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THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

 

Not Reportable

Case numbers: JS 130/20

 

In the matter between:

 

THE NATIONAL UNION OF FOOD BEVERAGE WINE

SPIRITS AND ALLIED WORKERS (NUFBWSAW)          First Applicant

 

MAMASELA LUNGILE AND 20 OTHERS                        Second and Further Applicants

 

and

 

COCA COLA BEVERAGES SOUTH AFRICA (PTY) LTD

(CCBSA)                                                                                               Respondent

 

Heard:            30-31 May, 1 June and 15-16 September 2022

 

Delivered:     21 September 2022

 

Summary:     Referral in terms of section 191 of the Labour Relations Act, 1996 (LRA) – automatically unfair dismissal – breach of section 187 (1) (c) of the LRA. Dismissal not automatically unfair. The issue of merger specific pending a decision in the Constitutional Court is of no relevance to the current dispute. Dismissal substantively unfair in respect of one applicant and not the remainder. Award of compensation an appropriate relief. Held: (1) No automatically unfair dismissal established. Held: (2) Dismissal of one applicant is substantively unfair, and of the remainder is substantively fair. Held: (3) Compensation that is just and equitable awarded. Held: (4) There is no order as to costs.    

 

JUDGMENT

 

MOSHOANA, J

 

Introduction

 

[1]          For the purposes of the Competition Act (CA)[1] a merger occurs when the direct or indirect acquisition or direct or indirect establishment of control by one or more persons over all significant interests in the whole or part of the business of a competitor, supplier, customer or other person, whether that control is achieved as a result of (a) purchase or lease of the shares, interest, or assets of that competitor, supplier or other person; (b) amalgamation or combination with that competitor, supplier, or other person; or (c) any other means[2]. When a merger occurs the Competition Commission (CC) as a matter of statutory law must be notified. Once notified the CC shall hold merger proceedings. In considering a merger, the CC must consider the effect the merger will have on employment.

 

[2]          Having considered a merger, the CC is empowered to approve the merger subject to any conditions. The above legal provisions sets the scene for this dispute. This dispute involves the dismissal of about 21 employees. A certain number of employees featured as applicants[3] before this Court. It is undisputed that effective 31 May 2019 a sizeable number of employees were dismissed. The respondent, Coca Cola Beverages South Africa (Pty) Ltd (CCBSA) contends that the dismissal happened for reasons related to its operational requirements. The applicants, the National Union of Food Beverage Wine Spirits and Allied Workers (NUFBWSAW) and the listed applicants contends that the dismissal breached the merger conditions and it is thus ‘merger specific’. Additionally, they allege that the dismissal is for a proscribed reason within the contemplation of section 187 (1) (c) of the Labour Relations Act (LRA)[4].

 

[3]          The dispute was referred to this Court in terms of rule 6 of the Rules for the Conduct of Proceedings in the Labour Court. It suffices to state upfront that after the dismissal that occurred on 31 May 2019, Food and Allied Workers Union (FAWU) lodged a complaint with the CC to the effect that CCBSA was apparently in breach of the merger conditions, which relevant conditions were to the following effect:

 

“9      Employment Conditions

9.1    Notwithstanding any other provision in this paragraph 9, CCBA commits that, for a period of no less than three years from the Approval date, it will maintain at least the number of Employees as are employed in the aggregate by the Merging Parties as at Approval Date.

9.2    Without derogating from its commitment set out in paragraph 9.1, CCBA shall not retrench any Bargaining Unit Employees as a result of the merger, and any retrenchments of employees outside of the bargaining unit shall be limited to 250 employees within the category of Hay Grade 12.

9.3    …

9.4    In the interest of clarity, retrenchments in the context of this condition do not include:

9.4.1    …

9.4.2    …

9.4.3    …

9.4.4    …

9.4.5    Necessary steps taken by the Merging Parties in terms of section 189 of the Labour Relations Act should operational requirements in the ordinary course of business that are not merger specific necessitates that such steps be taken.”

(Own emphasis).

 

[4]          Following the complaint by FAWU, on 24 October 2019 the CC issued what is termed a notice of apparent breach. The Coca Cola Beverages Africa (CCBA) was aggrieved by this notice of apparent breach and approached the Competition Tribunal of South Africa (CTSA) for a necessary relief. On 18 August 2021, the CTSA, appropriately beaconed by Panellists, Y Carrim; A Ndoni; and H Cheadle reviewed and set aside the notice of apparent breach. The CC was discomfited and it lodged an appeal to the Competition Appeal Court of South Africa (CACSA). On 17 June 2022, the CACSA handed down its judgment, in terms of which it upheld the appeal and set aside the findings of the CTSA. The CCBA launched an application for leave to appeal to the Constitutional Court (Con Court). As at the time of this judgment, a decision on the application for leave to appeal, was still pending.

 

[5]          Due to the personal circumstances that befell the presiding judge, the trial proceedings in casu were adjourned and became partly heard on 1 June 2022. During the adjournment period, as indicated above, the CACSA handed down its judgment. At the re-commencement of the trial in September 2022, Mr Haffegee, appearing for the applicants, sought to have the trial proceedings adjourned until the outcome of the Con Court’s decision. After debating the adjournment issue with the parties, this Court reached a conclusion, which shall be reasoned in due course, that the adjournment was unnecessary and it was duly refused.

 

[6]          As it shall later be outlined, this Court received viva voce evidence from five witnesses; namely Mr Leonhardt (Financial Director); Mr Rajbally (Commercial Director); Mr Pheta (Employment Relations Manager); Mr Mbatha (Applicant); and Mr Mashele (Applicant).

 

Background facts and evidence

 

[7]          For the purpose of this judgment, this Court liberally drew the background facts from the judgment of the CACSA penned by the erudite Siwendu AJA, with Victor JA and Nkosi AJA concurring. CCBA operates in the non-alcoholic beverages (NABs) market which includes amongst others, the Ready to Drink (RTD) and Carbonated Soft Drinks (CSD) market. Part of the production cycle of these beverages involves sugar, its producers, bottlers and distributors. CCBA manufactures bottles and distributes the Coca Cola Company (TCCC) products to wholesalers, formal and informal retailers.

 

[8]          On 19 March 2015, SABMiller PLC, the Gutsche Family Investments (Pty) Ltd and the TCCC notified the CC of a large merger. The proposal was to combine the bottling operations of the NAB business in South Africa under a single entity now known as CCBSA. CCBSA would become a subsidiary of CCBA.

 

[9]          Pertinent to this dispute, given the proposed consolidation of the entities, it was reported to the CC that the merging parties would close about six of the separate offices because one office was required after the merger. It was further disclosed that the proposed transaction would result in a duplication of about 250 positions at an executive, managerial, administrative and technical level. The merging parties anticipated that there would be no forced retrenchments amongst employees who formed part of the bargaining unit. Ultimately in September 2017, the merger transaction was approved with the conditions already outlined above with regard to employment.

 

[10]       On 19 January 2019, CCBA notified the CC of the contemplated changes to its staff complement. The CCBA informed the CC that economic difficulties necessitated it to rationalise and streamline its operations to optimise it to meet unusual business circumstances that suddenly ushered themselves. It stated that dismissal for operational requirements was a legitimate response to (a) decline in revenue and profitability due to micro-economic climate and a decline in sales volumes; (b) a competitive environment with new entrants, increased discounts and marginal revenue growth; and (c) the imposition of the Health Promotion Levy (sugar tax). In April 2018 it paid R2.1 billion in the new sugar tax. Its gross profits plummeted by R300 million. It also anticipated sharp increase in the cost of raw material.

 

[11]       On 21 January 2019, CCBSA issued a section 189A notice calling upon the relevant parties to a facilitated consultation process. About six facilitated consultation meetings took place. Ultimately on 31 May 2019 a large number of employees were dismissed. As pointed out earlier the CC process unfolded soon thereafter. On 31 October 2019 NUFBWSAW referred a dispute alleging unfair dismissal of its members. Conciliation failed to resolve the dispute. Around March 2020, the dispute was referred to this Court for adjudication.

 

[12]       Briefly the testimony in support of the CCBSA’s case emanated from three witnesses. The financial director testified with the aid of a document he prepared and shared with the trade unions. Dealing with the financial year of 2017/18 he testified that the sales volumes declined, the profitability of CCBSA plummeted to 10.4% from 12.2%. In response to such financial haemorrhage, efforts were made to curb the haemorrhage by amongst others placing moratorium on management salary increases. However, it became apparent that the business requires right-sizing in order to respond to the challenges. He testified that any business faced with a decline in its sales has to look internally with a view to right-size in order to regain profitability otherwise a business suffering a decline in profitability would eventually ‘shut doors’.

 

[13]       To a large degree his version was not seriously challenged in cross-examination. Instead the cross-examination focussed on the reduction of the so-called Pre-sellers positions and the creation of the new so-called Merchandisers position. To that he testified that he was not involved in that process. He was also challenged on the fact that since the sugar tax affected the whole entity why certain measures were not employed like salary cut or decrease for management. To that he confirmed that no salary reductions took place. He however reiterated that the financial position was not sustainable as profitability continued to decline.

 

[14]       The commercial director testified about the operational changes that were forced onto the company because of the sugar tax and price increases. That led to what he termed a rebased volumes. A relook of the business model became necessary. The route to market required a relook. The business needed to concentrate on about 80 thousand customers out of 190 thousand customers, which afforded the business about 90% in returns. That prompted a reduction of investment in smaller stores. As a result the role of Merchandiser as it existed at the time did not assist the business. As a result the role of Merchandiser fell away. Prior to considering dismissal for operational requirements, other costs cutting measures were considered. He testified that the old Merchandisers position inherited from the so-called legacy entities[5] worked differently whilst the new one worked on a team roving basis. During cross-examination he testified about the positions and what the legacy business had as a position. He disputed an allegation that the dismissals were merger related. Certain versions were put to him and he could not offer a comment. However, he testified that in the legacy business Merchandisers and Pre-sellers operated on different basis.

 

[15]       The Employment Relations Manager gave background information relevant to the merger. He was part of the facilitated consultation process. In addition, he testified about steps taken to turn the situation around following the impact of the sugar tax as well as the poor performance of the company. He gave evidence with regard to the two roles involved in this dispute, namely; Merchandisers and Pre-sellers. He testified about the LIFO selection criteria as discussed at the facilitated process and implemented by the company. He testified that the criterion that was implemented was the one agreed to at the consultation meeting. When the version of Mbatha was put to him, he testified that the agreed selection criterion was applied on Mbatha. He disputed a version that a plan was hatched to use sugar tax in order to retrench employees shortly after the merger. Despite being challenged he was steadfast that the selection criteria was agreed to out of the consultation process.

 

[16]       Mr Mbatha commenced employment at ABI during 1999 as a casual worker. In November 2005 he was made a permanent employee and worked as a Pre-seller. During 2019, he was stationed at Bedfordview where he serviced outlets at Etwatwa in the Daveyton Township. In Bedfordview there were more than 20 Pre-sellers and he was the only one out of the 20 that was retrenched. In his team they were eight members and seven team members remained. He had more years of service as others had one or two years of service. He was offered a Merchandiser position which he rejected because of the salary package that was low. At that time he was earning about R16 932.00 and he was offered R5120.00. He further testified that he was not given any reason why he was selected nor was his selection discussed with him. During cross-examination he testified that he was a union member at all material times and he was told that he was impacted in April 2019. He applied for positions at Wadeville but was not successful. He was offered positions but could not accept because of the salary package. He knew about the sugar tax and its impact as well as the change in the working conditions. He stated that he cannot dispute the testimony of the financial director.

 

[17]       Mr Mashele was employed from 1 August 2012. He started employment as a casual worker in 1997 at Boxer as a Merchandiser. He testified about the duties of a Merchandiser. According to him the position remained the same and the work he used to perform is now performed by employees or persons from what he called ‘DDK’. He was offered alternative positions which he rejected because of the salary issue.

 

Argument

 

[18]       Both legal representatives provided this Court with well researched written legal submissions. Those were useful for the Court in preparation of this judgment. It is not necessary for the purposes of this judgment to regurgitate the written submissions.

 

Evaluation

 

[19]       In referring this dispute, the applicants made two claims. The first being that the dismissal is automatically unfair within the contemplation of section 187 (1) (c) of the LRA. The second being that the dismissal predicated on operational reasons is substantively unfair. As indicated earlier, it seems to be the contention of the applicants that the retrenchment was somewhat prohibited by the conditions imposed by the CC and this Court is empowered and must resolve that contention. In this judgment, I shall deal with (a) the merger specific retrenchment issue; (b) the automatically unfair dismissal claim; and (c) the substantive unfairness claim.

 

The merger specific[6] retrenchment issue.

 

[20]       One of the disputed facts before this Court was outlined in the pre-trial minute as follows:

 

“Whether the dismissals were related to a merger between Coca Cola Beverages Ltd and various bottling operations, which was conditionally approved by the Competition Tribunal on 25 July 2016.”

 

[21]       As indicated earlier, an attempt was made to stall these proceedings on the basis that the decision of the Con Court is pending. As indicated, that stall was refused. The reasons thereof, in brief, are that the issue of merger specific retrenchment is irrelevant to the current proceedings. As a point of departure section 187 of the LRA provides that a dismissal is automatically unfair if the reason for the dismissal is one of the proscribed reasons listed in (1) (a)-(h). A dismissal related to a merger is not one of the listed proscribed reasons. Veritably, the CCBSA effectively ‘breached’ the merger conditions. Section 188 of the LRA provides that a dismissal that is not automatically unfair is unfair if the employer fails to prove that the reason for dismissal is for a fair reason related to (a) conduct; (b) capacity; and (c) based on operational requirements.

 

[22]       Section 61(1) (c) of the CA provides that if the parties to a merger have proceeded to implement the merger in a manner contrary to a condition for the approval of that merger imposed by the Commission is liable to pay an administrative fine. Subsection (2) provides that an administrative fine imposed in subsection (1) may not exceed 10 % of the firm’s annual turnover. A finding that the dismissal effected on 31 May 2019 is merger specific does not suggest that the dismissal is automatically unfair or was not for a fair reason. On the contrary, if it is found that CCBSA simply reneged from its undertaking that may mean that CCBSA is liable to pay an administrative fine. For the purposes of the LRA, if indeed the dismissal is for reason of operational requirements that is a fair reason even if it breaches the merger conditions. Put differently if when CCBSA gave an undertaking not to dismiss as a result of the merger it was wrong or it miscalculated, such does not prevent it to justify a dismissal on any legal grounds permitted in section 188 of the LRA once challenged about the dismissal. It ought to be remembered that section 23 (1) of the Constitution of the Republic of South Africa, 1996 (Constitution) guarantees an employer a right to fair labour practice. In NUMSA v Aveng Trident Steel (a division of Aveng Africa (Pty) Ltd) and Another[7] the Court per Mathopo AJ, as he then was, stated the following:

 

“[67]  … What that contention boils down to is that an employer considering operational requirements may never resort to retrenchments without contravening the section. This, in my view, would undermine an employer’s right to fair labour practice as entrenched in section 23 (1) of the Constitution, since it would take away its right to resort to retrenchments where operational requirements render them necessary.” (Own emphasis)

 

[23]       Similarly, in my view, where an employer undertook not to retrench after having miscalculated what may happen, should not be deprived of its right to fair labour practice guaranteed in section 23 (1) of the Constitution. The conclusion I reach is that CCBSA is not prevented to justify the dismissal it effected on 31 May 2019 using its operational requirements even if the requirements are related to the merger. Given the above view, an outcome approbatory or not would not affect an outcome to be reached by this Court. As a reminder, section 192 of the LRA provides that if the existence of a dismissal is established the employer must prove that the dismissal is fair.

 

Is the dismissal automatically unfair?

 

[24]       The applicants in the pre-trial agreement stated that the basis upon which they allege that the dismissals were automatically unfair is that CCBSA sought to compel the dismissed employees to accept a demand in respect of a matter of mutual interest. Section 187 (1) (c) states that a dismissal is automatically unfair if the reason for the dismissal is a refusal by the employees to accept a demand in respect of a matter of mutual interest between them and their employer.

 

[25]       There are a number of fundamental difficulties with this part of the case. Firstly, the statement of claim alleges that the dismissals and offers of alternative employment were designed to compel workers to accept a substantially reduced wage and other conditions of employment. This allegation suggests that CCBSA was compelling them to accept change of the terms and conditions of employment by making them offers of alternative employment. Making an offer of alternative employment is not akin to making a demand in respect of a matter of mutual interest. Secondly, for the provisions of section 187(1) (c) to obtain, there must be some credible evidence that shows that firstly there was a demand and secondly a refusal. Thirdly, that the ensuing dismissal objectively viewed was as a result of the refusal. The Labour Court per La Grange J in Bakulu v Isilumko Staffing (Pty) Ltd and another[8], had the following to say, to which I associate myself with:

 

‘[9]     Thus, in order to establish a basis for his case of automatically unfair dismissal, Bakulu needed to adduce some evidence that would tend to suggest that the real reason for his dismissal was not incapacity, which was the reason given by Isilumko, but was possibly race

[15]   …But he has brought his case to this court on the basis that the real reason was because of his race and he needed to raise a credible possibility that his dismissal in question fell within the scope of section 187(1) (f).’

[My emphasis]

 

[26]       The two applicants that testified before me did not once testify that CCBSA placed any demand to them. A dictionary meaning of a demand as a noun is an insistent and peremptory request made as of right. As a verb it means to act authoritatively or brusquely. Of importance, the demand must be about a matter of mutual interest. A matter of mutual interest broadly entails any action or conduct which has the propensity to affect the employment relationship between an employer and employee. The most common matter of mutual interest is unilateral changes to employment conditions. On the applicants’ own version, none of their terms and conditions of employment were altered unilaterally. The evidence overwhelmingly demonstrated that the Merchandiser position fell away and the Pre-seller positions became less. The fact that the available vacant positions that were offered came with a lower salary does not suggest that there was a unilateral change of terms and conditions of employment. Section 187 (1) (c) was authoritatively interpreted by the Con Court in Aveng. In interpreting the section, the Court stated that the question that arises is whether section 187 (1) (c) permits an employer to dismiss employees for rejecting a demand that arises as a result of the employer’s operational requirements. The Court settled the question by stating that the section does not prevent an employer to dismiss employees who reject a demand that arises as a result of the employer’s operational requirements.

 

[27]       Returning to the facts of this case, strictly speaking CCBSA did not make any demand. On the contrary, it made an offer in order to avoid a dismissal for reasons related to operational requirements of CCBSA. On 12 April 2019, CCBSA wrote a letter to Mashele and stated amongst others the following:

 

‘You are a MERCHANDISER, currently impacted as part of the 189 process underway; and based on the criteria that has been shared with the business and the union, you unfortunately remain unplaced.

 

Please find attached hereto, the list of available opportunities for your consideration. [Own emphasis].

 

Regrettably, should you remain unplaced by the end of April 2019, the company will issue you with a notice of termination of employment for operational requirements.’

 

[28]       The letter availed about six opportunities together with the salaries attached to each of those opportunities. If Mashele had accepted any of the available opportunities, he would not remain unplaced and he would not face dismissal due to operational requirements. As it was held in SAA v Bogopa and others[9], an employee whose position becomes redundant will ultimately be dismissed if an alternative position is not found. Where a position is rendered redundant, such a position ceases to exist. One cannot speak of a change of terms and conditions of employment in an instance where the position ceases to exist. Mashele was given the liberty to change his status from being an unplaced employee to being a placed employee. A placed employee avoids dismissal based on operational requirements. On 23 April 2019, the Employee Relations Manager in response to the demands from some employees at Nelspruit who indicated willingness to relocate but not accepting the salary offered, stated the following:

 

“The pay for any job is a material term and condition of employment. Unless you and your members accept the pay for the available positions, the company will not place your members to the available roles. In the circumstances, the company will proceed to terminate your members for operational requirements. The notice of termination will be issued on Tuesday next week.”

 

[29]       The applicants elevate this response to some form of a demand. It cannot be. What the applicants conveniently ignore is that this mail was in response to the mail from one Mr Tshabangu, who indicated that willingness to relocate to the available position but not at the proposed salary. It was for that reason that the Employment Relations Manager pointed out that if a salary, which is an essential component of the positions to be relocated to is not accepted, placement will not occur. It is important to recall that the placement will remove employees from being candidates for dismissal for operational requirements. This on the interpretation placed by Aveng, does not offend section 187 (1) (c), even if benignly the above is elevated to a status of a demand. Once a conclusion is reached that there was no demand, cadit quaesto. However, even if an offer to avoid a dismissal for operational reasons may be viewed as a ‘demand’ on the authority of Aveng section 187 (1) (c) is not offended.

 

[30]       With regard to Mbatha, his evidence was that he was made an offer which he refused for reasons that he considered to be valid. That should be the end of the enquiry for him. No demand was made by CCBSA to him.

 

[31]       In the premises, those applicants who testified before me failed to satisfy the requirement to produce credible evidence to demonstrate that the dismissal fell within the prohibited category in section 187 (1) (c). Nothing can be said about the remainder of the applicants because this Court did not hear from them whether any demand was made to them or not.

 

[32]       Accordingly, the dismissal of the applicants do not amount to an automatically unfair dismissal. Therefore, this part of the case falls to be dismissed.

 

Is the dismissal substantively unfair?

 

[33]       As indicated earlier, section 188 (1) (a) (ii) of the LRA decrees that a dismissal is fair if the employer manages to prove that it is based on the employer’s operational requirements. Section 213 defines operational requirements to mean requirements based on the economic, technological, structural or similar needs of an employer. Thus, what is required is for an employer to, on the preponderance of probabilities, demonstrate that the dismissal is predicated on either economical, technological, structural or similar needs. Before me there is overwhelming and uncontested evidence that the introduction of sugar tax impacted on the profitability of CCBSA. The evidence of the financial director corroborated by the commercial director and the Employee Relations Manager points to the fact that CCBSA had a commercial rationale for the dismissal. Measures, as testified to, employed to answer the financial quack mire are fair measures. The commanded test is not one of correctness of those measures but the fairness of the measures. It cannot be fair for a business to continue to keep stores open which do not assist its bottom line. The route to market strategy was a fair answer to the situation which incontrovertibly already dropped profit by R300 million and the company had to pay about R2.1 billion for sugar tax.

.

[34]       When a company is faced with financial vicissitudes, it is within its prerogative to conjure up a solution to its conundrum. It is not the duty of this Court to say that the solution conjured up is not the correct one. But it remains the duty of this Court to assess whether the solution so conjured up falls within the realm of fairness or commercial rationality. This Court cannot second guess the decision of an employer faced with an economical difficulty. Mr Haffegee suggested that because sugar tax impacted the entire company, it was wrong of CCBSA to only look the way of Merchandisers and Pre-sellers. If the Court were to uphold that suggestion, it is as good as the Court applying the correctness test. The message would be, a prudent employer would have done X and you did Y to address the problem and that is wrong. This Court is not mandated to do that. The approach is one that is less deferential. In casu, CCBSA found it rational to propose the reduction of the number of resources in various roles and to make certain positions redundant. Of course if this Court was a manager of that business it may have looked elsewhere. Unfortunately, the Court is not. It can only drool with desire outside the periphery of managerial prerogative.

 

[35]       In considering the fairness of the decision, this Court fails in its duties if it were to accept at face value the justification an employer gives. The Court is duty bound to assess whether the decision is fair taking into account the affected employees. The applicants took a view that CCBSA was bereft of a fair reason to dismiss. I disagree. The uncontested evidence of the CCBSA witnesses overwhelmingly demonstrates existence of operational requirements. This Court without hesitation concludes that CCBSA had a fair reason based on its operational requirements to dismiss. The testimony by the two applicants was weak to unseat the preponderance of probabilities. The testimony that the company ‘made’ money is made in hollow, when compared to the financial figures presented by the financial director of CCBSA. On the issue of financial health, this Court cannot discount the evidence of a financial director at the expense of a Merchandiser, no disrespect intended. The evidence of the financial director has probative value. The document containing the figures was availed and ostensibly not challenged, at the facilitated consultation meetings, which embraced NUFBWSAW.

 

[36]       Turning to the question of dismissal as a measure of last resort as developed by the Labour Appeal Court in NUMSA v Atlantis Diesel Engines (Pty) Ltd[10], the real question is whether there were means available to an employer to avoid a no-fault dismissal. If means are available, it will be substantively unfair to dismiss an employee in the circumstances where his dismissal was avoidable. In casu, it was apparent that CCBSA had available a means to avoid the dismissal of the two applicants that testified before me. As held in Bogopa, and Telkom v Oosthuizen[11], it remains the duty of an employer to avoid a dismissal. In order to realize that duty, where an employer has vacant positions it must offer those to the affected employees. CCBSA did exactly that.

 

[37]       What matters is measures to avoid a dismissal not the viability and or sufficiency of such measures. For instance, it is unacceptable for an employer to fail to offer an employee an alternative position simply on the basis that it would amount to demotion and an employee may reject it. Because the idea is to avoid a dismissal and its adverse social effects, the only time sufficiency and reasonability of an alternative arises is when severance pay is considered. Section 41(4) of the Basic Conditions of Employment Act (BCEA)[12] provides that an employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2). It is only at this stage that the reasonability of the offer is to be considered. If it is found that the alternative offer was unreasonable, all it means is that an employee would be entitled to severance pay.

 

[38]       The relevant question is whether there were available alternatives to avoid a dismissal or not. Curiously, the legislature in section 189 (3) (b) of the LRA refers to alternatives without any qualification. If the legislature was not concerned about job security only it probably would have employed qualifications like viable, sufficient or reasonable to be attached to the word alternatives. Accordingly, since the applicants rejected alternatives offered, there were no alternatives available to avoid the dismissal of the applicants.

 

[39]       This Court must hasten to state that where an employee wish to rely on the fact that his or her dismissal would have been avoided because the employer had vacant positions, such an employee, must make that allegation in the statement of case. There may be instances where an employer hides the fact that at the relevant time, there were vacant and available positions that could have avoided the dismissal of an employee. In such instances a Court may reach a conclusion that dismissal was unavoidable because there were no alternative available vacancies. Having said that this Court must add that the obligation to consider whether there are other jobs available rests with the employer[13]. Once searched and found, an employer is obligated to offer those available jobs to an employee in order to avoid his or her dismissal. The unfortunate situation in an instance where jobs are made redundant is that unless an alternative position is found an employee affected by the redundancy will ultimately be dismissed. In the case of Williams v Compair Maxam Ltd[14], Mr Justice Browne-Wilkinson stated that the first principle to adopt in a redundancy is that an employer must seek to give as much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and if necessary find alternative employment elsewhere in the undertaking or elsewhere.

 

[40]       It was emphasised in Williams that in a redundancy situation, it is not the duty of a Court to decide whether it would have thought it fairer to act in some other way. The question is whether the dismissal is fair or not. Of course a Court must still be satisfied that redundancy was sufficient as a reason to dismiss an employee. The Tribunal in Samuels v The University for the Creative Arts[15], reached the following conclusion, which was adopted by the Appeal Tribunal:

 

“11.   The Tribunal cannot go behind the management reasons for redundancy. It is not for us to tell the Respondent how they should manage their business or which posts should or should not be identified for redundancy. What we are concerned with is the fairness of the process and the reason for the dismissal.” [Own emphasis]

 

[41]       In terms of section 189 (7) of the LRA, an employer is obliged to select employees using criteria that were agreed and if there is none agreed to, one that are fair and objective. When it comes to selection criteria two issues arise, namely; (a) the selection adopted must be fair and objective; and (b) the criteria must be objectively and fairly applied. In Grieg v Sir Alfred McAlpine and Son (Northern) Ltd[16] it was held that where an employer has failed to prove that the criteria had been objectively and fairly implemented, the dismissal was unfair. It is important to state that in a situation where all positions are made redundant a selection criterion does not apply because everyone is to be dismissed if alternative positions are not found. The Tribunal in Samuels had this to say:

 

“10    In our judgment selection criteria come into force when there is more than one individual in a particular pool.”

 

[42]       I am in full agreement. Where all employees are to be dismissed in a redundancy situation there can be no assessment to be undertaken as to who stays and who goes. All will go if alternative positions are not found. However, if an employer adopts criterion other than last in first out (LIFO) for the purposes of redundancy selection, that employer must be able to show both that the criteria adopted are fair and objective and that the criteria has been applied rationally and objectively. In a situation involving so many employees, it is not sufficient for a single person who makes the selection to say he has done so on the basis of his management skill and judgment. When so many employees are involved, and a basis of selection is to be used which is open to the possibility of being influenced by over-subjective assessments, or even sheer prejudice, on the part of the person making the choice, it is important that management be able to show that they took sufficient steps to make their decision as objective and unbiased as possible.

 

[43]       A pre-trial agreement is a consensual document in which litigants navigates a Court to issues that require determination. It narrows the issues and prepares litigants on areas to focus on in order to prove or disprove each other’s cases outlined in the statements of case and response respectively. With regard to selection criteria, the applicants alleged that the proposed criteria were not objective and/or unfair. Ms Engelbrecht SC for CCBSA submitted that since the applicants did not raise the issue of application of the criteria, it was inappropriate for the applicants to raise it in argument. I disagree. As indicated above, the statutory obligation with regard to selection entails (a) objectivity and fairness of the criteria and (b) fair and objective application of the criteria. In terms of section 192 of the LRA, the onus to prove the fairness of a dismissal lies with an employer. Thus, an employer is obligated to show that a selection criterion was applied fairly if one has been adopted.

 

[44]       In its section 189 (3) notice, CCBSA proposed that in the circumstances where it is proposed that roles be made redundant, the incumbent or current holder would be selected. As indicated earlier this is not a selection criterion. All it means is that if no alternative posts are found the incumbents and or current holders of positions to be made redundant will be dismissed. In SA Breweries (Pty) Ltd v Louw[17] the Labour Appeal Court said the following:

 

“[19] Axiomatically, an incumbent of a redundant post is not automatically dismissed; that person is merely dislocated and only after the opportunities to relocate that person in another suitable post have been explored and exhausted, may they be fairly dismissed.

 

[20]   When, as typically is the position, several employees who occupy posts of similar function find themselves in a predicament that only some of a number of existing posts are to be retained, a selection method that is fair must be chosen to decide who is to stay and who is to go.”[18]

 

[45]       The above therefore takes care of the situation for Merchandisers, given the evidence that those positions ceased to exist since they were not part of the original organisation structure, no longer exist in current form since there was a change in pay level and structure and required realignment to the actual value of work performed.

 

[46]       In the circumstances where the number of roles are reduced, LIFO, Skills, qualifications and experience or a combination was proposed. This was to be applied in respect of Pre-sellers.

 

Is the criteria of LIFO, skills, qualifications and experience or combination of both objective and fair?

 

[47]       The Code of Good practice states the following:

 

“(7)    If one or more employees are to be selected for dismissal from a number of employees, this Act requires that the criteria for their selection must be either agreed with the consulting party or if no criteria have been agreed be fair and objective criteria

 

(8)     Criteria that infringe a fundamental right protected by this Act when they are applied, can never be fair. These include selection on the basis of union membership or activity, pregnancy, or some other unfair discriminatory ground. Criteria that are on the face of it neutral should be carefully examined to ensure that when they are applied, they do not have a discriminatory effect. For an example, to select only part-time workers for retrenchment might discriminate against women, since women are predominantly employed in part-time work.

 

(9)     Selection criteria that are generally accepted to be fair include length of service, skills and qualifications. Generally, the test for fair and objective criteria will be satisfied by the use of the “last in first out” (LIFO) principle. There may be instances where LIFO principle or other criteria needs to be adapted. The LIFO principle for an example should not operate so as to undermine an agreed affirmative action programme. Exceptions may also include the retention of employees based on criteria mentioned above which are fundamental to the successful operation of the business. These exceptions should however be treated with caution.”

 

[48]       According to item 9 of the Code, LIFO, skills, and length of service are generally fair criteria. Since CCBSA proposed and testified that it selected employees to be dismissed using that criteria, the answer to the question fashioned above is in the affirmative.

 

Has the CCBSA applied the said criteria fairly?

 

[49]       In her written submission, Ms Engelbrecht SC submitted that no evidence was led to show that the selection criteria were not fair and objective. This suggests a reverse onus. The applicants do not bare the onus to disprove that the selection criteria is fair and objective. As held above, it remains the duty of the employer to show that the selection criteria was applied fairly and objectively. The two applicants that testified before me firstly lamented that the position of a Merchandiser was never redundant. That suggesting that Merchandisers ought not to have been selected for dismissal because their positions were never redundant. On this score, the authorities are clear that it is not the duty of this Court to tell CCBSA which position it should or should not make redundant. The commercial director testified that the new Merchandisers positions operated at a different level and structure hence they were restructured and scaled at a lower pay rate. On the other hand the testimony of Mashele that some DDK employees still function at the same level is not satisfactory. It is more hearsay than direct. Probably, the applicants could have led the testimony of one of the DDK employees to bolster the allegation. Moreso Mashele himself never functioned in the so-called new ‘Merchandiser’ position. In applying the preponderance of probabilities, this Court reaches a conclusion that the Merchandisers position that was occupied by the Merchandisers ceased to exist, selecting them for dismissal after not being placed was fair.

 

[50]       Mbatha was employed as a Pre-seller at a place where there were 20 persons and he was part of a team of eight. He testified that he does not know why only he was selected in Bedfordview.

 

[51]       It became common cause that CCBSA had excess number of Pre-sellers. The commercial director could not offer a comment on the version that Mbatha was the only one dismissed in Bedfordview and he was one of the oldest employees.

 

[52]       The Employee Relations Manager however testified and his testimony was not sufficiently challenged. He testified that it was agreed out of the consultation process that where excess heads still exist, the company will apply the selection criteria that has been proposed and accepted for same and fewer jobs as follows:

 

“Employee ‘Expression of Interest’ as captured in the Talent Profile.

Fair and objective criteria utilised, including but not limited to:

-            Tenure, coupled with retention of skills for current and future business success;

-            Appropriate location of Job; and

-            The Company’s organisational diversity objectives.

The Company will provide a feedback to the placed and unplaced (4-8 March 2019)

The Company will provide feedback to parties, regarding the placement of excess heads, on 8 March 2019.

 

[53]       With regard to the situation of Mbatha, he testified that the agreed selection process was also applied in respect of him, when a version was put to him that in Bedfordview, Mbatha was the only affected person. Additionally, he testified that the Court shall decide. The manner in which the selection criteria was to be applied was as per the presentation he made.

 

[54]       On Mbatha’s own version, in April 2019 he was told in a meeting that he was impacted. In addition, he testified that he was at that time busy training somebody who will be taking over his position. This version only emerged in cross-examination and was never put to a single witness of the CCBSA. Mbatha was ably legally represented. He confirmed in line with the agreed process of expression of interest that he did express an interest in a position in Wadeville. At the same period he did express an interest for a position in Midrand. The Labour Appeal Court in Telkom SOC Ltd v Van Staden and Others[19] concluded that there is nothing innately unfair in requiring an employee with job security whose position is affected by such restructuring to apply for placement into a position in the restructured operation.

 

[55]       This Court is bound by Van Staden. On the basis of Van Staden, there was nothing unfair in requiring Mbatha to express interest to be placed at Wadeville and Midrand. Therefore, that implementation process is not unfair. Mbatha was interviewed for the position at Wadeville only to be told much later that he could not be placed because he came from sales. Again this version was never put to any of the witnesses of CCBSA. However, this Court was not told by CCBSA as to why Mbatha was not placed at Wadeville or Midrand. Based on the agreed principles what was to be utilised in the interview process if any was the tenure (LIFO) coupled with retention of skills for the current and future business success, appropriate job location, and CCBSA’s organisational diversity objectives. This Court was of course not told which of the principles outlined above did Mbatha not meet and why. The LAC in Van Staden made it abundantly clear that an Arbitrator or a Court in the context of a retrenchment dispute is entitled to scrutinize the placement process and the decision taken in terms of it given that an employee enjoys job security. In scrutinizing the process what the Court must be after is the fairness as opposed to the correctness of that process. The LAC went further to state that where the placement process has not met the required standard of fairness, in the sense that it has been subjective, arbitrary, capricious or inconsistent, the fairness of the decision to dismiss is likely to be tainted.

 

[56]       Nothing was placed before this Court to scrutinize. Should CCBSA have placed the process before this Court for scrutiny? In my view, the answer is a resounding yes. Failure to lay bare the process deprived this Court of its entitlement to scrutinize the placement process followed. It would have assisted this Court to have known why Mbatha did not ace the interview at Wadeville and Midrand. More recently, this Court in SACU obo Antoinette Danster v Bidvest Facilities Management (Pty) Ltd[20], had the following to say:

 

“[20]  The authorities require an element of fair procedure to be read into the application of selection criteria, particularly with those that border on the subjective…In my view, it was incumbent on the respondent, in the circumstances, to afford the applicant and/or her representative the opportunity to challenge the conclusions drawn in the schedule, which unquestionably formed the basis for the applicant’s selection for retrenchment. That failure to afford the applicant this opportunity renders her dismissal unfair.”

 

[57]       I plentifully agree with that view. Ms Engelbrecht SC argued that SACU was distinguishable on the facts. It may well be correct, no two cases can ever be the same on the facts. However, the principle established in SACU applies in all instances where an employee has not been afforded an opportunity to challenge conclusions related to lack of skills and or qualifications.

 

[58]       In principle, I do accept that it is not the duty of this Court to go through the placement process with a fine comb and seek to nit-pick, as it were, flaws in the process. The duty is that of determining fairness. This Court should not be left with questions as to whether the process was fair or not. This Court must be satisfied that an employer has in place a good system that ensures fairness when dealing with criteria that border on subjectivity. This Court only heard from Mbatha that he learned later that he was not successful because he was from sales. The reasons why Mbatha was not successful and selected for retrenchment ought to have emanated from CCBSA given the onus incidence. In Van Staden, the Court was satisfied that the appeal mechanism served as an internal remedy for instances where the scoring was unfair. It held that failure by an employee to make use of such internal mechanisms did not suggest unfairness.

 

[59]       In casu, this Court was not told of any internal procedural mechanism which would have ensured that the selection criteria was applied in the most objective, unbiased and fair manner. Under the circumstances, it must follow, that Mbatha was not afforded an opportunity to respond to the assessment of his skills and qualifications. Accordingly, the objective and fair selection criterion was not applied fairly to Mbatha.

 

Suitable remedy

 

[60]       Based on the updated list of applicants, there were 14 Pre-sellers. This Court only heard from Mbatha. There is no evidence before this Court as to whether the 13 Pre-sellers were also subjected to the same placement process as Mbatha. In the pre-trial minute nowhere is it recorded that the 13 Pre-sellers expressed any interest and whether they were subjected to any process that is potentially unfair. The applicants chose not to call the 13 applicants. Accordingly, this Court would engage in a realm of speculation in respect of their respective case, particularly in an instance where the applicants alleged in the pre-trial agreement that CCBSA’s insistence that the employees be interviewed for alternative jobs introduced a subjective criteria. Without knowing that the 13 applicants were interviewed or not, how would the Court investigate the alleged subjectivity? The LAC in MTN Group Management Services (Pty) Ltd v Mweli and Another[21] had the following to say:

 

“[21]  …The respondents failed at the trial to make out their case advanced in the pre-trial minute that they were not given enough interview time or that others were preferred over them, and did not put these contentions to the appellant’s witnesses in the cross-examination. This is an important omission and one which was repeatedly evident in the respondent’s approach to evidence in the matter, more so given the fact that our law is clear that where a point in dispute is left unchallenged in cross-examination, the party calling the witness is entitled to assume that the unchallenged witness’s testimony is accepted as correct.

 

[61]       Regard being had to the reasons why this Court found unfairness in relation to Mbatha, it is only Mbatha who will be entitled to a remedy. In terms of section 193 (1) any remedy contemplated in subsection (1) (a)-(c) is predicated on a finding that a dismissal is unfair. As outlined above, this Court is not in a position to make a finding that the dismissal of any of the 13 applicants is unfair. Accordingly, this Court is not empowered to afford them any remedy.

 

[62]       Regarding the remedy to be afforded to Mbatha, I agree with the approach taken by my brother in SACU. Ordinarily, applying an unfair selection criteria or applying a fair one unfairly goes to the substantive fairness of a dismissal. However, where the employer’s shortcomings are procedural in nature an award of compensation seems appropriate in those circumstances. Since compensation must be just and equitable, I take into account the fact that even if Mbatha was afforded his procedural rights to challenge the assessment that he has no skills and qualifications required, the best outcome for him would have been another interview. I cannot place it any higher and state that the outcome would be that he would have been placed. I also take into account that Mbatha turned down alternative employment. This, notwithstanding the fact that Mbatha may have had valid and sound reasons to decline the offer. Fact remains that the offer was aimed at retaining his job security. En passant, I hold a view that, if truly Mbatha and Mashele for that matter held a view that the position of Merchandiser commanded a higher salary than the one offered by CCBSA, there was nothing that would have prevented them, to thereafter, through their trade union, place a demand for a proper salary and or grading of the position. In similar vein, the Court in Oosthuizen suggested that, if an employer is concerned about the fact that an employee will, if placed, perform appropriately at the vacant position, that concern does not justify non-placement, because if an employee does not perform, procedures outlined in the LRA may be followed. Similar considerations bore scrutiny in respect of Mbatha and Mashele had they retained their job security.

 

[63]       That said, compensation being a solatium, it is just and equitable to award Mbatha, four months compensation[22]. Such being an equivalent of his last salary of R16 932.00.

 

Conclusions

 

[64]       For all the above reasons, the issue of merger specific is of no relevance to the current proceedings involving the fairness of the dismissal. The applicants failed to produce credible evidence that may support a conclusion that section 187 (1) (c) of the LRA has been breached. Accordingly, the dismissal is not automatically unfair. The dismissal of Mashele was not substantively unfair, and his claim falls to be dismissed. The dismissal of Mbatha is for reasons outlined above substantively unfair. The remainder of the applicants who failed to testify in Court are not entitled to any remedy. The appropriate remedy for Mbatha is compensation.

 

[65]       For all the above reasons, the following order is made:

 

Order

 

1.         The claim for automatically unfair dismissal is dismissed.

2.         The claim for substantive unfairness in respect of Mashele and the 13 applicants listed on page 17 of the pleadings bundle is dismissed. Their dismissal is found to be substantively fair based on the operational requirements of CCBSA.

3.         The dismissal of Raymond Mbatha is substantively unfair.

4.         CCBSA is ordered to pay to Raymond Mbatha an amount equivalent to R67 728.00 being an equivalent of 4 (four) months’ salary at last rate of R16 932.00 as compensation within the contemplation of section 194 of the LRA.

 

5.         There is no order as to costs.

 

GN Moshoana

Judge of the Labour Court of South Africa

 

Appearances:

 

For the Applicants:                        Mr I Haffegee of Haffegee Roskam Savage

Attorneys, Johannesburg.

 

For the Respondents:                    Ms M J Engelbrecht SC

 

Instructed by:                                 Moeletsi Attorneys Inc, Sandton.

 

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