Moses and Others v Fusion Wireless (Pty) Ltd t/a Sonic Telecoms and Others (C135/2021) [2024] ZALCCT 5 (6 February 2024)

REPUBLIC OF SOUTH

AFRICA

IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

JUDGMENT

Case Number:C135/2021

Not Reportable

In the matter between:

GHIEM MOSES AND 10 OTHERS Applicants

and

FUSION WIRELESS (PTY) LTD T/A/SONIC TELECOMS First Respondent

JL KRYNAUW N.O.

Second Respondent

MIENIE N.O.

Third Respondent

HERO TELECOMS (PTY) LTD Fourth Respondent

HEROTEL (PTY) LTD Fifth Respondent

Dates Heard: 23-25 February 2022, 2 August 2022, 8 August 2022, 2 October 2022, 25 May 2023; 8 September 2023

Delivered: 6 February 2024 (This judgment was handed down electronically by emailing a copy to the parties. The 7 February 2024 is deemed to be the date of delivery of this judgment).

RABKIN-NAICKER J

[1] This referral took many permutations over a long period of time and there were several interlocutory applications that the Court had to consider. The applicants came to Court claiming an unfair dismissal for operational requirements. In their amended statement of claim dated the 15 of November 2022, they sought an order in the following terms:

“53.1 Full retrospective reinstatement of the Applicants;

53.2 An order directing that the contracts of employment which Applicants had with Sonic have been automatically transferred to Fifth Respondent;

53.3 Alternatively, an order directing payment of 12 (twelve) months’ compensation to each Applicant;…”

[2] For the purposes of this judgment, it is apposite to record the lengthy common cause facts agreed in a second pre-trial minute dated 22 May 2023:

“ FACTS

WHICH ARE COMMON CAUSE

2. The identity and locus standi of the parties are not in dispute.

3. The Applicants were employees of First Respondent until they were dismissed for operational reasons in or during October 2020.

4. The circumstances of the Applicants’ dismissal are as follows –

4.1. In 2020 the HeroTel Group announced that 4 of its entities, with First Respondent being one of them, will be embarking on a retrenchment exercise.

4.2. On 1 September 2020, First Respondent issued its employees, including Applicants, with a notice of contemplated retrenchments in terms of section189(3) of the Labour Relations Act 66 of 1995 (“LRA”).

5. First Respondent’s notice in terms of section 189 of the LRA dealt with the rationale for the proposed retrenchment under the heading “1. Why the company is contemplating retrenchment”.

6. At the first consultation on 22 September 2020 Mr Derek Hershaw (“Mr Hershaw”), First Respondent’s Regional Business Manager for the Western Region, reiterated that the rationale for the contemplated retrenchment was financially driven for reasons stipulated in the section 189 notice.

7. At the first consultation, Applicants challenged the rationale for the contemplated retrenchment on the basis that the cause of First Respondent’s financial position was due to The HeroTel Group purportedly having stripped First Respondent of key revenue streams due to a range of alleged questionable intercompany transactions processed between First Respondent and the other entities within the HeroTel Group.

8. As First Respondent sought to justify the proposed retrenchments on the basis of its financial performance, it was necessary to interrogate the state of its financial affairs.

9. Prior to the second consultation process, Applicants, through Mr Stansfield, addressed correspondence to First Respondent requesting disclosure and access to categories of information that they contend were necessary in order for them to assess the employer’s rationale, consider and propose solutions that could avoid the mooted

retrenchments and prepare for the next consultation.

10. At the second consultation meeting held on 28 September 2020 Mr Hershaw refused to provide Applicants with the requested information, contending that it was confidential and sensitive.

11. First Respondent was only willing to disclose some information under strict and prescriptive conditions with Applicants prohibited from uplifting the documentation to peruse in their own time.

12. The First Respondent used performance as a selection criterion for the retrenchments. Applicants did not agree with or consent to these selection criteria.

13. At the third facilitated consultation session on 12 October 2020, Applicants brought a formal application before the CCMA in terms of section 16 of the LRA for the disclosure and access to the information.

14. On 19 October 2020, the CCMA issued a ruling (“the Ruling”) in favour of Applicants directing First Respondent to disclose the requested information including Sonic’s audited financial statements for the period March 2017 to March 2020.

15. The Ruling also stipulated that the manner of the access is that the employer will provide hard or electronic copies of the documents and the employees, and any party accessing the information after disclosure, must sign a non-disclosure agreement prior to accessing the information.

16. The First Respondent provided audited financial statements for the years 2017, 2018, and 2019, and a “draft” version of the audited financial statements for the year 2020. The First Respondent did not provide signed audited financial statements for the year 2020 as determined by the Ruling.

17. On 22 October 2020 Mr Hershaw submitted that First Respondent’s finalised audited 2020 financials are “not ready” as they “have not yet been audited”.

18. Throughout the consultation process, Applicants consistently maintained the position that the HeroTel Group has allegedly stripped First Respondent of key revenue streams whilst simultaneously burdening First Respondent with unfair group costs due to the purported questionable nature of a range of intercompany transactions processed between First Respondent and the other entities within the HeroTel Group.

19. The First Respondent had not provided signed audited annual financial statements for the year 2020 as determined by the Ruling by the time that the Applicants had been retrenched on or about October and November 2020.

20. On 20 May 2022 First Respondent was placed in voluntary liquidation.

21. The business of inter alia First Respondent transferred to that of Fifth Respondent, prior to First Respondent being liquidated on 20 May 2022. The transfer took place in accordance with the provisions of section 197 of the LRA.

22. The contracts of employment of those employees of First Respondent, at the time of the section 197 transfer, were transferred to Fifth Respondent in accordance with section 197 of the LRA.

23. The Second and Third Respondents were appointed as joint liquidators of First Respondent on 13 June 2022.

24. Second to Fifth Respondents have been joined as parties to the matter.”

Procedural Fairness of the Dismissals

[3] The question of whether this Court could pronounce on the procedural fairness of the dismissals given the common cause fact that they were subject to a consultation process in terms of section 189A, and there was no section 189A(13) application brought during the dispute, was doggedly persisted with on behalf of the applicants. This question was definitively dealt with in by the Constitutional Court in Solidarity on behalf of Members v Barloworld Equipment Southern Africa & others (2022) 43 ILJ 1757 (CC):

“Is there a distinction between disputes about procedural fairness and those relating to compliance with procedure?

[62] In Steenkamp I the court also considered the consequences of dismissals that occurred due to non-compliance with the provisions of s 189A. It held:

“[124] . . . If non-compliance with s 189A results in dismissals being procedurally unfair, the ordinary unfair dismissal provisions of the LRA as well as the special remedies that s 189A provides may be invoked. If the employer’s operational requirements for dismissals are inadequate, this can be challenged as rendering the dismissal substantively unfair with the advantage of immediate access to the Labour Court or the right to strike provided for in s 189A may be invoked.

[125] If the procedural requirements of s 189 or 189A are not complied with in circumstances where there is no acceptable reason for non-compliance, the result will be that the dismissal was not effected in accordance with a fair procedure as contemplated in s 188(1)(a)(ii). It is, therefore, procedurally unfair.’

[63] The court explained that the orders the Labour Court may make under s 189A(13) are very extensive. These include an order for reinstatement which could be with retrospective effect to the date of dismissal. The court elaborated on the process or procedure that an employer must follow when contemplating the dismissal of an employee for operational requirements. It highlighted that s 189A creates rights and obligations for a certain category of employers and their employees in regard to dismissals for operational requirements which did not form part of the LRA before 2002. It is worth noting that it also makes provision for the referral to the Labour Court for adjudication of a dispute about whether there is a fair reason for dismissal. It said that, in s 189A(13), the LRA specifies special remedies for non-compliance with a fair procedure and that in s 191 it sets out the dispute procedure that must be used to resolve disputes concerning an alleged infringement of the right not to be unfairly dismissed. In considering the remedies available to a dismissed employee, the court stated:

‘[160] If an employer has not issued notices of dismissal but has failed or is failing to comply with a fair procedure in the pre-dismissal process, a consulting party may make use of the remedy in subsection (13)(a). In such a case the consulting party would apply to the Labour Court for an order compelling the employer to comply with a fair procedure. If an employer gives employees notices of dismissal without complying with a fair procedure, or, if an employer dismisses employees without complying with a fair procedure, the consulting party may apply to the Labour Court for an order interdicting the dismissal of employees in terms of subsection (13)(b) until there is compliance with a fair procedure. This would include giving premature notices of dismissal.

[161] If an employer has already dismissed employees without complying with a fair procedure, the consulting party may apply to the Labour Court in terms of subsection (13)(c) for an order reinstating the employees until the employer has complied with a fair procedure. The significance of the remedy of reinstatement in subsection (13)(c) is that it is made available even for a dismissal that is unfair only because of non-compliance with a fair procedure. That is significant because it is a departure from the normal provision that reinstatement may not be granted in a case where the only basis for the finding that the dismissal is unfair is the employer’s failure to comply with a fair procedure. In such a case the norm is that the Labour Court or an arbitrator may award the employee only compensation.’

[64] This court accordingly made it clear that ‘fair procedure’, as contemplated in s 189A, refers to the procedure that has been set out in ss 189 and 189A, which gives effect to s 188. The court also dealt with the provisions of s 189A(18) and said that it precludes the Labour Court from adjudicating any dispute about procedural fairness of a dismissal for operational requirements referred to it in terms of s 191(5)(b)(ii). The court explained the position as follows:

‘In terms of [s 189A(8)(b)(ii)(bb)] only a dispute concerning whether there is a fair reason for dismissal may be referred to the Labour Court for adjudication. In fact subsection (18) precludes the Labour Court from adjudicating any dispute about the procedural fairness of a dismissal for operational requirements referred to it in terms of s 191(5)(b)(ii). It reads:

“The Labour Court may not adjudicate a dispute about the procedural fairness of a dismissal based on the employer’s operational

requirements in any dispute referred to it in terms of section 191(5)(b)(ii).”

Subsection (18) may seem very drastic and harsh on employees who may be having a dispute with their employer concerning the procedural fairness of their dismissal. However, it will be seen that, when read with subsection (13), it is not harsh at all. Subsection (13) provides extensive protections to employees where the employer has failed to comply with a fair procedure.’

[65] It is thus clear that the Labour Court may not adjudicate a dispute about the procedural fairness of a dismissal based on the employer’s operational requirements in any dispute referred to it in terms of s 191(5)(b)(ii). As this court reasoned in Steenkamp I, s 189A(13) provides adequate protection for employees where there has been a failure to comply with a fair procedure. Moreover, in Steenkamp II, this court confirmed the features of s 189A(13) and said:

‘[47] A distinctive feature of s 189A(13) of the LRA is the separation of disputes about procedural fairness from disputes about substantive fairness. Disputes about substantive fairness may be dealt with by resorting to strike action or by referring a dispute about the substantive fairness of the dismissals to the Labour Court in terms of s 191(11) of the LRA.

[48] Disputes about procedural fairness have been removed from the adjudicative reach of the Labour Court and may no longer be referred to the Labour Court as a distinctive claim or cause of action that a dismissal on the basis of operational requirements was procedurally unfair.’’

[4] Despite the above jurisprudence, Mr Oosthuizen for the applicants continued to refer to cases adjudicated before the amendment introducing section 198A into the LRA , as well as a post-amendment case ‘Reasons for a Judgment’ per Revelas AJ under case number JS 326/05. In that matter, the individual applicant had challenged the procedural fairness of his retrenchment through motion proceedings. There was no section 189A(13) application made to the Labour Court in this matter, although the applicants were represented by their attorneys of record during the consultation process. In any event, the law is now settled that the Labour Court does not have jurisdiction to consider procedural fairness in a matter such as this, as is abundantly clear from the unanimous Barloworld Judgment of the Constitutional Court referred to above. I will therefore deal with the question of the substantive fairness of the retrenchments.

Substantive Fairness

[5] Subsequent to the 2014 amendments to the LRA, Section 189A(19) has been deleted and no iteration of the requirements for substantive fairness are now listed in section 189A. As Grogan states[1]:

“Section 189A(19) gave express guidance on the factors to be evaluated when deciding on the substantive fairness of retrenchments These are:

· That the dismissal was to ‘give effect to a requirement based on the employer’s economic, technological, structural or similar needs’;

· That the dismissal was ‘operationally justifiable on rational grounds’;

· That there was a ‘proper consideration’ of alternatives; and

· That the selection criteria were ‘fair and objective’.

However, this provision has now been excised from the Act. It remains to be seen whether this will have any effect on the test applied by the courts. Since the provisions of s189A(19) merely replicated principles established by the courts, its removal will probably have little practical effect.”

[6] In terms of the May 2023 pre-trial minute, the following is recorded:

“Was the selection criteria fair?

Applicants

55. Applicants contend that no fair selection criteria were applied.

56. The Applicants did not aver in their statement of case that the selection criteria was unfair and cannot effectively plead this issue in the pre-trial minute.[2]

First Respondent

57. To the extent that the court considers the issue of selection criteria, the First, Fourth and Fifth Respondents states that:

57.1 The Fibre Manager and Key Accounts Manager positions were declared redundant, and it is the redundancy of these positions that led to the selection of Ghiem Moses and Bronwen De Pontes for retrenchment.

57.2 Performance in the form of sales figures was used as selection criteria for the sales consultants.

57.3 Technicians were selected for retrenchment based on LIFO.

57.4 The aforesaid criteria were fair and objective.”

[7] In their amended Statement of Case, the applicants did include the following questions for the Court to decide which are relevant to the substantive fairness decision:

“45.4 Whether Respondents decision to conduct the retrenchment process was premised upon a fair rationale; and

45.6 Whether the dismissal of Applicants for operational requirements was fair;”

[8] The above questions shall be considered by the Court. The fairness or otherwise of selection criteria falls as a matter of law to be considered by the Court when answering the question as to whether the dismissals were substantively fair.

The evidence on the rationale for the retrenchments

[9] The section 189 letter included the following clauses:

“APPLICATION FOR S189A OF LABOUR RELATIONS ACT 66 OF 1995 CCMA FACILITATION

RE: POSSIBLE

RETRENCHMENT

We refer to the above matter.

The company is contemplating embarking upon a retrenchment process which may lead to the possible termination of employees’ services; accordingly, it is necessary in such circumstances to consult with you regarding the possible retrenchments, on issues as detailed below. We wish to confirm that none of these issues have been finally determined. The company’s final decision would depend on such representations you may make.

For you to have full appreciation of the company’s in principle vision, we provide you with the following information, which information you will be required to respond upon in due course if necessary.

1. Why the company is contemplating retrenchments:

The rationale underpinning the restructure is essentially financially driven. Over the last 9 months a worrying trend has emerged in our business in the Western Cape Metro. Sales are slowing down and churn is increasing. Most of our wireless coverage areas are now covered by off-net fiber. It ranges from 70% to as much as 90% depending on which branch you consider, and it is increasing. Customers are choosing fiber over wireless.

The National Lockdown due to Covid-19 has made this worse. Many businesses have closed, residential users are under economic pressure and payment defaults are increasing. The Company does not foresee these trends changing anytime soon. Based on our profit margins we are not able to retain customers long enough to recover the capital investment bringing them onto our network. Break-even typically takes 4 years to recover from but our current churn rates indicate customers are leaving within 3 years of joining our network. The service levels are also not good as we have negative NPS ratings. This is also contributing to a higher churn. We cannot continue operating as we have in the past and expect to get different results.

In order to ensure a sustainable business model for the 3 branches in the Western Cape basin we need to:

· Stop looking for new growth in off-net FYYH areas, or lower LSM areas where customers cannot afford our services

· Improve our service levels

· Reduce operating costs. This includes our staff costs. We anticipate that we will have to reduce our staff compliment by up to 30%. This amounts to between 25 and 30 staff out of 89 staff members.

2. Alternatives to retrenchment

2.1 Voluntary Retrenchment Packages

As an alternative to retrenchment, the company will be open to discuss the possibility of voluntary retrenchment packages, which could be offered. This will be on a case by case basis. Employees who are interested in a voluntary retrenchment package, may approach management.

The terms and conditions of the voluntary packages can be discussed during the consultation process. The company further undertakes to consider any proposed alternatives that you may table during the consultations process. The company however reserves the right to deny any staff member the option taking of a voluntary retrenchment package based on its own operational requirements.

Any staff member electing not to pursue or investigate the options of a voluntary retrenchment package will not be prejudiced in any way during consultation.

2.2 Transfers

The Company encourages employees to apply for vacant positions within the Group.

The details of the positions available within the Group will be discussed during the consultation.

2.3 Bumping

If employees are skilled and experienced in any other positions within the company, the employee may apply to bump another person in that position. This can only occur horizontally or downwards.

2.4 Suspension of bonuses

The suspension of bonuses is an alternative that has already been considered and implemented. Bonuses have been

suspended pending the financial performance of the business for the year of 2020.

2.6 Other Alternatives

The company also undertakes to consider any proposed alternatives that you may table during the consultations process….

4. Selection criteria:

The selection criteria for each department will be dealt with during the consultation process as the Company proposes that skills be used as the predominant selection criteria and that employees may also be selected according to LIFO (last in, first out) according to the operational requirements of said department. It is also proposed that employees may be selected based on the redundancy of certain positions.”….

Should the company have no alternative but to proceed with the termination of employees’ services, the company will use a selection criterion that has been agreed upon or failing agreement a criterion which will be both fair and objective.”

[10] Much of the testimony in the trial concerned the issue of the ‘rationale of the retrenchments’. Mr Oosthuizen’s cross examination dealt with revealing the implications of the content of the financial statements of the Group. In his heads of argument, he underlines that nothing is mentioned in the 189(3) letter of the following, which are evident from the financial statements:

“20.1 Fusion’s holding company having transferred to itself revenue amounting to R10 294 579;

20.2 The unilateral decision to terminate business with resellers, thereby decreasing revenue by a further R19 million;

20.3 The creation, by way of accounting entries and without any disclosure or consultation, of further expenses of R12 773 144 and R10 530 079;

20.4 The fact that the above “expenses” in revenue were self-inflicted and the increase in expenses the result of inter-company account juggling.”

[11] No purpose will be achieved in summarising the minutiae of the evidence given at trial regarding the said financial accounts in this judgment. Suffice to say that Mr Wessels for the Group tried to explain the rationale for the retrenchment when faced with forensic cross-examination on behalf of the applicants. His evidence, summarised in the submissions by Mr Orton reflected the following:

* Fusion’s core business, wireless internet connectivity, is dated and inferior technology and Fusion was therefore losing customers and would continue to lose customers to fibre companies;

* The profitability of each wireless customer was decreasing year on year as Fusion had to undercut themselves in an attempt to compete with fibre;

* The loss of each wireless customer represented lost revenue and concomitantly provide, which Fusion otherwise would have had, had it not lost the customers;

* The respondents’ rationale was never simply that it had to cut costs because Fusion was losing customers, or its nett profits

deteriorated as a general proposition.

The submissions summarising the evidence continue:

“The rationale always related to the very specific dynamics described above, which revolves around the fact that customers are choosing

fibre over wireless, being the core business, which results in loss of wireless customers and sales and a drop in revenue and profit per wireless customer for the reasons set out above. It was completely rationale of Fusion to reason as it did at the time that these circumstances constituted a trend, in other words something that had begun and is set to continue. Its concerns were also rationally exacerbated by the fact that its business had to contend with the economic downturn brought about by COVID and the potential for this to continue. To compound matters, it could not overcome this problem by changing their core business from wireless to fibre, for rational reasons alluded to above. It was equally rational for it to then take these considerations seriously and intervene in its business to cut costs, including operational and staff costs, in such a manner that will render IT profitable enough in the future so that it can provide a better return (sic) the shareholders investment in the business for as long as possible.”

[12] The above explanation tries to cover all bases. The rationale was technological, it had to do with falling revenue, Covid played a part, and the Group was entitled to ensure shareholders profit increased in the future. The approach taken by Mr Oosthuizen in his submissions was to underline that that the Section 189 notice was materially misleading and that being so:

“…it obviously follows that the true reasons for the downturn in the viability of the company …were not discussed. In any event,

the transferring of substantial business to the holding company, and the cessation of sales to resellers, had taken place months before the retrenchment process commenced.”

[13] Mr Oosthuizen then returns to the consultation process:

“Furthermore, and even if one ignores the self-inflicted decrease in revenue and increase in expenses, a separate question which Fusion has not answered is why the retrenchment of the eleven Applicants (and other staff) was necessary to remedy the situation. There is absolutely no reason why the reversal of the inter-company business and the key accounts could not have been achieved by the simple process of reversing the accounting entries and once again vesting these revenue streams in Fusion. Similarly, the decision to no longer sell to the resellers could have been easily reversed, in the consultation process.

The proposition can be stated differently. Although, in a group company structure, revenue streams and expenses could notionally be transferred from one entity to the other, where this results in a prospective loss of jobs, then the employees affected by such

accounting processes are entitled to the benefits of the joint problem-solving process described by Section 189.”

[14] Once again, the approach taken on behalf of the applicants cleaves to the notion that even in a section 189A retrenchment this Court can decide on procedural deficiencies in the consultation process in a situation in which no section 189A(13) application was brought. The basis for claiming substantive unfairness of the retrenchments is stated on behalf of the applicants to be as follows in the heads of argument:

“In the matter now before the Court, Applicants aver that the retrenchments were substantively unfair. They aver that the Section 189(3) notice was materially misleading, that Respondent’s conduct in effectively removing parts of the business conducted by Respondent and transferring that business to the holding company without any attempt to consult with the employees was substantively unfair, and that these contentions need to be fully investigated in the proceedings now before the Court.”

Evaluation

[15] In BMD Knitting Mills (Pty) Ltd v SA Clothing & Textile Workers Union[3] , the LAC surveyed the caselaw tackling the question as to whether a Court should second guess an employer as to commercial or business efficacy:

“[17] In SA Clothing & Textile Workers Union & others v Discreto—A Division of Trump & Springbok Holdings (1998) 19 ILJ 1451 (LAC) at para [8] Froneman DJP set out the test for determining whether a dismissal is for a fair reason (albeit in terms of the Labour Relations Act 28 of 1956), as follows:

'The function of a court in scrutinizing the consultation process is not to second guess the commercial or business efficacy of the employer's ultimate decision (an issue on which it is, generally, not qualified to pronounce upon), but to pass judgment on whether the ultimate decision arrived at was genuine and not merely a sham (the kind of issue which courts are called upon to do, in different settings, every day). The manner in which the court adjudges the latter issue is to enquire whether the legal requirements for a proper consultation process had been followed and, if so, whether the ultimate decision arrived at by the employer is operationally and commercially justifiable on rational grounds, having regard to what emerged from the consultation process. It is important to note that when determining the rationality of the employer's ultimate decision on retrenchment, it is not the court's function to decide whether it was the best decision under the circumstances, but only whether it was a rational, commercial or operational decision, properly taking into account what emerged during the consultation process.'

[18] In essence the test enunciated in Discreto follows the approach to judicial review of administrative action enunciated by Froneman DJP in Carephone (Pty) Ltd v Marcus NO & others (1998) 19 ILJ 1425 (LAC), namely that courts should afford administrative bodies a significant margin of appreciation and not evaluate their actions in terms of value judgments which the courts impose upon the activities of such bodies. Thus as Froneman DJP said at para [36]:

'As long as the judge determining the issue is aware that he or she enters the merits not in order to substitute his or her own opinion on the correctness thereof but to determine whether the outcome is rationally justifiable, the process will be in order.'

[19] I have some doubt as to whether this deferential approach which is sourced in the principles of administrative review is equally applicable to a decision by an employer to dismiss employees particularly in the light of the wording of the section of the Act, namely, 'the reason for dismissal is a fair reason'. The word 'fair' introduces a comparator, that is a reason which must be fair to both parties affected by the decision. The starting-point is whether there is a commercial rationale for the decision. But, rather than take such justification at face value, a court is entitled to examine whether the particular decision has been taken in a manner which is also fair to the affected party, namely the employees to be retrenched. To this extent the court is entitled to enquire as to whether a reasonable basis exists on which the decision, including the proposed manner, to dismiss for operational requirements is predicated. Viewed accordingly, the test becomes less deferential and the court is entitled to examine the content of the reasons given by the employer, albeit that the enquiry is not directed to whether the reason offered is the one which would have been chosen by the court. Fairness, not correctness is the mandated test.” (emphasis mine)

[16] I have referred to the amendments to section 189A(19) of the LRA in 2014, deleting express guidance on the factors to be evaluated when deciding on the substantive fairness of retrenchments. These requirements included that the “dismissal was operationally justifiable on rational grounds”, a factor akin to the Discreto ‘administrative law’ approach. This Court is inclined to prefer the ‘fairness’ approach in deciding the matter before me. Some of the evidence given by the applicants in the trial brought the impact of the retrenchments on their lives and livelihoods into sharp focus. This reminds us of the need to balance the interests of the parties in no-fault dismissals with care, keeping in mind that fairness is the mandated test.

[17] Where monies are redirected from a company member of a Group to the holding company, in the manner they were in this case, leading to the voluntary liquidation of that member (Fusion), the proposition that the retrenchments were a fait accompli is strengthened. In addition, there was no evidence led before me by the employer of fair and objective selection criteria being applied to the applicants or of any consideration to alternatives to the retrenchments by the employers. The criteria of ‘performance’ was mentioned in the pleadings of the respondents, but no evidence was given at trial to support same, or to establish how this was measured. In all these circumstances I find the retrenchments to have been substantively unfair.

[18] That Fusion’s business, (as well as the business of other subsidiaries), was gradually transferred into Herotel was confirmed in testimony by Mr Wessels. He was unable to specify when this occurred and stated that the ‘process took some time’. Mr Oosthuizen has submitted that the process amounted to a section 197 transfer and should I find the retrenchment of the applicants unfair, they should be afforded the primary remedy of reinstatement into Herotel. It bears repeating that the second pre-trial minute records the following as common cause fact:

“21. The business of inter alia First Respondent transferred to that of fifth Respondent, prior to First Respondent being liquidated on 20 May 2022. The transfer took place in accordance with the provisions of section 197 of the LRA.

22. The contracts of employment of those employees of First Respondent, at the time of the section 197 transfer, were transferred to Fifth Respondent in accordance with section 197 of the LRA.”

[19] Given the above concession made on behalf of the employer, the remedy of reinstatement into Herotel is appropriate. Those witnesses who testified for the applicants emphasised that this is the remedy they sought. In all the above circumstances, I make the following order, bearing in mind that in labour court matters costs do not automatically follow the result:

Order

1. The dismissals of the applicants were substantively unfair.

2. Herotel is to retrospectively reinstate the applicants into the same or similar positions as they held at the time of their retrenchment.

3. There is no order as to costs.

______

H.Rabkin-Naicker

Judge of the Labour Court

Appearances:

Applicants: A. Oosthuizen SC instructed by Mcaciso Stansfield

First and Fifth Respondents: Snyman Attorneys

[1] In ‘Dismissal’ 3rd edition, Juta at page 497

[2] Although this clause is contained under the heading Applicants, one can only presume that is a mistake given its content which reflects Respondents case.

[3] (2001) 22 ILJ 2264 (LAC)