MEWUSA obo Mockey and Others v Otto Marketing CC (JS1030/11) [2014] ZALCJHB 404 (16 October 2014)

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

JUDGMENT

Case no: JS 1030/11

Not Reportable

In the matter between:

MEWUSA OBO MOCKEY AND 5 OTHERS

Applicant

and

OTTO MARKETING CC

Respondent

Heard: 23 April 2014

Delivered: 16 October 2014

Summary: Unfair dismissal claim dismissal for operational reasons. The employer offering alternative employment at a lower salary level. The employee rejecting the offer for alternative employment.

MOLAHLEHI J

Introduction

[1] The issue for determination in this matter is whether the dismissal of the applicants for operational reasons by the respondent was procedurally and substantively fair. The individual applicants seek reinstatement if they were to be successful in these proceedings.

The background facts

[2] The individual applicants are former employees of the respondent who were prior to their dismissal for operational reasons employed as supervisors. It is common cause that prior to dismissing the individual applicants, the respondent embarked on a consultation

process with the union which was initiated subsequent to the notice in terms of section 189 of the Labour Relations Act of 1995 (the LRA).

[3] Following their dismissal, the applicants referred the dispute concerning the alleged unfair dismissal to the bargaining council and subsequent to the failure of the conciliation, instituted the present proceedings.

[4] It is common cause that their dismissal was preceded by several consultation meetings between the respondent and the union. It is

also common cause that the respondent failed to provide the applicants with its financial statement when requested to do so by

the union. It has not been disputed by the applicants that the dismissal was due to the restructuring and not for financial reasons.

The case of the respondent

[5] In contending that the dismissal of the individual applicants for the operational reasons was for a fair and valid reason, the respondent

presented the testimony of Mr Culligan, the sole member of the respondent.

[6] Mr Culligan, testified that the retrenchment of the individual applicants arose consequent to the need to restructure the business,

necessitated by the imperative of sustainability. It was, according to him, only one supervisor who was not retrenched and that was because he was not employed in the manufacturing section of the business which was affected by the restructuring.

According to Mr Culligan, the six supervisors were, during the consultation process, offered positions as factory workers as an alternative to the retrenchment which they rejected. The positions which were offered were at grade E which were lower than those occupied by the individual applicants. The offer included the adjustment in the salary of grade E to accommodate the affected employees. Even with the adjustment, it is common cause that the adjusted salary of the affected employees would still be lower than what they were earning. The offer made by the respondent was rejected by the union for that reason.

[7] The union proposed a voluntary retrenchment which according to Mr Culligan was accepted by the respondent but none of the individual

applicants applied for it. At another meeting which was held on 22 August 2011, the respondent proposed the redeployment of the affected employees which seem to have also been rejected by the individual applicants.

[8] In relation to the two employees, who the applicants contended ought to also have been retrenched, Mr Culligan testified that one person was not employed in the affected section of the business and the other one accepted that position offered at grade E as an alternative to retrenchment.

The applicant’s case

[9] Mr Modigoa, the union organiser testified on behalf of the applicants. In his testimony, he largely confirmed the version of Mr Culligan. He, for instance, testified that the reason why the individual applicants rejected the offer of alternative employment was because the salary offered was too low and the acceptance thereof would have amounted to a demotion. He conceded during the cross examination that he attended all the six consultation meetings which were convened by the respondent.

[10] The second witness of the applicants was Mr Marakalala who also confirmed that the union advised them about the offer for the alternative

employment. He also testified that he had intended to accept the offer but changed his mind when he was told the salary would be lower than what he was earning.

The legal principles

[11] It is trite that section189 of the Labour Relations Act of 1995 (the LRA) requires an employer who anticipate retrenchment to consult with the union or employees likely to be affected by the retrenchment. Section 189 of the LRA does, however, recognise the right of the employer to dismiss employees for operational reasons.

[12] An employer faced with retrenchment is required to consult with a view of seeking consensus on how to avoid the retrenchment or to minimise the consequences thereof. In the event that the parties are unable to find a solution to avoiding the retrenchment, they are then required to engage further in developing selection criteria for the purposes of retrenchment. If the parties are unable to reach consensus as to the selection criteria, the employer has a duty to ensure that the selection criteria to apply in the retrenchment is fair.

[13] In the present instance, the rationale for the retrenchment has not been seriously challenged by the applicants.

[14] The facts and the circumstances of this case also indicate that there was a genuine attempt, during the consultation process, to find a solution to avoiding the retrenchment. The parties endeavored to reach consensus as to how to avoid the retrenchment. The bona fides of the respondent in offering to employ the individual applicants as an alternative to retrenchment was not placed in doubt. The

applicants rejected the offer for alternative employment, because according to them accepting it would have resulted in the reduction of their salaries and in a sense a demotion.

[15] In my view, it is apparent, from the proper analysis of the facts of this matter, that the respondent cannot be criticized for failing to satisfy the basic principles of fairness as required by the provisions of section 189 of the LRA. I am also of the view that the respondent cannot be criticized in as far as the selection criteria is concerned because all the positions which became redundant as a result of the restructuring involved employees in the same category being supervisors. I have already, dealt with the issue of the two employees who were not retrenched.

[16] Although the respondent has successfully defended the claim I do not belief that it would be appropriate to allow the costs to follow the results.

Order

[17] In the premises, the applicants’ dismissal by the respondent for operational reasons was for a fair reason.

[18] The applicants claim is dismissed with no order as to costs.

______________

Molahlehi, J

Judge of the Labour Court of South Africa

Appearances:

For the Applicant: Metal and Electrical workers union of SA.

For the Respondent: De Villiers and Du Plessis Attorneys.