Ngozo and Others v Scorpion Legal Protection (JS 354/06) [2007] ZALC 78 (2 November 2007)

The applicants, Mr Ngonzo, Mr Malinga, Mr Limekhaya and Ms Sikhunyane, challenged their dismissals for operational reasons on the basis that it was automatically unfair as provided for in s187 (d) of the Labour Relations Act 66 of 1995 (“the Act”). They contended that they were dismissed because of the dispute they have referred to the Commission for Conciliation, Mediation and Arbitration (“the CCMA”) against the respondent. In the alternative the applicants claimed that their dismissal was both procedurally and substantively unfair.

The late filing of the notice to opposition was condoned.

Background facts

The applicants who are legally qualified were employed in the quality management department of the respondent and were known as the “Proto team.”

The only and main witness of the applicants, Ms Sikhunyane, testified that they were not consulted about the restructuring of the quality management department (“QMD”).

The applicants were according to her called to a meeting during June 2005, where they were told that they would, starting from that day, report to Mr Mahube, but that this would not affect their job descriptions and their positions would not change.

On the 7 October 2005, the applicants submitted a memorandum containing their grievance concerning their salary increase. The outcome desired in terms of the memorandum was stated as follows:”

“We want the company to either place us in the senior advisor or Branch Managers salary band as was promised by our supervisor. We should be reviewed as per either band to be allocated to us and such reviews should be backdated as per individual employment date at the QMD”

The respondent replied to the memorandum on the 14 October 2005 and amongst others stated that:

“3. We are in the process of investigating your claims and obtaining further particulars. At this point in time however, and further to various meetings and correspondence, your department would need to be restructured due to the operational requirements and the departure of your previous departmental head, Mr Thabang Mothibe.”

The meeting as suggested in the above memorandum was convened on the 19 October 2005. The meeting was attended by Mr Mohomed Degam, the General Manager Legal Department, Ms Debbie Nortin, IR practitioner and five members of the applicants.

It is apparent in the minutes of the meeting that after briefing the meeting about the background and roles of the applicants, Mr Degan, indicated that the relationship between the applicants and the other branches and departments “had become increasingly limited as a result of the general perception from other branches and departments.” He further stated:

“1.4 Things have degenerated to a point where Proto Team was seen by other branches, departments and managers almost as “spies” and other employees did not trust the team or their motives”

Mr Sizwe Vilakazi who was the spokesperson for the applicants, stated that he did not understand what Mr Degan was speaking about because in as far as they were concerned, the meeting was supposed to discuss their grievance which was about their salary and reviews of their positions.

Mr Degan then explained that the respondent whished to address the issue of restructuring and job grading and salary reviews, during the same process as the restructuring would have an impact on grading and the salaries of the applicants.

The meeting concluded with the applicants indicating that they needed time to consider whether they would want the consultation to take place in terms of s189 of the Act.

The applicants did not revert back to the respondent as promised and on the 24 October 2005. On 25 October 2005, the respondent addressed a memo to the applicants, indicating that they were surprised to receive a CCMA dispute referral whilst awaiting their response arising from the discussion of the meeting of 19 October 2005. In the same memo the respondent undertook to revert back to the applicants regarding their grievance before close of business on Friday, 28 October 2005.

The applicants responded to the above in a memo dated 27 October 2005, where they indicated that they did not see any point in discussing the restructuring matter as it was already referred to the CCMA.

The CCMA dispute referral was then withdrawn and according to Ms Sikhunyane, the withdrawal was because the respondent had indicated willingness to consult with them.

The respondent then agreed to deal with the issues raised in the grievance separate from the issue of restructuring. Separate meetings with individual members of the applicants were convened on 10 November 2005, the outcome of which was that the respondent did not accede to the salary demand of the applicants.

On the 11 November 2005, the applicants were suspended for the alleged refusal to obey lawful instructions. Whilst on suspension the respondent served s189 (3) notices to each of the applicants. The applicants responded to the notices on 23 November 2005, wherein they stated:

“1. We refer to the non-consultative restructuring and subsequent unlawful suspension of each signatory to this letter. We refer to your letter dated 16 November 2005 (received on 22^nd November 2005) inviting us individually to attend a consultative meeting in terms of section 189 (3) of the Labour Relations Act 66 of 1995.

We note that this invitation is extended amid a hearing scheduled for 30 November 2005 at the Commission for Conciliation, Mediation and Arbitration (“CCMA”) [for the subject matter is (sic) dispute] and while we are suspended as per your letter dated 11^th November 2005.

We further note that your letter dated 16 November 2005 raises a number of issues which require a detailed response and advice from our legal representative. We are unable at this stage to respond nor compel to request information as per paragraph seven (7) of the said letter due to short notice at which (sic) your invitation.

We further need clarification regarding your letters of suspension dated 11^th November 2005, and whether our unlawful suspension has been uplifted. Should the suspension be uplifted, this will be viewed with suspension considering your conduct since we started inquiring about our employment status, earnings and grades.”

In addition to noting that the applicants were not willing to participate in the consultation process, the respondent in the memo of 24 November 2005, indicated that:

“9. We look forward to meet with you at the Commission for Conciliation, Mediation and Arbitration (CCMA) on Wednesday, 30 November 2005, where we anticipate that, in the unlikely event of the Commission assuming jurisdiction over a dispute for which no provision has been made in the Labour Relations Act of 1995 (the LRA), you will be directed to engage in a meaningful and joint-consensus seeking consultation process with the Company, as per the consultation meeting scheduled for Thursday, 24 November 2005.”

After withdrawing their dispute on the 25 November 2005, the applicants addressed a letter to the respondent wherein they dealt with the issues raised in the respondent’s letter dated 28 November 2005, and also listed the information they required in order to prepare for the consultation with the respondent. They also required that their suspension be uplifted including that they be consulted as a group rather than as individuals.

The suspensions were uplifted through a letter dated 10 January 2006, wherein the applicants were also advised that they would be consulted individually.

On the same day, 10 January 2006, another memorandum was sent to the applicants in which they were advised of several issues related to the process of restructuring. They were firstly advised of the reasons for the restructuring and possible dismissals. The reasons are set out at paragraph 5.1 of the memo as follows:

“5.1 The Reason for the Proposed Restructure and/or Possible Dismissal

During June 2005, the Company announced in a memorandum, that it had critically reviewed and evaluated the performance and functionalities of QMD. It was communicated that, although QMD had achieved various successes, relationship with various other branches and departments, had become strained.”

The alternatives which were considered are set out at paragraph 5.2 and in the same paragraph the applicants were advised of vacant posts in Johannesburg and Germiston and that they could apply for the same if they so wished. In the same letter it was pointed out that one of their members had resigned and the other one had applied and was appointed as a claims handler.

The applicants responded to the above memo in an undated letter and raised a number of issues arising from the respondents’ letters of 15 December 2005, and 10 January 2006. One of the issues raised in the letter concerned the appointment of a facilitator to facilitate the consultation process.

The consultation meeting facilitated by Mr du Rant, attorney of record of the respondent was held on the 16 January 2006. In the main, the meeting seemed to have focussed on the reason for the restructuring. The meeting concluded with an agreement that the applicants would furnish their written representations by 14H00 on 18 January 2006, and that the respondent would respond by the 20 January 2006.

Instead of sending their written submission as agreed, the applicants send a letter dated 17 January 2006, indicating that they would not submit same but do so at the next meeting. They also raised an objection and demanded that Mr Durant should recuse himself as a facilitator and that an independent facilitator be appointed.

Another consultation meeting was held on the 24 January 2006, where the applicants again insisted that Mr Durant should recuse himself and another facilitator be appointed in terms of section 189A of the Act. The other issue raised by the applicants was that they were not able to consult without having seen the minutes where the decision was taken to restructure. The meeting seems to have been held with an understanding that the applicants would make representations by 27 January 2006.

On the 31 January 2006, the respondent addressed another letter reminding the applicants of their undertaking and that they had failed to make representations as was agreed on 27 January 2006. In addition to reminding them of the invitation that they should apply for the vacant positions, an offer on the following terms was made to the applicants:

“4. You are hereby required to indicate in writing, before close of business on Wednesday, 1 February 2006, whether you accept the offer of alternative employment as Claims Handler at the same monthly remuneration which your currently receiving”

The applicants responded in a letter dated 1 February 2006, and disputed ever agreeing to making written submissions. The essence of this letter was that they rejected the offer to be appointed in the claims department.

Thereafter, a final consultation meeting was held on the 7 February 2006, where the respondent indicated that the process had reached its final stage and raised the issue of the timing of the termination of the relationship. The applicants were then on the same day issued with letters of termination.

Issues to be determined

The issues to be determined as set out in the pre-trial minutes are:

Whether there was a fair reason for the dismissal
Determine whether a fair procedure was followed before he dismissal,
Whether the dismissal was automatically unfair,
Whether the dismissal was as a result of their grievance,
Whether the applicants are entitled to the relief claimed
Are the applicants entitled to severance pay?

Automatically unfair dismissal

In terms of s187 of the Act a dismissal is automatically unfair if the employer dismisses an employee for taking action against the employee who took action, or indicated an intention to take action, against the employer in the exercise of any right conferred by the law.

The court in the case of Mafumane v Rustenburg Platinum Mines Ltd (2003) 10 BLLR 999 (LC), held that the employee bears the burden of proving that the dismissal falls within the ambit of section 187 of the Act and thereafter the onus shifts to the employer to prove that the dismissal was fair.

This approach was correctly rejected in the case of Janda v First National Bank (2006) 12 BLLR 1156, where the court held that in terms of section 192 (2) of the Act the onus to show that the dismissal of an employee was for a permissible reason lies with the employer. This onus remains with the employer throughout the proceedings and does not at any stage shift to the employee. The only burden that the employee has is that of adducing sufficient evidence to cast doubt on the reasons put forward by the employer.

In Thomas v MINCOM (2007) 10 BLLR 93, Moshoana AJ, accepted the approach adopted in Janda’s case and quoted with approval what was said by Davis AJA in Kroukam v SA Airlink (Pty) Ltd (2005) 26 ILJ 2153 (LAC) (at para 28), when he said:

“In my view, section 187 imposes an evidentiary burden upon the employee to produce evidence which is sufficient to raise a credible possibility that an automatically unfair dismissal has taken place.”

Turning to the facts of this case it is apparent from the version of the respondent that after obtaining an input from other stakeholders, it unsuccessfully sought to consult with the applicants about the restructuring of their department.

The version of the applicants that the respondent dismissed them because of them having referred their dispute to the CCMA is unsustainable, for had this been the motive then the respondent would in all probabilities have dismissed them soon after the lodging of the grievance and would not have waited for a period of four months before taking action against them.

The other difficulty with the applicants’ case is, why would the respondent have invited them to apply for alternative positions and later offered them positions on the same grade and remuneration, if indeed it wished to dismiss them for lodging the dispute. The version of the applicants is also contradictory in that on the one hand they allege that the respondent took the final decision to restructure in June 2005, and in the same breath say that the final decision to restructure was taken in October 2005, as a result of them having lodged their dispute with the CCMA.

It is therefore my view that there is insufficient evidence to cast doubt that the reason for the dismissals of the applicants were not due to operational reasons as put forward by the respondent but because the referral of the dispute to the CCMA.

During cross-examination, Ms Sikhunyane conceded that the memos regarding restructuring were sent out to the employees before they lodged their dispute. She emphasized during her testimony and that they were only interested addressing their salary grievance and not restructuring. She further conceded to the contents of paragraph 3.12 of the minutes of 19 October 2005, where it is recorded that:

“3.12 It was confirmed and explained to all parties present, that the company did not foresee or anticipate any job losses and that the company merely sought to consult with the applicants members about changes to the terms and conditions of their employment. In light hereof, the Company had not felt it necessary or appropriate, to consult in terms of the provisions of section 189 of the LRA”

Substantive unfair dismissal

In terms of clause 2(4) of Schedule 8 of the Code of Good Practice: Dismissal in cases where the dismissal is not automatically unfair, the employer must show that the reason for the dismissal is a reason related to the employee’s conduct or capacity, or is based on the operational requirements of the business. If the employer fails to do that, or fails to prove that the dismissal was effected in accordance with a fair procedure, the dismissal is unfair.

The employer bears the burden of proving that a dismissal for operational reasons is substantively and procedurally fair, in terms of s188 of the Act. Substantive fairness entails the employer having to prove that the dismissal was for reasons either related to its economic, technological, structural or similar needs.

The need to restructure according to the respondent’s version was necessitated by the changing business and operational objectives of focussing on quality management and also addressing the strained relationship between the applicants and other branches. Whilst it is apparent that the applicants challenged the issue of the strained relationship between them and other branches during the consultation this was not the case during the trial.

The need to change the approach to quality management was not challenged both during the consultation and the trial. There is also no evidence that the applicants were replaced after their dismissal and that no similar positions to theirs were created. There is also clear evidence that the respondent had completed its rightsizing project and restructured the complaints’ division of the QMD.

Ms Sikhunyane did not deny that the letter titled “Restructuring of QMD” was sent to all staff and she probably did not see it because during that period she was away from work on maternity leave. She conceded that the memos on page 14 and 16 of the bundle were sent to all members of the applicants but still contended that they were not consulted.

During cross-examination, Ms Sikhunyane stated that they took their matter to the CCMA because they wanted the respondent to comply with s189. The referral to the CCMA was however not about consultation but about a salary and grading grievance.

As part of showing how unreasonable and unfair the responded treated the applicants, Ms Sikhunyane testified that during the grievance process, the responded threatened them. This thread was according to her made by Mr Smith at the meeting of 29 October 2006.

Ms Sikhunyane was highly evasive about the nature of the thread. She for instance did not answer the question of whether she considered it a thread when the respondent indicated that it would not give in to an unsubstantiated salary increase demand. She however conceded that the alleged thread was not of such a nature that it prevented them from attending meetings with the respondent.

Ms Sikhunyane was not only an argumentative witness, who now and again would pose questions back at the respondent’s counsel, but was also evasive in answering a number of critical questions. She evaded and avoided the question of how the dispute was filed with the CCMA. This question was central to how their suspension came about. Strange enough she could not remember where they found the CCMA referral forms but remembered and denied not returning to work the afternoon after filing their dispute with the CCMA. In the same breath she could not recall going to the CCMA that afternoon.

In the light of the above I find that the probabilities favour the version of the respondent that the dismissals were for operational reasons. Accordingly, I find the dismissals to have been substantively fair.

Procedurally unfairness

The applicants contended that their dismissal was procedurally unfair in that they were not consulted before the decision was taken by the respondent. The applicant also complained that they were not provided with the necessary information to assist them in preparing for the consultation. The complaint related to failure or refusal by the respondent to furnish them with the minutes of consultations with the other stakeholders, disclosure of the financial statement, the budget and access to resources.

When asked what resources they were referring to in their letter of the 30 November, Ms Sikhunyane stated that this related to the reports which were in their laptops which were taken away when they were suspended. The answer as to why there was no specific request to have access to the reports was totally unsatisfactory and in essence evaded the question.

As concerning the minutes of the meeting with other stakeholders the applicants insisted on them being made available despite being informed that there were no minutes of the meeting between the respondent and the other stakeholders.

The same attitude applied in relation to the demand for the financial disclosure and the budget. The financial statement and the budget were irrelevant because the restructuring was not driven by economic imperatives but by other considerations. During cross-examination, Ms Sikhunyane conceded and accepted that the position of the respondent was correct in relation to the disclosure of the finances and the budget.

A close scrutiny of the documentation and the evidence of Ms Sikhunyane, not only reveal unwillingness to participate in the consultation process but total lack of co-operation. They throughout up to the end adopted an adversarial attitude and treated the process in no different way to pure adversarial litigation. They were uncompromising in their attitude and the position they adopted regarding the salary increases and the reviews of their positions. It would seem to me that the applicants regarded their salary dispute as a right rather than a dispute of interest and everything else had to be put on hold pending the resolution of the salary grievance.

They insisted that their salary grievance be addressed separately from their restructuring process. As a result an agreement was concluded between the parties on 26 October 2005, that the grievance and the restructuring would be dealt with separately. Despite this agreement the applicants cancelled the meeting with the respondent which was scheduled for the 28 October 2005, as they were waiting for a date for the CCMA to direct the respondent to consult them in terms of s189 of the Act.

After finalising the issue of the grievance the respondent, despite not contemplating retrenchments, issued the applicants on the 16 November 2005, with a formal s189 (3) of the Act notice. The notice invited the applicants to a consultation on the 24 November 2005, regarding the issues listed therein and in particular the issue of whether their positions should be made redundant including alternatives if their positions were to be declared redundant. The applicants declined to attend pending the CCMA meeting which was scheduled for 30 December 2005. They indicated that there were available to meet on 1 December 2005.

Subsequent to the applicants withdrawing their CCMA referral, the respondent scheduled a meeting for consultation on 1 December 2005, being a date that the applicants had indicated their availability. The applicants were yet again not willing to participate and the matter was left until the following year.

On the 10 January 2006, the respondent issued an amended s189 (3), inviting the applicants to a consultation meeting on 16 January 2006. The applicant still did not co-operate and a further meeting was scheduled for the 24 January 2006. A further meeting was scheduled for 7 February 2006, for the purpose of consulting on severance pay.

Except for asserting that the applicants proposed a team building exercise during the cross-examination, Ms Sikhunyane conceded that the applicants did not make any representation during the whole process. The assertion about team building was only mentioned during cross-examination and appears nowhere else in the minutes of the meetings that the respondent had with the applicants nor their pleadings.

The non co-operative attitude of the applicants continued even after it became clear that they had lost their employment. They seem less interested in saving their employment. They refused to apply despite being invited to do so and being told that they would be given preferential treatment. They on more than one occasion also rejected the offers to be employed as claims handlers at the same job grade and remuneration.

I see no reason in fairness why the costs should not follow the result.

Order

In the circumstances, I make the following order:

_____________

Molahlehi J

Date of Hearing : 26 June 2007

Date of Judgment : 02 NOVEMBER 2007

Appearances

For the Applicant : Calton Mogane of Mohlaba & Moshoana Inc.

For the Respondent: Adv L Erasmus instructed by Du Randt Inc.

South Africa: Labour Court

Ngozo and Others v Scorpion Legal Protection (JS 354/06) [2007] ZALC 78 (2 November 2007)