Richard Mvubu, the Applicant (“Employee”), was permanently employed by Pharmaceutical Contractor (Pty) Ltd, the Respondent (“Employer”). The Employee was employed to work the night shift in the manufacturing and granualtion unit of the Employer.
Following an attempted armed robbery with a demand for ransom at the Employer’s premises, the Employer initiated retrenchment proceedings in terms of Section 189 of the Labour Relations Act 66 of 1995 (“LRA”). After the consultations, the Employer retrenched the employees who worked the night shift, which included the Employee.
Commission for Conciliation, Mediation and Arbitration (“CCMA”)
The Employee (together with the other retrenched employees), represented by the trade union, referred the matter to the CCMA. However, the matter remained unresolved and the other employees withdrew from the matter.
The Employee thereafter brought an application to the Labour Court for unfair retrenchment, on the basis that his retrenchment was unfair on both procedural and substantive grounds.
According to the section 189(3) notice issued by the Employer, the need to retrench arose as a consequence of, inter alia, the economic situation at the time and security concerns due to the attempted armed robbery at the Employer’s premises.
The main issue to be determined by the Labour Court were as follows: –
- whether there was a need to retrench;
- whether the notice issued in terms of section 189(3) constituted sufficient notice;
- whether there was a proper consultation in terms of section 189; and
- whether the Applicant is entitled to relief prayed for or any other relief.
The Employer’s reason for the retrenchments were due to the “bad economic situation and sudden downfall of work”, as the work done by the night shift employees could also be done by the day shift employees.
The Employee disputed the above and contended that the Employer had failed to follow certain guidelines contemplated in Section 189 of the LRA, in that: –
- there had been insufficient consultation (in that there was no second meeting as alleged);
- that the Employer had not allowed the employees to provide their opinion; and
- that Employer did not explore alternative measures such as preferably, Retrenching temporary staff instead of permanent staff.
As such, the ‘meaningful consultation process’, as contemplated in Section 189 of the LRA, requires that the Employer may not have reached a pre-determined decision to retrench.
The Labour Court had to consider whether there was a need to retrench and whether the Employer had facilitated meaningful consultations with the employees in reaching the decision to retrench due to economic factors.
Despite the Employer providing economic reasons for its restructure of the employees working hours, the Employer had provided the employees with no opportunity to suggest alternatives to retrenchment, nor did the Employer explore alternatives. In this regard, the so called ‘economic reasons’ where not convincing to the Labour Court and appeared to be an excuse for the Employer to reduce its workforce.
As such, the Labour Court found that the Employer had failed to conduct a meaningful consultation process with the Employee. Accordingly, the Labour Court found that the retrenchment was procedurally and substantively unfair and ordered reinstatement of the Employee, with a back-pay equivalent to 12 months’ salary.
The judgment stresses that the consultation part of the retrenchment process should not have a predetermined outcome. The judgment further emphasises the necessity for the employer to have meaningful engagement with the employees throughout the retrenchment process and to have explored alternatives to retrenchment prior to making a decision to retrench. Moreover, the employer’s decision to retrench for operational and commercial reasons must be justifiable on rational grounds and must not merely be used as an excuse to reduce the workforce.
Written by Ayanda Katjitae