Many employers face the reality of inevitably having to consider retrenchment. Employers see the changing requirement of the company and realise they might need to retrench, but for several reasons, they prolong the decision to start the consultations with affected employees. Reasons may include:
- Employers hoping the business would turn around, for example, an employer who has given out several large quotations and hope for them to be accepted;
- Employers do not want to scare employees and risk losing highly skilled and loyal employees to competitors;
- Employers don’t want the news of retrenchment to be made known to suppliers, clients or competitors as it may harm the company.
There is a concept that employee representatives, especially unions, have been known to argue in retrenchment proceedings know as fait accompli (the fate of the employee had already been predetermined). The courts have historically stated that this comes down to the employer having a closed mind.
One example of this is what the court said in CVO School Vivo v Pretorius and Others ZALCJHB 412 (6 April 2017) where the court said, “What is the point of consulting where it can do nothing to avoid possible job loss and where the mind of the employer is not only completely closed to any proposals or suggestions forthcoming from the employee”.
Therefore, there is tension between avoiding this fait accompli and the employer meetings its legal obligations under section 189 of the Labour Relations Act. This tension is because the employer must consult with employees likely to be affected, which requires some degree of decision-making. This tension is intensified because the employer has a lawful duty to inform the employees he identified are likely to be affected of the number of positions likely to be involved and also specify the job categories under section 189(3)(c). The employer can’t provide this information if it cannot, to a degree, decide before the retrenchment commences.
This tension has not gone unnoticed by the courts, and in 2019 this was more formally addressed, and employers can get some relief from this tension. In South African Commercial Catering and Allied Workers Union (SACCAWU) and Others v JDG Trading (Proprietary) Limited, the court stated the following:
An employer cannot be held to a standard of a genuine commercial rationale for retrenchment if it would be prejudiced in subsequent court proceedings precisely for making such an assessment of its commercial realities. The employer must be entitled to form a prima facie view on retrenchment, even a firm one, provided it demonstrates and keeps an open mind in the subsequent process of consultation, which was the case here.
Based on this very recent case from the Labour Appeal Court, it is clear that the employer can decide the number of possible dismissals, the job categories, and the selection criteria. The fact that the employer has formed a view before consultations do not automatically cause procedural unfairness.
The Constitutional court recently (2022), in the case of Solidarity obo Members v Barloworld Equipment Southern Africa and Others, supported the case of the Labour Appeal Court and has given a good outline of what is required from the employer to avoid fait accompli and ensure lawful consultation. The court gave the following points:
- An employer must disclose sufficient information to enable parties to make informed representations;
- Carefully and thoughtfully, consider the proposals made;
- An employer is obliged to give reasons for rejecting employee proposals after careful consideration of the proposals.
Want to know more about what information to disclose and what not to disclose? Contact your nearest SEESA Labour Legal Advisor. Alternatively, leave your contact details on our website, and a SEESA representative will contact you.
About The Author:
Andries Lerm is a Senior Legal Advisor at the SEESA Cape Town branch. He has an Honours Degree in Employment Relations (Industrial Relations) from the North West University (Potchefstroom) and an LLB from the University of South Africa and has approximately 10 years of service with SEESA (Pty) Ltd.
Resources:
- CVO School Vivo v Pretorius and Others; CVO School Vivo v Pretorius and Others (JR1006/15; JR1004/15) [2017] ZALCJHB 412 (6 April 2017);
- Solidarity obo Members v Barloworld Equipment Southern Africa and Others (CCT 102/21) [2022] ZACC 15 (6 May 2022);
- South African Commercial Catering and Allied Workers Union and Others v JDG Trading (Proprietary) Limited (JA140/17) [2018] ZALAC 38; (2019) 40 ILJ 140 (LAC); [2019] 2 BLLR 117 (LAC) (17 October 2018);
Labour Relations Act 66 of 1995.