National Union for All Sectors and Others v 3 Sixty Life (Pty) Ltd and Others (C171/24) [2024] ZALCCT 24; (2024) 45 ILJ 1841 (LC) (12 June 2024)

THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

Not Reportable

case no: C171/24

In the matter between:

NATIONAL UNION FOR ALL SECTORS (NUFAS)

First Applicant

YVETTE ARENDSE

Second Applicant

LUCINDA NITZKY

Third Applicant

and

3 sixty life (pty) ltd

First Respondent

NUMSA INVESTMENT COMPANY (PTY) LTD

Second Respondent

DOVES GROUP HOLDINGS (PTY) LTD

Third Respondent

Heard: 22 May 2024

Delivered: 12 June 2024

Summary: Application for compensation and other relief in terms of section 189A(13)(d) of the Labour Relations Act, 1995. Retrenchment embarked upon by the employer was not subject to section 189A of the Labour Relations Act, 1995 and the other relief sought falls outside relief that can be awarded in terms of section 189A(13)(d) of the LRA.

JUDGMENT

GANDIDZE, AJ

Introduction

[1] The interim relief sought, to be made final in due course, is one ‘that the respondent be ordered to pay a compensation of up to twelve (12) months salaries to each of the second and third applicants in terms of s189A(13)(d) read with section 194 of the Labour Relations Act[1] (LRA) for failure to follow procedure in dismissing the applicants, and be ordered to pay damages endured by the applicants due to the psychological distress they suffered in the manner the termination of their contracts was conducted by the respondents, in terms of the common law.’

[2] Yvette Arendse and Lucinda Litzy, the second and third applicants respectively, are employees[2] of 3Sixty Life (Pty) Ltd, the first respondent. I shall refer to them as the applicant employees. They instituted the present proceedings

with the assistance of their trade union, the National Union for All Sectors (NUFAS), and the first applicant herein. I shall refer to the applicant employees and their trade union collectively as the applicants. The second and third respondents are cited on the grounds that the three entities own each other, that the third respondent attended meetings held with NUFAS prior the launch of the present application and that all respondents were copied in mail that NUFAS exchanged with the first respondent or its attorneys.

[3] The curator of the first respondent filed an answering affidavit opposing the relief sought by the applicants. Second and third respondents did not file answering papers but filed brief heads of argument and participated in the proceedings, joining cause with the first respondent.

[4] The urgent application first served before me on 21 May 2024, when l postponed the matter to 22 May 2024 to enable the applicants to file a replying affidavit, as requested. When the matter was heard on 22 May 2024, all parties had been given ample opportunity to present their full cases. It is apparent from those papers that even though interim relief had been sought, in reality the relief sought was that of a final nature. Interim relief would serve no purpose because relief in terms of section 189A(13)(d) is final in nature.[3] Therefore the applicants are required to make out a case for final relief.

Urgency

[5] The applicants submitted that the matter was urgent because applications in terms of section 189A(13) of the LRA are by their nature urgent, and that unless the matter was heard on an urgent basis, the applicants would be left with no recourse against the first respondent which had admitted that it had lost business and no longer had the funds to pay its staff, and therefore was at risk of closing its doors. The court was also required to take into account section 198B which protects employees kept on successive

fixed term contracts contrary to law and who could not get redress in due course.

[6] Since the matter was fully ventilated when oral arguments were presented, coupled with the fact that applications in terms of section 189A(13) must be filed within 30 days, I have accepted that the court’s urgent intervention was required. Orders in terms of section 189A(13)(a) to (c) must be sought and granted on an urgent basis. The situation is different with section 189A(13)(d) orders dealing only with compensation which relief can be granted in due course. However, because section 189A(13) does not distinguish the time period for applications where orders in terms of paragraphs (a) - (c) are sought, and those applications where an order in terms of paragraph (d) is sought, which is thirty days, it follows that all these orders can be sought on an urgent basis or at least an expedited basis in respect of an order in terms of paragraph (d).

[7] Another reason to treat the matter as urgent is that it is in the best interests of all involved for the matter to be disposed of on its merits rather than disposing of it on the grounds of urgency alone.

[8] The matter is urgent.

Joinder of second and third respondents

[9] Above l set out the reasons the second and third respondents were cited as parties. The second and third respondents argued that there was misjoinder.

[10] The relief sought in the notice of motion is against the respondent, and as there are three respondents, it is not clear which respondent is being referred to. The allegation that the second and third respondents are interested parties as they attended meetings with the union regarding the dispute and that they were copied in all correspondence relating to the matter is made in the replying

affidavit for the first time and therefore the respondents were not afforded an opportunity to respond. If the applicant’s version is correct, then the second and third respondents are interested parties. In addition, because the second and third respondents have joined cause with the first respondent in resisting the relief sought by the applicants on the merits, this points to them having an interest in the matter. They argued, with reference to the decision of the Constitutional Court in National Union of Metalworkers of South Africa v Intervalve (Pty) Ltd and Others[4], that the court lacks jurisdiction to entertain this dispute which has not been conciliated by the Commission for Conciliation Mediation and Arbitration (CCMA), and they also sought costs against the applicants who compelled them to appear at the hearing of the matter by refusing to withdraw the frivolous application as demanded by the first respondent.

[11] The view l take on the merits of this application makes it unnecessary to make a final determination on the joinder issue in these proceedings.

Background facts

[12] The two applicant employees have been in the employment of the first respondent for several years[5], on fixed term contracts which were successively renewed, until their alleged dismissal in 2024. Whereas other employees were consulted on a retrenchment process that the first respondent embarked on, the applicants were excluded as the first respondent regarded the applicant employees as being fixed term contract employees, and therefore not required to be involved in a consultation process

before terminating their employment.

[13] The employees were terminated on 18 April 2024.

[14] Following their termination, the employees sought the intervention of their union, NUFAS, and following a meeting between the representatives of the first respondents and NUFAS, the termination letters were retracted. The retraction of the termination letters was confirmed by the first respondent’s attorneys on 26 April 2024, and the union was also informed that the applicant employees were still in the employment of the first respondent.

[15] NUFAS wrote to the first respondent recording that the effect of retracting the termination letters was that the applicant employees had been re-instated and sought clarification on this.

[16] A meeting was held between representatives of the first respondent, the applicant employees and their union representative, Mr Mbana. The first respondent regarded this meeting as a prelude to the commencement of a formal consultation process.

[17] Thereafter the first respondent’s attorneys wrote to the union requesting copies of all the fixed term contracts relied upon by the applicant employees. These contracts are attached to the urgent court papers and the first respondent alleges that this is the first time it received the requested contracts.

[18] NUFAS addressed another letter to the first respondent on 9 May 2024 complaining that the applicant employees were still sitting idly at home since the retraction of the termination letters, that the employer’s conduct was viewed as a repudiation of the contract of employment, which repudiation was accepted by the employees and also constituted an unlawful dismissal, and that the employees will institute action for damages.

[19] On 14 May 2024 the first respondent’s attorneys wrote to the union stating that the requested information (copies of the fixed term contracts) was still awaited, that a section 189(3) LRA letter will be issued, that the applicant employees had been working from home since the COVID-19 pandemic and had been denied access to the first respondent’s information because of information received that they may be taking up employment with a competitor, but that they were still being remunerated even though they were not performing any duties.

[20] On the same day the union served the urgent court papers on the first respondent’s attorneys.

[21] As the first respondent had now been provided with copies of the fixed term contracts which were annexed to the applicants’ court papers, it issued a section 189(3) notice to the applicant employees and demanded that the union withdraw the urgent application filed.

[22] The union responded to the first respondent’s attorneys giving their client a choice between tabling a settlement proposal in respect of the dispute filed at court or filing answering papers. No settlement proposal was tabled but answering papers opposing the application were delivered.

Section 189A(13)(d) and section 194 of the LRA

[23] I deem it necessary to reproduce the relevant provisions of the LRA relied upon by the applicants for ease of reference.

[24] Section 189A of the LRA regulates dismissals based on the operational requirements of employers with more than fifty employees. Section 189A(13) provides as follows:

‘(13) If an employer does not comply with a fair procedure, a consulting party may approach the Labour Court by way of an application for an order—

(a) compelling the employer to comply with a fair procedure;

(b) interdicting or restraining the employer from dismissing an employee prior to complying with a fair procedure;

(c) directing the employer to reinstate an employee until it has complied

with a fair procedure;

(d) make an award of compensation, if an order in terms of paragraphs (a) to (c) is not appropriate.’

[26] The applicants rely on subsection 13(d) which permits the Court to grant compensation where the orders in terms of paragraphs (a) to (c) are not appropriate.

[27] Section 194 of the LRA provides for the limits on compensation that may be awarded in different types of disputes. Subsection (1) provides for a maximum of twelve months compensation where, inter alia, an employer is found not to have followed a fair procedure when dismissing an employee.

Analysis

Can the applicants utilise section 189A(13) to obtain the relief sought?

[28] It will be recalled that section 189A deals with dismissals for operational requirements by employers with 50 or more employees. The applicants allege that the provision applies as the first respondent has sixty-six employees. In answer, and with reference to the invitation to consult issued to affected employees, the first respondent admitted that it has sixty-six employees but that only four employees were affected by the retrenchment process and that one employee was dismissed for operational requirements in the 12 months preceding these retrenchments. For that reason, the first respondent disputed that section 189A applied to the retrenchment process it embarked on.

[29] In the replying affidavit the applicants insist that section 189A(13) applies because ‘a dismissal exists’, that the applicants were ‘constructively dismissed’ and that section 189 provides for the procedure to be followed in retrenchments whereas section 189A deals with the relief to be granted.

[30] Section 189A applies to large scale retrenchments and it is evident from subsection (1)(a) that an employer who employees at least 50 employees and up to 200 employees must contemplate retrenching at least 10 employees, including those retrenched in the preceding 12 months, for the provision to apply. Even though the provision is clear, referring to section 189A(13) the Constitutional Court in Regeneys expressly said the following:

‘[217] The procedure and remedies provided for in subsection (13) only apply to employees whose employer is subject to section 189A, namely employers who employ more than 50 employees.’

[31] The further requirement is that such employer with between 50 employees and up to 200 employees must contemplate retrenching at least 10 employees. Therefore, if such employer contemplates retrenching less than 10 employees, section 189A does not apply to the contemplated retrenchments.

[32] Applicants did not put up a version contesting the first respondent’s version that it intended to retrench a total of four employees[6] and that it had retrenched one employee in the preceding 12 months. These figures are disclosed in the section 189 notices issued to the applicant employees. Therefore, the applicants cannot utilise section 189A(13) to obtain relief from this court in circumstances where section 189A did not apply to the retrenchment process embarked upon by the first respondent .

[33] Section 194 of the LRA dealing with limits on compensation relied upon by the applicants is of assistance once it has been established that a dismissal was procedurally unfair. It does not confer jurisdiction on the court to determine the applicants’ section 189A(13) application in circumstances where section 189A does not apply to the retrenchments embarked upon by the first respondent.

[34] The above findings are dispositive of the issue but l deem it necessary to consider two submissions made by the first respondent on section 189A(13) applications.

[35] The first is that the applicant employees are not entitled to the relief sought because compensation in terms of section 189A(13)(d) is not a stand-alone remedy. In Regeneys the Constitutional Court made it clear that compensation in terms of section 189A(13)(d) can be a stand-alone remedy as that remedy has nothing to do with putting the consultation process back on track. Therefore, employees who are dismissed following an unfair procedure during a section 189A retrenchment process who do not wish to be re-instated must utilise section 189A(13)(d) to obtain compensation because the orders in terms of subsections (a) to (c) would be inappropriate. These employees cannot utilise section 191(5) of the LRA to obtain compensatory relief but must use section 189A(13). Therefore, but for the fact that l found that the retrenchment process embarked upon by the first respondent did not constitute a large-scale retrenchment, this court could have entertained the applicants’ claim for compensation as a stand-alone remedy. This should not be read to mean that such a claim would have succeeded. I am merely making the point that on the authority of Regeneys, compensation in terms of section 189A(13)(d) can be a stand-alone remedy for employees subjected to a section 189A retrenchment process when the remedies set out in subsections (a) to (c) are not appropriate.

[36] The second submission by the first respondent was that section 189A(13) is intended to permit urgent intervention by this court over section 189A consultations to correct any procedural irregularities as and when they arise. This submission is correct in so far as subsections (a) to (c) of the provision are concerned. In Regeneys Management (Pty) Ltd the court has since clarified that while this is the primary purpose of section 189A(13), there is a secondary purpose served by subsection (d) which allows this court to entertain a section 189A(13)(d) claim for compensation even after the retrenchments have been effected. It is in terms of this provision and only this provision that employees affected by a large-scale retrenchment can seek relief for procedural unfairness. Claims for alleged substantive unfairness are to be pursued in terms of section 191(5) of the LRA.

[37] I accept that when this matter was argued on 22 May 2024, the parties may not have been aware of the Constitutional Court judgment in Regeneys, which was decided on 21 May 2024. I did not see the need to call for supplementary heads of argument following the handing down of the Constitutional Court decision in Regeneys as the application would still fail given that the retrenchment process sought to be challenged was not a section 189A one.

[38] It is also necessary that l address the only point raised by the second and third respondents in opposition to the application, viz, that the court lacks jurisdiction to determine the application because the dispute was not conciliated. There is nothing in section 189A that suggests that section 189A(13) applications must be preceded by a conciliation. In fact l would venture to add that were applicants in such matters required to first refer their disputes for conciliation, they would without fail miss the 30 days deadline for filing such applications with this court. It is disputes where the substantive fairness of the dismissal is challenged that are required to be conciliated. Therefore the submission has no merit.

[39] In conclusion, the applicants cannot pursue a claim for compensation in terms of section 189A(13)(d) of the LRA.

[40] Even if s189A(13) applied, damages for psychological distress and severance pay claim are not competent relief in terms of subsection (d). Only compensation can be awarded in terms of that provision. This is another reason for refusing the relief sought.

[41] The above findings are dispositive of the application but l nevertheless proceed to deal with the other submissions by the applicant.

Injury committed or reasonably apprehended

[42] The applicants allege that harm is reasonably apprehended as the first respondent has financial constraints and is at risk of insolvency, hence this court must intervene at this stage to protect their rights when there is still an employer to enforce their rights against.

[43] Because the applicants cannot utilise section 189A(13)(d) to have their claim for compensation heard by this court, it follows that there can be no talk of irreparable harm warranting this court’s intervention.

No alternative remedy

[44] This court’s refusal to entertain this section 189A(13) application for compensation does not mean that the applicants are without remedy. They can utilise section 191(5) of the LRA to challenge the alleged procedural fairness of their dismissals.

[45] The applicants’ claim that in terms of sections 198B(3),[7] read with section 198B(5)[8] of the LRA, they were employed on contracts of indefinite duration, is a claim that should be processed in terms of section 198D(1) of the LRA.

[46] If there is a dispute about the applicant’s entitlement to severance pay, section 41(6) of the Basic Conditions of Employment Act[9] (BCEA) provides that such a dispute can be referred to the CCMA or a Bargaining Council with jurisdiction. The severance pay payable can be determined by this court in a section 191(5) referral.

[47] The breach of contract claim can be referred to this court as such but cannot be brought in terms of section 189A(13) of the LRA.

[48] Therefore the applicants have adequate alternative remedies to have all their claims against the respondents determined.

[49] The other problem for the applicants is that these claims are not foreshadowed in the notice of motion, but are referred to in the founding affidavit, which would be yet another reason not to entertain the claims.

Conclusion and costs

[50] The applicants have not made out a case for the relief sought.

[51] On the one hand the applicants sought costs against the respondents who they contend forced them into litigating.

[52] On the other hand the respondents urged the court to grant punitive costs against the union for bringing a frivolous claim, and a reserved costs order against the applicant employees until the first respondent can verify the information that they have since secured alternative employment with a competitor of the first respondent. At that stage, a joint and several liability costs order will be sought against all the applicants.

[53] Even though the claim ultimately turned out to be one without merit, Mr Mbana who represented the applicants compiled

lengthy and detailed affidavits and heads of arguments in which he set out what he viewed as his members’ strong case against the respondents. During argument, he passionately argued that case believing that it had merit even though it turned out otherwise. He also deposed, in the replying affidavit, that he was of the view that it is standard procedure to seek a rule nisi in such applications. It has not been suggested that Mr Mbana is a legal person and therefore should know better. In its submissions the second and third respondents refer to the fact that Mr Mbana is a senior labour relations officer at NUFAS. That may be so, but a trade union official cannot be equated to a legal person. Therefore, l find that the application was filed in the bona fide but mistaken belief that it had merit and therefore should not be met with a costs order, whether punitive or otherwise.

[54] I have also taken into account the events which necessitated the launch of the application and the fact that the

applicants felt, wrongly or rightly, done in by their employer and resorted to approaching the court in the hope of getting recourse

after they felt that they had been left hanging. At some point they were issued with termination letters. These letters were retracted

only after the union intervened. Since the letters of termination were retracted in late April 2024, they have not been allowed to render services and their tools of trade were taken away from them. The employer gives its reasons for implementing these measures, one of which is that the second applicant secured employment with a competitor of the first respondent.

[55] However, no reasonable explanation is given as to why the third applicant who is not alleged to have secured alternative employment with a competitor has not been allowed to resume her duties until the consultation process is concluded. There is also a dispute as to whether the applicant employees are still receiving their salaries. I am not in any way pronouncing on the merits of any claim that the applicant employees may be advised to bring. All l am saying is that their aggrievement with the state of affairs in the period preceding the launch of the present application is understandable, even though the current application failed. All the above stated militate against granting a reserved costs order against the applicant employees as sought by the first respondent.

[56] In the premise, the following order is made:

Order

1. The matter is heard as one of urgency.

2. The application in terms of section 189A(13)(d) of the Labour Relations Act, 1995, is dismissed.

3. There is no order as to costs.

_______________________

T Gandidze

Acting Judge of the Labour Court of South Africa

Appearances:

For the Applicant: Mr Mbana

Instructed by:

Official of NUFAS

For the first respondent: Mr Belger

Instructed by:

Mr Horn of Cowan Harper Madikizela Attorneys

For the second and third respondents: Mr May

Instructed by:

DBP Law

[1] No. 66 of 1995, as amended.

[2] I return to this issue below as the claim before court is one for a dismissal not in compliance with section 189A(13)(d) of the Labour Relations Act No. 66 of 1995.

[3] Regeneys Management (Pty) Limited t/a Regeneys v Ilunga and Others CCT 220/2022 [2004] ZACC 8 (21 May 2024) at para 77.

[4] [2015] 2 BCLR 182 (CC).

[5] The applicants allege that the applicant employees have in excess of ten years’ service but also refer to employment contracts

concluded in 2019 and 2020, with the consequence that it is not possible to determine the actual length of service, an issue that fortunately need not be determined in these proceedings.

[6] Referred to in the answer as ‘two employees and two other persons in the Stop Order Team’, and the prior retrenchment of Ms. Major.

[7] The section prohibits the employment of employees on a fixed term contract or successive fixed term contracts unless the exclusions in the provision apply and it is the applicant’s case that none of those provisions applied to their situation.

[8] The provision states that employees employed contrary to subsection (3) are deemed to be on contracts of indefinite duration.

[9] Act No 75 of 1997.