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Collective Bargaining Clive Thompson. Organisational Rights, the Duty to Bargain and the Termination of Collective Agreements. Section 18 of the LRA:

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organisational rights the duty to bargain and the termination of collective agreements
Organisational Rights, the Duty to Bargain and the Termination of Collective Agreements

Section 18 of the LRA:

(1) An employer and a registered trade union whose members are a majority of the employees employed by that employer in a workplace, or the parties to a bargaining council, may conclude a collective agreement establishing a threshold of representativeness required in respect of one or more of the organisational rights referred to in sections 12, 13 and 15.

(2) A collective agreement concluded in terms of subsection (1) is not binding unless the thresholds of representativeness in the collective agreement are applied equally to any registered trade union seeking any of the organisational rights referred to in that subsection.

organisational rights the duty to bargain and the termination of collective agreements1
Organisational Rights, the Duty to Bargain and the Termination of Collective Agreements

BHP Billiton Energy Coal South Africa Ltd v CCMA & others (LC)

  • AMCU one of 3 unions recognised for organisational and bargaining rights purposes; bargained in central forum
  • Employer alters its policy: AMCU excluded from new bargaining forum
  • AMCU applies to CCMA for relief. CCMA issues arbitration award instructing employer to “engage with AMCU with all the negotiations” and to allow AMCU “to be a party to any proceedings in the interest of its members”.
  • BHP Billiton asks Labour Court to review CCMA award:
    • No legal authority to require bargaining
    • Two other unions had an interest in CCMA proceedings and should have been joined
organisational rights the duty to bargain and the termination of collective agreements2
Organisational Rights, the Duty to Bargain and the Termination of Collective Agreements

BHP Billiton Energy Coal South Africa Ltd v CCMA & others (LC)

  • Basis of CCMA reasoning: all parties should be treated equally (?)
  • Did AMCU have a case based on its earlier recognition agreement (to be pursued, then, under s 24)?
  • Labour Court:
    • No duty to bargain under LRA
    • In any event, other parties should have been joined
    • Award set aside, matter remitted to CCMA for a fresh hearing
organisational rights the duty to bargain and the termination of collective agreements3
Organisational Rights, the Duty to Bargain and the Termination of Collective Agreements

TAWUSA & Alliance comprising of STEMCWU v Anglo Platinum Ltd (LC)

  • 2002: TAWUSA and Alliance unions recognised for bargaining and other purposes
  • 2006: Employer recognises NUM and UWUSA, gives notice to TAWUSA and other that the existing agreement are to be cancelled on notice
  • TAWUSA tries to stop cancellation by bringing interpretation and application dispute to CCMA. CCMA says it cannot deal with it.
  • TAWUSA then asks Labour Court to hold the status quo pending while it refers other related disputes to the CCMA.
tawusa alliance comprising of stemcwu v anglo platinum ltd lc
TAWUSA & Alliance Comprising ofSTEMCWU v Anglo Platinum Ltd (LC)

Court notes that recognition agreements may be terminated under s 23(4 ) on reasonable notice. Company in this case gave three months, a reasonable period.

  • To grant the relief requested would “amount to compelling the [employer] to continue in a collective bargaining relationship to which it no longer wishes to be a party”.
  • “The LRA adopts an unashamedly voluntarist approach – it does not prescribe to parties who they should bargain with, what they should bargain about or whether they should bargain at all. In this regime the courts have no right to intervene and influence collectively bargained outcomes.”
essential services and minimum services
Essential Services and Minimum Services

Section 72:

The essential services committee may ratify any collective agreement that provides for the maintenance of minimum services in a service designated as an essential service, in which case –

  • the agreed minimum the services are to be regarded as an essential service in respect of the employer and its employees; and
  • The provisions of section 74 do not apply.

Section 74: compulsory arbitration substituted for industrial action in essential services

essential services and minimum services1
Essential Services and Minimum Services

Eskom Holdings (Pty) Ltd v NUM & others (LC)

  • Eskom an essential service. NUM and Solidarity ask for a minimum services agreement. Eskom declines.
  • Unions refer dispute to CCMA. CCMA finds that it can deal with matter. Eskom challenges this outcome in the Labour Court.
  • Can the CCMA arbitrate the matter? Can the Essential Services Committee ratify an arbitration award on minimum services or only a collective agreement on minimum services?
  • What can a union do to try to oblige an employer to agree a minimum services arrangement? If it can’t strike, surely someone must arbitrate?
  • Court finds for employer. The ESC has made its primary determination, and the boundaries can only be varied by an uncoerced agreement .
interpretation and application of agreements
Interpretation and Application of Agreements

National Entitled Workers’ Union v MEIBC & Others (LC)

  • Dispute over non-payment in relation to the working of short-time
  • A dispute over the interpretation and application of an agreement (Main Agreement of the Metal and Engineering Industries Bargaining Council), or over the contravention of and agreement?
  • Union brings the case to the Council on the former basis.
  • Court holds against it: “The dispute concerned compliance rather than interpretation and application, and fell to be treated on that basis in terms of the procedures that are respectively applicable.”
dealing productively with constant workplace change
Dealing Productively with constant Workplace change

USA:Kochan & others:

What is needed is collaboration on three fronts:

  • In the workplace – participatory work practices
  • In collective bargaining – emphasis on interest-based bargaining
  • Strategic level – labour-management partnerships
dealing productively with constant workplace change1
Dealing Productively with constant Workplace change

SA: The challenge in the nineties and noughties:

  • New institutions needed to be created to carry labour-management relations at all levels √
  • A new set of workplace dynamics – a new workplace ethos – needed to be forged. X
  • The workplaces of the future needed to be productive and competitive. X
  • The entire framework and approach needed legitimacy across all key stakeholders. √
procedural fairness
Procedural Fairness

Timelines for retrenchment:

  • Section 189(1) read with s 189(3): When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must issue a written notice inviting the other consulting party to consult with it.
  • Subsections 189A(7) and (8): The employer may give notice to terminate the contracts of employment in accordance with section 37 (1) of the Basic Conditions of Employment Act –

(a) if a facilitator is appointed, once 60 days have elapsed from the date on which notice was given in terms of section 189 (3) or,

(b) if a facilitator is not appointed, once a matter has been referred to statutory conciliation (after a 30-day wait) and the periods mentioned in section 64 (1)(a) have elapsed (effectively, once a certificate on non-resolution has been issued or 30 days have passed)

procedural fairness1
Procedural Fairness

National Union of Metalworkers of South Africa & others v General Motors of South Africa (Pty) Ltd(LC)

  • Crash in demand for cars: 80,000 becomes 25,000
  • 1 July 2008: s 189(3) notice issued – unions informed that 520 positions at stake, downsizing to occur over “3 to 4 months”.
  • By end of year, workforce reduced by 1,000
  • Fresh need to retrench further in early 2009: new notices required or not? Company goes ahead without issuing new notices.
  • 4 Feb 2009: GM advises of need to continue the process. Proposes shift changes to save jobs. Proposal rejected.
  • April 2009: 400 more job go.
  • Unions come to court under s 189A(13) and (17): claim of procedural unfairness – need for fresh notice and consultation (?)
numsa v general motors
NUMSA v General Motors

Issue 1:

Lifespan of a s 189(3) notice; three indicators contemplated , namely –

(1) some raison d’être, usually in the form of an underlying commercial dynamic, for the foreshadowed consultation process;

(2) a timescale for the anticipated reduction in the workforce; and

(3) the anticipated scale of the reduction in the workforce.

Finding: fresh notice needed in the circumstances of the case

numsa v general motors1
NUMSA v General Motors

Issue 2:Did the union exercise its legal rights in good time? Finding: No

“The overriding consideration under section 189A is to correct and prevent procedurally unfair retrenchments as soon as procedural flaws are detected, so that job losses can be avoided.”

An application challenging the fairness of the procedure in the event of larger scale retrenchments must be brought “not later than 30 days after the employer has given notice to terminate the employees services or, if the notice is not given, the date on which the employees are dismissed”.

numsa v general motors2
NUMSA v General Motors

Issue 3: Any relief for workers not yet dismissed?

“There is little purpose in a trade union participating in a process designed for joint consensus-seeking, as NUMSA did, when its strategy is limited to making allegations of ideological impurity and moral bankruptcy – this is the industrial relations equivalent of fiddling while Rome burns. But it is not for this court to second-guess the outcome of the consultation process, nor to protect its integrity beyond the statutory requirements. I trust that effective intervention by a skilled facilitator might produce a mutually acceptable outcome and achieve one of the important objectives of the LRA – to provide organised labour with a voice in any restructuring or retrenchment process, and to promote the prospect of consensual outcomes on the vital issue of preserving jobs.”

procedural fairness2
Procedural Fairness

The pointed lesson for unions from NUMSA v General Motors:

Although employers may be tripped up for procedural lapses, there is not much succour for workers here and the true challenge is to get the most out of the consultation process. Crisis consultations – the usual form – need to be replaced by longer-term enterprise and industry plans on employment security between employers and unions.

procedural fairness3
Procedural Fairness

National Union of Mineworkers v De Beers Group Services (LC)

  • Global economic crisis: need to restructure and retrench at three different operations; some 600 jobs at stake
  • Consultations generally conducted at a central forum

Issue: were valid notices issued under s 189(3) read with s 189A(8)?

national union of mineworkers v de beers
National Union of Mineworkers v De Beers

Section 189A(8): If a facilitator is not appointed, then two requirements kick in:

  • A party may not refer a dispute to a council or the Commission unless a period of 30 days has lapsed from the date on which notice was given in terms of section 189(3); and
  • Once the periods mentioned in section 64(1)(a) have lapsed, then the employer may give notice to terminate the contracts of employment in accordance with section 37(1) of the Basic Conditions of Employment Act.

(Section 64(1)(a) essentially requires 30 days to run. One effect of s 189A(8) is to render time-neutral the options of facilitation and non-facilitation.)

national union of mineworkers v de beers1
National Union of Mineworkers v De Beers
  • In two of the three De Beers cases, there was effectively no referral of the retrenchment exercises to facilitation nor a referral of any dispute to statutory conciliation. The employer merely consulted with either the affected employees or their union, NUM, and then proceeded to issues termination notices.

Issue: Could these notices be valid? Is referral to statutory conciliation only obligatory in the event of a dispute? The core of the union’s case was that the employer was not entitled to issue notices of termination unless the matter had first been referred to the CCMA for statutory conciliation and the specified time periods had run their course.

national union of mineworkers v de beers2
National Union of Mineworkers v De Beers

De Beers’ argument: There is no explicit requirement to refer a dispute to the CCMA before issuing notices of termination but in any event the need to make a referral only arises if there is in fact some dispute in relation to the pending retrenchments, which was not the case here. Furthermore, it said, the duty imposed by section 189(2) is only to “attempt” to reach consensus, and at some point the employer is entitled to call off the process and to act unilaterally.

national union of mineworkers v de beers3
National Union of Mineworkers v De Beers

Section 189A(2)(a) specifies that “an employer must give notice of termination of employment in accordance with the provisions of the section”. In NUM v De Beers (2006) 27 ILJ 1909 (LC), Freund AJ held, in a case where no facilitator had been appointed in respect of a large-scale retrenchment, that –

“s 189A(8)(b)(i) provides that the employer “may” give notice to terminate the contracts of employment “once the periods mentioned in s 64(1)(a) have elapsed”. Reading s 189A(2)(a) together with s 189A(8)(b)(i), I think it is clear that the lawgiver intended that the employer may only give notice to terminate the contracts of employment if the periods mentioned in s 64(1)(a) have elapsed”.

national union of mineworkers v de beers4
National Union of Mineworkers v De Beers

In the current case, in two of the three matters, the union itself decided to refer what it regarded as disputes to statutory conciliation not long after the employer issued notices of termination.

With dispute underway, employer cannot simply issue notices of termination.

Earliest dates on which De Beers would have been entitled to issue valid notices of termination would have been the dates on which the certificates of outcome of the statutory conciliation had been issued.

national union of mineworkers v de beers5
National Union of Mineworkers v De Beers

Comment: sections 189 and 189A must be read together, and their overriding objective is to promote problem-solving and consensus-reaching outcomes. When consultation delivers agreement, there is no dispute and therefore the call to invoke statutory conciliation as a ritual step before issuing notices of termination is simply otiose.

However, if there is any doubt over whether there is agreement on restructuring plans involving dismissals, then a prudent employer should assume a dispute and parcel the matter off for either facilitation or conciliation, and let the prescribed periods run before issuing any notices of termination

substantive fairness
Substantive Fairness

NUMSA & others v Genlux Lighting [LC]

– a failed restructuring attempt

  • Performance issues (productivity, absenteeism, theft, competition from cheap imports and more)
  • Remedy: retrench all, rehire all through a temporary employment agent to do the same work
  • Claims of substantive and procedural unfairness

Issue: Was there a genuine retrenchment?

numsa others v genlux lighting
NUMSA & others v Genlux Lighting

“Effectively, the company relinquished its administrative function on its labour force. To that extent, the company even paid 12% more that it had spent before retrenchment to enable the third party agent to cater for the human resources services of the employees.

. . . The reasons advanced for retrenchment when seen against the behaviour of the respondent after retrenchment show that the decision to retrench was nothing but a sham. The overwhelming evidence shows that the retrenchment was not properly and genuinely justified by operational requirements. The decision to retrench was undoubtedly not a reasonable option in the circumstances.”

substantive fairness1
Substantive Fairness

Visser v Atronic International GmbH (LC)– retrenchment a fait accompli?

  • Germany company board decides to close SA office and appoint an independent distributor instead
  • Sales manager retrenched at the end of July 2007
  • Issue: Whether the employer had had a valid reason for the dismissal and whether a meaningful consultation process had been pursued
substantive fairness2
Substantive Fairness

Visser v Atronic International GmbH (LC)

“This was a classic example of a retrenchment where the employee was confronted with a fait accompli. The impression gained from the evidence was that the Respondent tried to justify the retrenchment ex post facto hence the evidence of Beckman [the managing director based in Germany]. This is not fair. The Applicant was as a result of this decision afforded no opportunity to influence the actual decision to retrench her. She was thus not afforded an opportunity to consult over the need to retrench her.”

(?)

substantive fairness3
Substantive Fairness

Janse van Rensburg v Super Group Trading (LC)

  • Senior manager retrenched without meaningful prior consultation
  • Employer also relying on employee’s alleged lack of interpersonal skills and generally rude and aggressive behaviour

“He was never given an opportunity . . . to respond to these allegations before the decision to terminate his employment was taken. In any case, these are issues best dealt with through a disciplinary or incapacity hearing and not the retrenchment process.”

substantive fairness4
Substantive Fairness

Marneweck v SEESA Ltd (LC)

  • Applicant a manager of a marketing team
  • Performance issues: put on terms, then made an agent on a commission basis
  • Employee claims unfair dismissal
  • Employer responds by charging the employee with desertion, conducting a disciplinary enquiry in his absence and then dismissing him for desertion.
  • Labour court finds there was a dismissal in the first instance, as claimed by the employee
substantive fairness5
Substantive Fairness

Marneweck v SEESA Ltd (LC)

“The respondent by introducing a new contract that radically changed not only the terms and conditions of employment of the applicant, but also the nature of the relationship from that of employment relationship to that of an independent contractor, repudiated the contract, which repudiation the applicant accepted.”

substantive fairness6
Substantive Fairness

Marneweck v SEESA Ltd (LC)

Employee found to have been dismissed for operational requirements but, “the applicant had not been consulted about the amalgamation of his team into another and the cursory meetings that had been held between the parties fell short of the now well-established consultation requirements”.

selection criteria
Selection Criteria

Section 189(7): The employer must select the employeesto be dismissed according to selection criteria –

  • that have been agreed to by the consulting parties; or
  • if no criteria have been agreed, criteria that are fair and objective.
selection criteria1
Selection Criteria

NUMSA obo members v Timken SA (LC)

  • Agreement could not be reached and so the employer elected to go with a mix comprising years of service, attendance record, disciplinary record and tardiness.
  • Those so selected for dismissal felt aggrieved and brought a challenge in the Labour Court.
numsa obo members v timken sa
NUMSA obo members v Timken SA

LIFO is the most objective and fair [criterion] to use. This [criterion] need not be applied in those cases where its application could result in loss of skills or disrupt the business operations. There was no evidence to that effect in the present instance.

Where the selection of employees is based on factors such as attendance record, tardiness and performance, such employees should be given an opportunity to make representations against the negative conclusion that may be drawn against them as a result thereof.

In the present instance, the analysis of the selection criteria shows clearly, in my view, that it was subjectively based on the elements of discipline. The criteria excluded from its scope skills, qualifications, experience and long service. What is also clear is that even if it was to be found that the [criterion] itself was objective and fair, its application was clearly unfair.

numsa obo members v timken sa1
NUMSA obo members v Timken SA
  • Bumping must be considered (Porter Sigma v Karachi [LAC])
  • Retraining must be considered:

“An employer has an obligation not to dismiss an employee for operational requirements if the employer has work which such employee can perform either without any additional training or with minimal training” – Zondo JP in Oosthuizen v Telkom

consultation
Consultation

189.   Dismissals based on operational requirements

(1)  The employer must consult –

(a) any person whom the employer is required to consult in terms of a collective agreement;

(b) if there is no collective agreement that requires consultation –

(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and

(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;

(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or

(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.

consultation1
Consultation

National Union of Metal Workers Union of SA v Aunde South Africa (Pty) Limited (LC)

Employer covered by Metal Industries Bargaining Council (MIBCO)

  • NUMSA recognised by employer
  • Waves of retrenchment; NUMSA membership falls below 1/3; rival union UASA grows to 60 %; NUMSA derecognised, UASA cuts deal which sees employees including NUMSA members dismissed and then re-engaged on reduced terms
  • NUMSA brings s 189A(13) challenge to Labour Court
numsa v aunde lc
NUMSA v Aunde (LC)

Issue: Whether or not Aunde had a duty to consult with NUMSA after it lost its majority membership

  • Employer only has to consult over pending retrenchments with “any person whom the employer is required to consult in terms of a collective agreement majority union recognised for this purpose” (s 189(1))
  • “The recognition agreement which [Aunde] sought to rely on in support of its argument that the procedure it followed was in line with the provisions of section 189(1)(a) of the LRA, is silent in as far as the regulation ofthe consultation process in case of a retrenchment was concerned.” – Therefore dismissals procedurally unfair
consultation2
Consultation

HOSPERSA v MEC for Works, KwaZulu-Natal & another (LC)

Departmental restructure

  • Posts of incumbents advertised, but incumbents ineligible – insufficient qualifications
  • Insufficient prior consultations
ccma or labour court for individual operational requirements dismissal cases
CCMA or Labour Court for Individual Operational Requirements Dismissal Cases?

Scheme Data Services (Pty) Ltd v Myhill NO (LC)

Section 191 (12):

If an employee is dismissed by reason of an employer’s operational requirements following a consultation procedure in terms of section 189 that applied to that employee only, the employee may elect to refer the dispute either to arbitration or to the Labour Court.

ccma or labour court for individual operational requirements dismissal cases1
CCMA or Labour Court for Individual Operational Requirements Dismissal Cases?

Scheme Data Services (Pty) Ltd v Myhill NO (LC)

  • Can the substantive fairness of a operational requirements dismissal be challenged in either arbitration or the Labour Court only if that dismissal is procedurally okay?
  • “[T]he plain wording of the section is clear and it is this: an employee who is dismissed for operational reasons is free to refer the dispute – whether founded on procedural fairness or substantive fairness or both – either to the CCMA or to the Labour Court.”
severance pay
Severance Pay

NASUWU & another v Pearwood Investments (Pty) Ltd t/a Wolf Security (LC)

  • Accepting severance pay: a waiver of the right to challenge the fairness of the dismissal?
  • No: “Acceptance of, and claims for, severance pay cannot constitute a waiver of the rights of the individual applicants to pursue their claim in respect of their unfair termination based on operational requirements.”
severance pay1
Severance Pay

Mampuru v Maxis Strategic Alliance (LC)

Severance pay and prescription

  • 2002: Employees retrenched, with promise of severance pay
  • Monies not forthcoming; legal proceedings only instituted in 2008
  • Provisions of Prescription Act apply to claims under the LRA. Act provides that, with certain exceptions, debts prescribe three years after the debt is due. The debtin this matterfell due on 30 August 2002, which meant that the applicants’ claim against the employer under the agreement had prescribed. The applicants left empty-handed.
restructuring and retrenchment
Restructuring and Retrenchment

Aviation Union v SAA [LAC] [Zonda JP & Davis JA]

Second-generation outsourcing revisited: if a service which qualifies as a business or part of a business is transferred (outsourced) as a going concern from A to B (meaning that all contacts of employment must be transferred under s 197), and that same service is later moved on to a third employer or back to the original employer, does that second event triggers s 197 as well?

aviation union v saa lac
Aviation Union v SAA [LAC]

2000: SAA outsources a range of building maintenance services to LGM for up to ten years. Agreed that this is s 197 transfer.

2007: SAA invokes its reserved contractual rights to redirect the outsourced services because of a change in ownership of LGM.

Temporary service provider appointed to provide the relevant services pending the outcome of the tender process

LGM advises its (previously transferred) employees of possible retrenchment; facilitated consultations commence

Union calls on SAA take back/take on all relevant employees of LGM. SAA refuses. Matter goes to Labour Court. Decision in favour of SAA.

Appeal to Labour Appeal Court.

aviation union v saa
Aviation Union v SAA

Assets and inventory of SAA as pertaining to the transferred services were sold to LGM and, on termination of the outsourcing agreement, SAA would be entitled to repurchase the assets and inventory of LGM dedicated to providing the services under the agreement.

LGM and SAA agreed that transferred employees were deemed to have been employed by LGM in terms of section 197(1)(a) and 197(2) (a) of LRA.

LGM was afforded the access which was reasonably required to render the services to use the office space, workshops, the airport apron, computers and the network of SAA at all designated airports.

Of critical importance to the present dispute was a provision in the agreement (clause 27) that SAA retained a right to transfer certain services and all functions to itself or to a third party and to obtain transfer or assignment of LGM to SAA of all third party contracts.

aviation union v saa1
Aviation Union v SAA

SAA

LGM

Next E’er

1st transfer of maintenance service plus employees

2nd transfer of maintenance service plus employees

aviation union v saa2
Aviation Union v SAA

Section 197 (1) :

  • “transfer”’ means the transfer of a business by one employer (‘the old employer’) to another employer (‘the new employer’) as a going concern.
aviation union v saa3
Aviation Union v SAA

Davis JA: A Company wishes to rid itself of a group of employees who form a discrete business unit within A. It enters into an agreement with B Company whereby the particular business unit which forms a part of A’s overall business is transferred as a going concern to B. In short, B will now ensure performance of the operations of that unit. This transaction between A and B can be classified as an outsourcing agreement. The agreement includes the right of A to cancel the outsourcing agreement within a year which would thereby obligate B to transfer the business back to A. If the literal interpretation adopted by Basson J were to be applied, the entire protection of section 197 afforded to employees in the unit could be circumvented in that, once the business is retransferred to A, the latter would have no obligations to any of the employees pursuant to section 197 of LRA. This result would surely be subversive of the very purpose of section 197 and can only be sustained if the wording of the section could plausibly bear no other interpretation.

aviation union v saa4
Aviation Union v SAA

Davis JA: there is no compelling reason to conclude, on the wording of section 197(1)(b), that the new employer (i.e. the initial transferee) has not transferred the business to a third party or to the initial transferor. In other words the initial transferee became the employer after the initial transfer. Pursuant to the contract which caused the initial transfer, the existing employer is now obliged to transfer the business to a party which will now become the new employer. Hence the second generation transfer falls within the scope of the definition.

Union appeal succeeds.

aviation union v saa5
Aviation Union v SAA

What now?

Debate will shift to whether, when an outsourced service shifts from a second to a third employer, there has in fact been the transfer of a business as a going concern. This will not always be the case. Consider:

A municipality has a contract with a certain car hire company (company A) to meet the travel needs of its employees. If it then terminates that contract and concludes a contract with company B, must all the employees of company A now be employed by company B? “Surely not”, was the Court’s response in Crossroads Distribution (Pty) Ltd t/a Jowells Transport v Clover SA (Pty) Ltd & others [2008] 6 BLLR 565 (LC); (2008) [Revelas J]

restructuring transfers of employment
Restructuring:Transfers of Employment

Business and Design Software (Pty) Limited v van der Velde (LAC)

  • Section 187(1)(g): a dismissal is automatically unfair if the reason for the dismissal is “a transfer, or a reason related to a transfer, contemplated in section 197 or 197A”.
  • Does this mean that an organisation contemplating a transfer of part or all of the business is simply entirely frozen out of the downsizing option? More significantly still, is a company that has acquired another business simply barred from any sort of rationalisation of the workforce?
business and design software pty limited v van der velde lac
Business and Design Software (Pty) Limited v van derVelde (LAC)

One company bought another (BDS) in circumstances where it was clear that there had been a transfer of a business as a going concern, and where all of the former’s employees were to be transferred to the latter on the same terms and conditions. This transaction was formally effected by a sale agreement entered into on 3 April 2003, but the same agreement purported to make the deal effective from 1 January 2003. In the meantime, on 28 March 2003, the general manager of the first company, Mr Van der Velde, found himself retrenched when he refused a demotion after another person effectively took over his job, making him surplus to original requirements.

He alleged that his dismissal arose out of the transfer, and was hence automatically unfair under section 187(1)(g).

business and design software pty limited v van der velde lac1
Business and Design Software (Pty) Limited v van der Velde (LAC)

On facts, court had no trouble in concluding that van der Velde was dismissed for a reason related to the transfer.

Dismissal, automatically unfair

business and design software pty limited v van der velde lac2
Business and Design Software (Pty) Limited v van derVelde (LAC)
  • Old employer: “A dismissal to facilitate the transfer of the business as a going concern . . . is hit by section 187(1)(g) of the Act and is automatically unfair”.
  • New employer: “After the transfer the purchaser of the business can dismiss any employee for operational requirements where the requisite operational requirements can be proved and the right procedure is followed.”

(?)

restructuring transfers of employment1
Restructuring:Transfers of Employment

Ponties Panel Beaters Partnership v NUMSA (LAC)

  • Dismissals by Ponties 1 because of apparent operational requirements
  • While dismissals being challenged in LC, Ponties 1 goes out of business and Ponties 2 takes over
  • Labour Court finds dismissals unfair, and holds both Ponties liable
  • Pointies 2 (now called Triponza) goes into liquidation, tries to dismiss all staff but is interdicted
  • Ponties Panel Beaters now takes over the business, saying though that only the assets has been bought, not the business as a going concern
ponties panel beaters partnership v numsa lac
Ponties Panel Beaters Partnership v NUMSA (LAC)

Issue: Whether the same underlying business had been transferred as a going concern, so attracting the obligations of section 197 of the LRA

  • Plenty of continuities found
  • Interruption of business (one closing down, another starting up after a break) does not render s 197 inapplicable
  • Employer liable
restructuring challengeable under the promotion of administrative justice act
Restructuring: Challengeable under the Promotion of Administrative Justice Act?

NUTESA v Central University of Technology, Free State (LC)

  • In terms of collective agreement, CUT bound to deal with NUTESA on, amongst other things, restructuring (consultation-negotiation formula)
  • Union resists rather than engages over restructuring proposals
  • Union then attempts to interdict looming changes by claiming that employer’s restructuring decision constituted administrative action in contravention of the provisions of section 1 of the Promotion of Administrative Justice Act
restructuring challengeable under the promotion of administrative justice act1
Restructuring: Challengeable under the Promotion of Administrative Justice Act?

NUTESA v Central University of Technology, Free State (LC)

  • Union comes up against the Constitutional Court decision in Chirwa v Transnet: purpose of the LRA is to deal with all employment-related matters involving allegations of unfairness and that the LRA mechanisms were best suited to dealing with such disputes.
  • The case turned squarely on labour relations issues
  • “Failure to comply with the provisions of these documents does not, in my view, amount to administrative action as envisaged in section 33 of the Constitution or section 1 of PAJA. The decision in issue concerns collective bargaining issues and agreements which are governed by the provisions of the LRA.”