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the labour court of South Africa, JOHANNESBURG

Not Reportable

case no: JS1034/16

In the matter between:

NUMSA obo CEBEKHULU & 18 OTHERS                                               Applicants

and

MONTE VISTA INVESTMENTS (PTY) LTD

T/A CALTEX MONTE VISA                                                                            Respondent

Heard:           07 February 2019

Delivered:     14 February 2019

Summary:     A referral in terms of which the applicants allege that the dismissal was both substantively and procedurally unfair. A company facing financial difficulties has a fair reason to dismiss. Prior to a dismissal, an employer must engage in a meaningful joint-consensus seeking consultation. Whether a fair procedure was followed, the court is concerned with what happened at the employer’s premises as opposed to the evidence tendered in court. The duty to consult arises once dismissal for operational reasons is contemplated. The obligation to consult is a dual one. Where, the other consulting party frustrates the process, an employer is entitled to take a final decision to retrench. Held: (1) The dismissal is both substantively and procedurally fair. (2) The applicants’ claim is thus dismissed. (3) No order as to costs.

judgment

MOSHOANA, J

Introduction

[1]          This is a referral in terms of section 191 of the Labour Relations Act[1] (the Act). The individual applicants (Cebekhulu and 18 others) alleged that the respondent unfairly dismissed them for operational reasons. The respondent disputed that the dismissal was unfair on any leg.

Background facts

[2]       Given the issues to be addressed in this judgment it is not necessary to give detailed background facts of this matter. Suffice to mention that around June 2016, the respondent advised the trade union and its employees of its dire financial difficulties and suggested measures to avoid the possible retrenchments. These suggested measures of working less hours and changing the roster, irked the employees and almost caused an industrial action. On 5 July 2016, the respondent issued a section 189(3) notice to the employees. A consultation meeting only happened on 5 August 2016. Parties have different versions as to what transpired in this meeting. I shall deal with those later. It is common cause that following a commotion in the meeting of 5 August, parties engaged each other through written correspondence to a point. On 10 August 2016, the trade union made certain written proposals. Those were rejected on 15 August 2016. The respondent invited further proposals before it took a decision to terminate. Such proposals did not come forth.

[3]       On 30 August 2016, the respondent issued termination letters. Aggrieved by the termination, the applicants referred a dispute to the Bargaining Council alleging unfair dismissal. The dispute could not be resolved and was referred to this court for adjudication.      

Evidence Led

[4]          Since dismissal was not placed in issue, the respondent bore the onus and the duty to begin. The respondent tendered the evidence of two witnesses. The two witnesses corroborated each other on the relevant issues. They testified that on 5 August 2016, the first consultation meeting occurred and the trade union official made proposals around short time and related issues. This, the respondent rejected as it was suggested in June 2016 and it almost caused an industrial strife. The respondent suggested a temporary closure of the entity. It was at this point that tempers flared and the meeting could not proceed as the trade union representatives walked out of the process. The trade union official handling the matter informed management that by close of business, they would forward their written proposals. On 10 August 2016, which is five days later, the written proposals were received. After considering them, the respondent responded in writing and rejected the proposals with reasons. Further they invited further proposals by 19 August 2016. After 19 August, they formed a view that the process has come to an end and issued letters of termination on 30 August 2016.

[5]          The applicants tendered the evidence of Mr Cebekhulu. Suffice to mention upfront that he was a weak witness. He appeared not to have been prepared to present the applicants’ case. Regarding the meeting of 5 August, he had accompanied a trade union official, who was handling the matter. According to him there was no meeting. It was more a gathering of less than 10 minutes, where the “tall” Mr Naidoo, informed them that they are forging ahead with a retrenchment no matter what the trade union says. Thereafter, both he and the trade union official walked out of the “gathering”. He was not party to the correspondence addressed by the trade union.

[6]          On 15 August 2016, whilst he was at the employer’s premises for some other gathering, after such gathering, he was summoned back to the premises to receive his termination letter. At first he testified that he received his termination letter on 15 September 2016 and he later changed the date to 15 August 2016. He testified that all the individual applicants wished to be reinstated.

Evaluation

[7]          In terms of section 192 of the Act, the onus is on the respondent to prove that the dismissal was fair. In terms of section 188, a dismissal is fair if it is for a fair reason and effected in accordance with a fair procedure.

[8]          Dismissing an employee for operational reasons is fair. I am satisfied that on the uncontested evidence, the respondent was facing financial difficulties. It is uncontested that in order to address the financial difficulties, the respondent had to cut costs. There is no other evidence to gainsay the testimony of the respondent’s witnesses. The financial records demonstrated that the assets of the respondent were exceeded by the liabilities[2]. I have no doubt in my mind that the respondent faced a financial quagmire. I cannot agree with any contention that there were no economic reasons for the dismissal. It seems to be the applicants’ contention that because in August 2016, the company did not produce audited financial statements, the respondent cannot rely on the economic reasons. I cannot agree. The respondent’s witnesses testified that they offered management accounts since the financials were not available at the time. Other than a bare denial, there is no reasonable version put by the applicants. Audited financial statements are for a financial year. In the interim, financial records that may reflect the financial position of the company are management accounts. It is uncontested that dismissing the applicants was the only viable option available to the respondent. Accordingly, the dismissal of the individual applicants was substantively fair.

[9]          With regard to procedure, it is common cause that the dismissal happened before the consultation process could reach finality. The law is such that an employer is entitled to take a decision to dismiss. Section 189 enjoins that a decision to terminate for operational reasons can only be taken once a consultation process has taken place. Section 189 (2) further enjoins a consultation to be meaningful and to attempt to reach consensus on appropriate measures to avoid the dismissal, minimise the number, change the timing of the dismissal and mitigate the adverse effects of the dismissal. The consulting parties must consult and attempt to reach consensus on the method for selecting employees to be dismissed and the severance pay for dismissed employees.

[10]       The duty to consult rests on both the employer and the other consulting party. It is a dual obligation. Where the other consulting party frustrates the process, an employer is entitled to take the decision to terminate. As such, the party who frustrated the process cannot complain about procedural unfairness. Where a party complains about procedural unfairness such a party must state the basis of the unfairness to enable the employer party to address it in evidence.[3]

[11]       In the pre-trial minutes, the applicants submitted thus: “Respondent effected the retrenchment prior to consultations being finalised”. As pointed out above, it is indeed common cause that the consultation process was not completed. The factual question to be resolved by this Court, is who frustrated the process? Differently put, who is at fault? The applicants contend that since the respondent did not consult in a bona fide manner, it frustrated the process. On the other hand, the respondent contends that since the trade union bailed out, given the urgency of the financial situation, it had no option but to take the decision. They reasonably assumed that the process is completed.

[12]       The basis of the applicants’ contention is that its letter of 10 August was not fully responded to, accordingly, the respondent was not consulting in good faith. I cannot agree with this contention. Firstly, it is undisputed that the Local Organiser, Mr Lazarus Moetsela, from whom the Court had no pleasure of hearing, suggested in the meeting of 5 August 2016 that he shall be communicating in writing and shall do so by close of business on that day. It is common cause that he only did that 5 days later. Secondly, the director of the respondent invited further proposals by close of business on Friday, 19 August 2016. It is common cause that this invitation was made in writing on 15 August 2016.

[13]       It is further common cause that the trade union did not respond to this invitation. It was only in argument that Mr Sebotsa, a trade union official, appearing for the applicants, argued that the reason there was no response is that the trade union took a view that since the response is not as detailed as they would have wanted it, the respondent was not bona fide. Having taken that view, they gave up on the process. The applicants were not entitled to a detailed response. Section 189 (6) (a) provides that 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. The letter of 15 August 2016, in part reads thus:

“These are not solutions for us as the problem is long term. These garages simply do not generate sufficient revenue to sustain its costs. The situation is dire and actions needs to be taken immediately.”

[14]       The legal obligation is to consider and respond with reasons of disagreeing. This the respondent did. It took the respondent 5 days to respond. It can only follow that the respondent considered the representations. It is not awaited that the other consulting party must agree with the reasons. Parties must agree to disagree. The respondent gave its reasons for disagreeing, thus complied with the requirements of the subsection. Available to the applicants was the procedure in section 16 of the LRA. They chose not to invoke same. The decision to bail out was not wise and was self-defeating. It can only mean a frustration of the consultation process. Accordingly, I conclude that the trade union frustrated the process and the respondent was entitled to conclude the retrenchment process at the time it did on 30 August 2016. There was no procedural unfairness.     

[15]       In the results, I make the following order:

Order

1.         The dismissal of the individual applicants is both substantively and procedurally fair;

2.         The applicants’ claim is hereby dismissed;

3.         There is no order as to costs.

_______________________

GN Moshoana

Judge of the Labour Court of South Africa

Appearances:

For the Applicants               : Mr Spuy Sebotsa, Trade Union Official.

For the Respondent            : Advocate C Prinsloo.

Instructed by                         : De Villiers & Du Plessis Attorneys, Pretoria.

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