alone precludes a Court from reinstating an employee dismissed for operational requirements. While this Court may therefore, in the future be less inclined to draw so clear a distinction between substantive and procedural unfairness (particularly in cases where the dismissed employee does not seek reinstatement), I shall proceed to examine the issue of fairness in this case along traditional lines, more particularly because it is common cause that the LRA in its pre-2002 amended form applies here.
Bearing in mind that “fairness, not correctness is the mandated test”, the judgment of Davis AJA in BMD Knitting Mills (Pty) Ltd v SACTWU (2001) 22 ILJ 2264 (LAC) at 2269I-2270B is to the following effect:
“The starting point is whether there is a commercial rationale for the decision. But, rather than take such justification at face value, a court is entitled to examine whether the particular decision has been taken in a manner which is also fair to the affected party, namely the employees to be retrenched. To this extent the court is entitled to enquire as to whether a reasonable basis exists on which the decision, including the proposed manner, to dismiss for operational requirements is predicated.”
That approach was recently confirmed by Davis AJA in Enterprise Foods (Pty) Ltd v Allen and Others [2004] 7 BLLR 659 (LAC) at p.663, para 17. As stated earlier, I intend applying a similar approach in the present case.
I pause to mention that in considering issues of fairness, the Court is obliged to have regard to fairness to both parties. There is no room for any suggestion (and Mr Kahanovitz for the applicants did not argue this) that fairness is confined to its effect on employees only.
National Union of Metal Workers of SA v Vetsak Co-operative Ltd and Others 1996 (4) SA 577 (A) at 589C-D;
Woolworths (Pty) Ltd v Whitehead 2000 (3) SA 529 (LAC) at 559F;
National Education Health and Allied Workers Union v University of Cape Town and Others (2003) 24 ILJ 95 (CC) at p.112C-E.
In his celebrated concurring judgment in the Woolworths case, supra, Willis JA (in an uncontroversial passage) made the following remarks about the concept of fairness (albeit in the context of a discrimination complaint):
“[127] Fairness is an elastic and organic concept. It is impossible to define with exact precision. It has to take account of the norms and values of our society as well as its realities. Fairness, particularly in the concept of the LRA, requires an evaluation that is multi-dimensional. One must look at it not only from the perspective of prospective employees, but also employers and the interests of society as a whole. Policy considerations play a role. There may be features in the nature of the issue which call for restraint by a court in coming to a conclusion that the particular act of discrimination is unfair.”
SUBSTANTIVE REASONS ADVANCED
There is no dispute between the parties regarding the company’s entitlement to embark upon the WCM strategy. Indeed, in the National Substantive Agreement concluded between the union and the company on 29 June 1995, the following was expressly recorded in that regard:
“21. World class manufacturing
It is agreed that SAB and its employees have a significant contribution to make towards the rebuilding of the national economy and the Reconstruction and Development Programme. The parties commit themselves to engage in constructive discussion, within accepted Procedures and Agreements, and will work together to make the Company a successful, world class manufacturer.
The parties agree that skills development is essential in order to achieve the status of a world class manufacturer and marketer of fine quality beers. The parties, therefore, agree not to boycott training in the event of any dispute, either at a local or national level.
The parties agree that the following joint task forces be established under the auspices of the National Forum:
...
21.3.2 task force on world class Manufacturing/Job Grading.”
I should point out that the present case differs significantly from the usual retrenchment scenario one encounters where jobs are shed to save an ailing company. Here, the company has openly come to Court and explained that its decision to restructure was motivated by a desire to become more efficient and competitive (both locally and globally) and to increase its profitability. In a market-driven economy there can be no objection, in principle, to retrenching to increase profit margins (there is after all a duty to shareholders to do so), provided always that the employer’s conduct is found to be fair on a general assessment of all the evidence. (Hendry v Adcock Ingram (1998) 19 ILJ 85 (LC).) See also Fry’s Metals (Pty) Ltd v NUMSA and Others [2003] 2 BLLR 140 (LAC) at 152-3, para 33 and General Food Industries Ltd v FAWU, supra, at p.682, para 52; p.684, para 62.
Arising from the mutual commitment towards a strategy of WCM, and no doubt in an endeavour to obviate the necessity to later enter into section 189 consultations at a local/plant level, the company, in 1998, proposed that the Workplace Change Agreement be concluded. I shall revert to the WCA hereunder. Suffice it to say at this stage that the relevant document drawn up by the company for discussion purposes to attempt to reach consensus on this point, is replete with references to WCM and the corporate jargon associated therewith. The uncontested evidence of Burger in relation to this document was that negotiations in relation thereto broke down when the union demanded a moratorium on job losses which the company was not prepared to give. There was no evidence to suggest that the union, at any stage during the WCA negotiations or the other discussions and interactions leading up thereto, did not appreciate or object to the introduction of WCM per se.
In the circumstances I am satisfied that the company’s reliance upon WCM as the primary factor motivating change in its workplace constitutes a valid “commercial rationale”, in the context in which that concept has been used in the cases referred to above. At this level, then, I am satisfied that the company did not treat the individual applicants unfairly.
INCAPACITY DISMISSAL?
Mr Kahanovitz took the argument in relation to substantive fairness to a further level and contended that the real reason for the dismissal of the individual applicants was their incapacity to perform the work required of them by the company under the BOP II model. To this extent, Mr Kahanovitz contended that the retrenchment was a sham intended to mask the real reason for the dismissal.
Mr Gauntlett readily conceded that if the union’s argument on this score was correct, the company was in trouble and that it would not be able to justify the dismissals on the basis of section 189 of the LRA. However, Mr Gauntlett argued strenuously against any suggestion of an incapacity dismissal. The issue is not as simple as it seems and requires some detailed analysis.
The union’s argument draws succour from a number of recent decisions including Greig v Afrox Ltd (2001) 22 ILJ 2102 (ARB), SA Mutual Assurance Society v Insurance and Banking Staff Association and Others (2001) 9 BLLR 1045 (LAC), Wolfaardt and Another v Industrial Development Corp of SA Ltd (2002) 23 ILJ 1610 (LC), Ntshanga v South African Breweries Ltd (2003) 8 BLLR 789 (LC) and an article by Prof Rycroft (who incidentally wrote the arbitration award in Greig v Afrox, supra) entitled Corporate restructuring and “Applying For Your Own Job” (2002) 23 ILJ 678.
Prof Rycroft’s article is a critique of the SA Mutual Life case and provides a useful summary of the principles underpinning the argument advanced by Mr Kahanovitz. It commences with the following remark:
“An industrial relations trend has taken root in terms of which an employer, for operational reasons, seeks to introduce a restructured organisational template, and in so doing redefines the requirements and competencies for jobs in the new structure. Existing staff are then told that all existing positions have become redundant and that if they want to continue in employment with the employer, they must apply for the ‘new’ positions. Those who fail to apply or who are not appointed, are considered to have resigned or are retrenched.”
After a thorough discussion of the SA Mutual Life case and various other decisions of the Labour Appeal Court and the Labour Court, Prof Rycroft concludes with the following remarks:
“In summary, an employer intending to restructure by way of defining jobs and making all or a group of existing jobs redundant must be able to show: (i) a reasonable and commercial rationale for the decision to restructure; (ii) that the particular decision has been taken in a manner which is also fair to the employees to be retrenched; (iii) that the retrenchment of the employees is essential to achieve the purposes of the restructuring; (iv) that the criteria for appointment to the ‘new’ jobs are clear and justifiable, linked specifically to the new job description; (v) that guidance is given to employees as to which of the restructured jobs they might be eligible (sic); (vi) that employees are given an opportunity in the interview to answer any questions about past performance that might be used as a criterion for not appointing them to the job; and (vii) that the eventual selections are objectively justifiable.”
It is worth noting that Prof Rycroft suggests, too, that the deferential approach towards the commercial efficacy of an employer’s decision (cf. SACTWU and Others v Discreto (A Division of Trump and Springbok Holdings) (1998) 19 ILJ 1451 (LAC)), has yielded to an enquiry in which the Court is now entitled to examine the content of the reasons given by the employer in assessing whether it has established substantive fairness.
Relying on Prof Rycroft’s article in the main, Mr Kahanovitz argued that the employer’s classification of “redundancy” in the present case should be carefully scrutinised because:
unless an employer is closing down or moving its operation, the designation of all jobs as “redundant” is not an accurate description of what changes the employer is seeking to make; and
modifying a job or its responsibilities does not make that job “redundant” because jobs are always in the process of being adapted and fine-tuned.
The decision by Davis AJA (Zondo JP and Du Plessis AJ concurring) in the SA Mutual Life, case, is worth quoting at some length:
“… Mr. Bozalek [who appeared for the employees] submitted that the very documentation upon which appellant had relied to justify the restructuring of the department indicated that much of the problem with the department lay in the ‘inadequate skill level and qualifications of several of the recruitment consultants’. During the consultation period second to fifth respondents had taken the approach that, with improved training and skill development, many of the difficulties which the department had encountered could be resolved. Accordingly Mr. Bozalek submitted that the decision to restructure the department represented a guise under which the appellant sought to address problems of perceived non-performance or incapacity of the individual respondents which on its own documentation was caused by a skill shortage.
When the restructuring of the department is examined within this factual context it appears that it represented a means of the dismissal of the individual respondents based upon incapacity and poor work performance. …
… Furthermore, when asked as to how the incumbents of the old department were expected to perform successfully in their new posts, Ms. Griffiths was constrained to answer that they were assessed according to the required level of competence for the new jobs and that they had received further training, the very point on which second to fifth respondents had sought to negotiate.
… When the evidence is evaluated holistically, a clear picture emerges of appellant being dissatisfied with the performance of certain members within the department, and choosing not to initiate proper disciplinary enquiries (sic) in relation to performance and incapacity. Rather appellant sought to restructure the department as a means of dismissing those employees with whom it was dissatisfied, namely the individual respondents.
In the circumstances, appellant was not able to discharge the onus of establishing that second to fifth respondents were retrenched because their jobs had become redundant pursuant to a process of restructuring the department. It was also not able to show that the individual respondents would not have been able to perform to the acceptable level of competence in the restructured department. … The ultimate decision to change the department was predicated upon appellant’s manifest dissatisfaction with the performance of certain personnel in the department rather than the grounds of operational requirements. …” (at paras 12 to 17).
In argument Mr Kahanovitz relied heavily on the SA Mutual Life case as support for his contention that the dismissals in the present case were effected for reasons of incapacity. While there are certainly similarities between the two cases, in my mind there is a fundamental factual difference between the two:
Davis AJA found at p.1050F (para 17) in the SA Mutual Life case that -
“The ultimate decision to change the department was predicated upon appellant’s manifest dissatisfaction with the performance of certain personnel in the department rather than on the grounds of operational requirements, namely requirements based on the economic, technological, structural or similar needs of the employer (section 213 of the Act).”
In the present case the unchallenged evidence is that the decision to move from BOP I to BOP II was aimed at improving the overall efficiency of the company’s entire production facility countrywide. (The focus was on a more generalised and macro scale.)
The company’s production efficiency (according to Michael Short who gave evidence on behalf of the company) is measured on a percentage basis and is calculated to reflect the amount of time that any production line is operative. So, for example, to achieve 100% efficiency a production line would have to operate for every hour within a 24 hour cycle. When the line is static and not running, the efficiency factor reduces and is reflected by a percentage lower than 100.
The uncontested evidence is that, at the Newlands brewery, the efficiency prior to the restructuring was of the order of 53%, while currently it is close to 70%. This, according to the company, is a significant increase in efficiency and is one which is based on the overall structural changes which were introduced with the BOP II model. This is a wholly different situation to a complaint by an employer about poor work performance in a particular area. I find, therefore, that the SA Mutual Life case, while persuasive authority in respect of the principles postulated, is based on a fundamentally different set of facts and is therefore distinguishable.
Mr Gauntlett argued that the facts of the present case do not reflect a dismissal for incapacity. As I will attempt to demonstrate hereunder, certain of the dismissed employees were considered by the company to be incapable of being sent on training courses to enable them to work in the new structure. The union did not dispute that the new structure (BOP II) was a materially different structure to the BOP I structure. While it may be that certain of the individual BOP II tasks remain unaltered, the unchallenged evidence of Smith, Burger and Ingmar Boesenberg (the general manager at Newlands) was that the organisation of work at the Newlands brewery under BOP II has been materially changed: BOP II employees are now required to perform a variety of tasks. The affected employees were capable of rendering services in the old structure, and there was never any suggestion by Mr Kahanovitz in the cross-examination of the company’s witnesses that the inability of the employees to work in the old (BOP I) structure was a factor which led to their dismissals.
In the circumstances of the present case, I am of the view that an incapacity dismissal does not arise because the alleged incapacity on the part of the affected workers was not in relation to their extant position. I am to be guided in this regard by the provisions of section 9 of Schedule 8 to the LRA in which guidelines are set out for the evaluation of evidence in cases of dismissal for incapacity.
“Any person determining whether a dismissal for poor work performance is unfair should consider -
whether or not the employee failed to meet a performance standard; and
if the employee did not meet a required performance standard whether or not -
(i) the employee was aware, or could reasonably be expected to have been aware, of the required performance standards;
the employee was given a fair opportunity to meet the required performance standard; and
dismissal was an appropriate sanction for not meeting the required performance standard.”
Consideration of these guidelines clearly requires that the employee is to be evaluated against a performance standard fixed in respect of his/her past performance. In my view, it would be fallacious to argue that the inability to meet an entry level requirement for a new and re-designed job constitutes incapacity in respect of past performance. Further, I consider that it would be unfair to an employer, which was contemplating the introduction of a new work regime (which of itself might require a smaller workforce) to retain its entire old workforce and to follow the provisions of the aforementioned section 9 of Schedule 8 to establish who was liable to be dismissed. Such a system would be chaotic to say the least.
The case of Wolfaardt and Another v Industrial Development Corp of SA Ltd (2002) 23 ILJ 1610 (LC) also involved a decision to do away with all current positions whereafter employees had to apply for the new positions. There were fewer new positions than old positions. Of relevance to this matter are the following findings made by Landman J:
The key was whether it is permissible for an employer to make all employees redundant and then select, albeit according to certain broad criteria, the employees it wishes to retain (at para 24). This process was somewhat colourfully described as being one of pouring old wine into new skins, but as “the new skins were smaller than the old, there would be some plonk left over. This case is partly about who decided what goes into the new skins and what happens to the plonk.” (at para 10).
The employer argued that employees had been selected for retrenchment using only one criterion, namely a failure to be appointed to a position in the new structure (at para 25).
At para 26 - referring to Rycroft’s article where it is submitted that restructuring should not be used to dismiss employees who cannot be dismissed for misconduct or incapacity - Landman J held that this principle would apply not only where the employer uses restructuring as a sham or stratagem but also where the employer cannot show that the non-employment is fair, e.g. where the employees are not afforded an opportunity to deal with the perceptions of their incapacity.
The process of having to apply for a new job places an employee in the precarious position of being a “supplicant”. Having to apply for a job may ignore, sometimes unconsciously, that an existing employee enjoys job security (at para 27).
It would seem that the facts in the Wolfaardt case, too, differ from the present to the extent that the selection criteria applied to all “redundant” employees in that case were regarded by the Court as being too arbitrary:
“[32] When it comes to selection the procedure was simply the choice made by management. The procedure and selection criteria remind one of schoolboys picking a team by calling out names until the less desirable players are left and discarded or accepted reluctantly. This is not objective. It is palpably unfair.”
The conclusion which I draw from the debate on this issue is that Prof Rycroft’s approach set out above provides a useful tool in deciding whether there was substantive fairness or not in cases of this nature. Save for the category 4 employees (to which further reference will be made hereunder), I am satisfied that the positions in which the present applicants were previously employed can properly be described as being “redundant” with the introduction of the BOP II model which was indisputably a new method of work-organization.
SELECTION CRITERIA
As pointed out above, one of the areas which the LRA enjoins the parties to attempt to seek consensus on is “the proposed method of selecting which employees to dismiss” (section 189(3)(d)). The issue of selection criteria (or more properly, the fairness thereof) is one of those categories which can resort under either substantive or procedural fairness, depending on the circumstances. In the present case I propose considering the primary selection criterion as part of the substantive fairness enquiry.
The collective agreement referred to above (“the NRA”) contains a negotiated retrenchment procedure (colloquially referred to in evidence as “Annexure F”). Clause 5 of that annexure requires the company and the union to consult on, inter alia, the following issues when no alternatives to retrenchment are found:
“5.2 The criteria for the selection of employees to be effected by the retrenchment:
5.2.1 the criteria for the selection of retrenchees should, as far as possible, be LIFO coupled with retention of skills; and
5.2.2 where LIFO coupled with the retention of skills is not conclusive, efficiency at the job and attendance records may be used as additional criteria for selection.”
It will immediately be observed that the primary agreed selection criteria (paragraph 5.2.1 of Annexure F) played no part whatsoever in the present case. The company’s contention is that these were not capable of application in the prevailing circumstances and that its choice of alternate criteria was justified and fair.
In a document prepared in 1998 (post-Alrode Line 12), Smith attempted to illustrate the “fall-out points” which would accompany the implementation of BOP II. In summary, that document envisaged the following process:
All positions in the existing BOP I structure to be declared redundant;
Entry level specifications (“ELS”) to be established for all applicants for posts in the new structure. (The ELS for external applicants were to be higher than for existing employees.)
Existing employees who did not meet the minimum entry specifications were to be redeployed where possible.
If redeployment was not feasible those employees were to be retrenched.
If the existing employees did meet the ELS, they were to be sent on pre-implementation training courses, whereafter they were required to undergo competency assessments. If they did not pass these assessments, they were to be retrenched.
Employees who successfully passed the competency assessments were then employed on the new lines and were subjected to further scrutiny. Such employees who were not assessed as competent after a “third summative assessment” were then retrenched.
From this proposed procedure it can be seen that the setting of entry level specifications for existing employees had the potential of materially affecting their job security. In respect of certain employees, the fixing of a new hurdle which they had to surmount before their continued employment could be considered, effectively amounted to a selection criterion for retrenchment in the event that they were unable to comply with the entry level requirements for the restructured jobs. In the cross-examination of Smith it was put thus:
“... (T)hen one can also infer that the people you’re not even letting into the training zone as it were you’re making the call, you’re making the prognosis that they’re not going to have the necessary levels of competence? --- Correct.”
The category 2 applicants were directly affected by this policy. Simply put, they were dismissed because the company held the view that they were not capable of being trained (or even being sent for training) to work in the BOP II structure and they were not deployed elsewhere in the brewery.
The obvious question that follows then is: “Did the company act fairly in setting the relevant entry level specification in regard to existing employees?”
In its amended statement of claim the union attacked the unfairness of the company’s approach in this regard as follows:
“5.6.B2... (v) Respondent also adopted the view that for the BOP II strategy to achieve its goals only employees with certain minimum levels of general education would be considered for training as BOP II employees.
Employees’ levels of general education would, so respondent decided, be measured by reference to assessments made under the Adult Basic Education and Training (“ABET”) system.
Respondent decided that to be eligible for training as a BOP II operator/employee the following minimum entry specification would apply in the case of internal candidates:
Attendant: ABET Level 2
(Literacy and Numeracy);
BOP Operator: Abet Level 3
(Literacy and Numeracy);
Process Operator: ABET Level 4
(Literacy and Numeracy).
...
5.6.F In terms of a carefully planned preconceived ‘WCM implementation strategy’ ... respondent implemented a plan to retrench approximately 25% of its national workforce. This plan was executed in the following manner ...
(ii) Fixed selection criteria were set which would either have the result of leading to the retrenchment of employees with the lowest education levels (who were more often than not the longest serving employees). This occurred in circumstances where respondent was clearly aware that its conduct would not only result in the retrenchment of a large number of the employees but moreover, that its claim to be a company occupying a ’high moral ground’ (sic) would be seriously questioned in consequence of its decision to exclude from its business employees who had, to a large extent, been the victims of so-called Bantu education.”
The union contended further that the legal conclusions flowing from these allegations included:
“6.1.(f) The selection criteria used by the respondent were unfair, to wit:
numeracy and literacy levels;
experience;
‘personal attributes’;
various factors unknown to the applicants.”
The Company’s response to these averments is as follows:
“3.11. Ad para 5.6.B
...
The core features of BOP II entailed, inter alia, the following:
Team-based structures from management to shop floor;
A step change in general level of competence;
Self-sufficient, shift-based teams;
A three-tiered team structure in packaging;
Focussed business units and process areas;
Asset care and QC accountability at source;
Smaller teams of multi-skilled, cross-functional team members;
Autonomous maintenance at shop floor;
Appropriate engineering skills required at Level 1 for situational problem-solving;
High levels of literacy and numeracy at Level 1 amongst operators for, inter alia, capturing of data;
A team-based structure consisting of the four building blocks (BOP operator, process operator, process artisan and team leader);
Building blocks to create career pathways ...
...
The minimum entry level specifications for internal candidates in respect of the positions were as follows:
Packaging attendant: ABET Level 2 literacy, ABET Level 2 numeracy, mechanical aptitude, one-year experience in a packaging environment;
Packaging BOP operator: ABET Level 3 numeracy, mechanical aptitude, two years experience in a packaging environment;
Packaging process operator: ABET Level 4 literacy, ABET Level 4 numeracy, mechanical aptitude, two years experience in a packaging environment;
Packaging process artisan: trade test qualification (preferably in mechanical, electrical or millwright), two years in a packaging environment, job specific assessment;
Those employees who failed to apply for the new positions or who were unsuccessful in applying for the new positions were retrenched in circumstances where they could not be redeployed.
Save as aforesaid, these allegations are denied.”
In response to the union’s legal conclusions. the company pleaded as follows:
“3.47.6 Ad Paragraph 6.1(f):
The selection criteria for internal candidates are set out in paragraph 3.11 above.
Save as aforesaid, these allegations are denied.”
The question of the selection criteria was a hot-bed of dispute between the parties and took up a major portion of the 23 days over which this trial ran. The company relied, in the main, on this issue on the evidence of Smith, Felicity Miller and Short, as well as the Flagship Report. The union adduced only the evidence of an expert, Daryl McLean, in rebuttal. In evaluating this evidence and the legal conclusions flowing therefrom, I shall broadly approach the case in the manner suggested by Prof Rycroft in the article referred to above.
In summary, the company argues on this aspect of the case, that its choice of ABET as the entry level specification was a fair comparator which was justified as an initial assessment tool in the circumstances. It contends that this choice was found by Flagship to be appropriate. Even if it is now found to have been wrong, the company argues that its choice was bona fide and reasonable and that it is not for the Court to sit in judgment as an “appellate body” over its decision. Rather, Mr Gauntlett argued, the Court’s function is to consider the position as if it were reviewing an administrative act. The test then is one of rationality rather than accuracy or correctness. I do not think that it is necessary to lay down yet another approach in a matter such as this. The abovementioned dictum of Davis AJA in the BMD Knitting Mills case clearly reflects that in appropriate circumstances a wrong decision may be excusable: “fairness not correctness is the mandated test.”
The union’s argument, in reliance on McLean’s evidence, is that the company’s point of departure in regard to ABET was fatally flawed in the circumstances and that Flagship’s endorsement thereof does not address the real enquiry, viz. was ABET an appropriate yardstick at all in the instant case and should it ever have been considered by the company as an ELS? In other words, was the use of ABET reasonable in the prevailing circumstances?
An evaluation of certain of the evidence on this point then becomes necessary. In determining the reasonableness of the company’s reliance on ABET as an ELS, one has to consider, as well, whether the employees who did not possess the designated ABET levels were fairly afforded an opportunity to enhance their prospects of attaining those entry levels. I consider it convenient to consider all these issues at the same time.
THE COMPANY’S USE OF ABET AS AN ENTRY LEVEL SPECIFICATION
Generally:
The agreed schedule of the 115 individual applicants reflects that:
all are males;
the vast majority are Black Africans;
the average length of service with the company was of the order of 15 years;
many of them had served the company for more than 20 years and in some cases for 35 to 40 years;
the majority had been employed in the packaging department on lines 2 or 3/4;
the company had no record of the educational level of the educational level of 34 (almost 30%) of the employees;
about half of them (approximately 57) did not have the requisite ABET entry level specifications.
In respect of those employees who claimed to have recognised levels of education Pinto said that the company relied implicitly on the school-leaving certificates which the individuals possessed (or claimed to possess).
In relation to certain of the employees whose levels of formal education were not known, the company arranged for ABET screening in March 2001. Some employees evidently were not willing to undergo such screening.
There was considerable debate, both in cross-examination of various of the company’s witnesses (in particular Pinto) and in argument, as to whether the company advertised only ABET levels as entry qualifications for BOP II operator positions or whether employees were informed that proof of school-leaving qualifications would be equally acceptable. The clear implication was that if prospective employees were only told that ABET was the entry level specification (as opposed to a formal educational standard), they did not apply because they were confused or misled as to the requisite entry qualification.
The evidence of Pinto certainly was strongly suggestive of the fact that ABET alone was advertised as the appropriate qualification. However, in my view, not much turns on this point because the union did not adduce cogent and reliable evidence to warrant the reasonable inference that category 1 retrenchees did not apply for new positions because they were confused about the criteria. I do not think that long-standing employees whose jobs are under threat will easily labour under a misapprehension as to what they need to do (or should do) to retain employment.
Of far greater significance in regard to ABET as an entry level requirement is the structural approach of the company to the relevance of ABET as a determination factor in regard to future employability.
ABET - The Early Years:
Felicity Miller (an experienced human resources practitioner with the company) testified that she had been responsible for the introduction of an ABET programme in the company nationally as far back as August 1992. The purposes of this intervention were described by the witness as follows:
“(T)he first one was taking cognisance of the historical background of our workers, many of whom lacked the necessary literacy levels to survive in a changing world; and secondly the changing world of work that would require new skills and new competencies and they required literacy and numeracy levels to operate in the changing world of work.”
Prior to the introduction of that ABET programme nationally, management and certain of the union’s shop stewards formed a committee which planned and implemented the programme. Participation in the initial ABET programmes on the part of the workers was completely voluntary and was facilitated through the union shop stewards. One of the shop stewards on that 1992 committee was Neville Mphanga, who still serves the union. He was responsible for furnishing Mr Kahanovitz with instructions during the course of the trial, but did not give evidence.
Miller stated that, as far as she was concerned, the decision by an employee not to participate in any ABET programme had the potential consequence that that person “would not have the necessary skills for the changes in the workplace”. She said, too, that this consequence was made clear to the shop stewards in discussions within the ABET committee referred to above. She was unable to say whether this position filtered through to the rank and file of the workforce via the shop stewards.
Under cross-examination Miller said that initially the ABET intervention was part of the company’s general social responsibility plan, but that there was also a general need in the company for skills upliftment due to the changing nature of work globally.
I might add that McLean, who evidently has extensive experience in ABET practice and policy, said that the company’s early ABET interventions were known to him. I understood him to convey that, as a practitioner in the ABET field, he was informed of, and impressed by, the manner in which the company had embarked on this area of corporate responsibility.
During the workshop at the Riverside Sun in 1995 referred to above, a certain Gavin Hartford addressed the participants. He was described as a full-time national organizer of the union. According to the minutes of the workshop, Hartford made it quite clear that the pursuit of a WCM strategy would have the following consequences:
the necessity to reassess the skills levels of workers;
the need to address training in the workplace so as to provide a degree of “portability and accreditation across the company”;
a new level of work organization, including “team work” and multi-skilling;
the need for appropriate managerial adjustment or transformation;
a threat to employment security (“It is understood that jobs will change fundamentally, but a guarantee of no retrenchments is essential”).
In answer to a question from the floor during discussion time, Hartford is recorded as having said:
“It is unworkable to make Adult Basic Education compulsory. You cannot force people to learn if they don’t want to. It must be a voluntary system. In terms of managing the company’s commitment to ABE and achieving high education standards among employees, in support of increased flexibility and productivity, it is important to negotiate minimum entry standards for new employees. This stops the flow of illiterate and innumerate people into the business.
If retrenchments take place, older employees whose education and training levels are inadequate for the new direction the business is taking, can be targeted for retrenchments. However, this cannot be done without providing them with a social security net.”
In argument Mr Gauntlett relied on Miller’s evidence and Hartford’s alleged statements (which were not disputed by the union) as establishing a foundation for the contention that ABET as an entry level specification was fundamentally fair. In my view, the emphasis placed thereon by the company is excessive. At best, I think it can be said that the union was aware of the importance of ABET training and the potential influence that it could have on employees’ advancement in the workplace. However, it cannot be said that, before the Alrode pilot, workers at the lower level of the corporate structure would have had reason to co
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