Employment law update – Termination in breach of a statutory provision – a dismissal or nullity?

May 1st, 2015

Edcon v Steenkamp and Others (LAC) (unreported case no JS648/13, JS51/14, JS350/14, 3-3-2015) (Murphy AJA with Tlaletsi DJP and Musi JA concurring).

By Moksha Naidoo

Section 189A of the Labour Relations Act 66 of 1995 was introduced to ‘enhance the effectiveness of consultation in large scale retrenchments’ and allows parties to appoint a facilitator to facilitate consultation between them.

If a facilitator is not appointed then in terms of s 189A(8):

(a) 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 s 189(3); and

(b) once the periods in s 64(1)(a) have elapsed –

(i) the employer may give notice to terminate the contracts of employment in accordance with s 37(1) of the Basic Conditions of Employment Act 75 of 1997.

The period referred to in s 64(1)(a) is a 30 day period or until such time as a certificate of non-resolution is issued.

In National Union of Mineworkers v De Beers Consolidated Mines (Pty) Ltd (2006) 27 ILJ 1909 (LC), Freund AJ had occasion to interpret s 189A(8). In that case the union, acting in terms of s 189A(8)(a), referred a dispute to the Commission of Conciliation, Mediation and Arbitration (CCMA) on 30 March 2006. The following day the employer gave its employees notice of termination advising them that their last working day would be 30 April 2006. The union approached the Labour Court arguing that the notice was premature and in breach of s 189A(8)(b). The court held that an employer can only serve a termination notice once 30 days have lapsed from the time the dispute was referred to the CCMA or once a certificate of non-resolution concomitant to the dispute referred, was issued. De Beers gave notices of termination a day after a dispute was referred to the CCMA and therefore acted in breach of a statutory provision (ie, s 189A(8)(b)) rendering the notices invalid. As part of the court’s reasoning Freund AJ relied on the peremptory language used in s 189A(2)(a) which reads:

‘In respect of any dismissal covered by this section –

(a) an employer must give notice of termination of employment in accordance with the provisions of this section.’

In an unrelated case the Labour Appeal Court (LAC) in De Beers Group Services (Pty) Ltd v NUM [2011] 4 BLLR 319 (LAC), when faced with a similar situation wherein the employer retrenched its employees before the 30 day period had expired from when the union referred a dispute to the CCMA, relied on Freund AJ reasoning and held that not only were the termination notices invalid but the ensuing dismissals were also invalid. Davis JA held:

‘In short, if the employer fails to comply with the mandatory requirement of consultation in terms of section 189(2) and moves to terminate the employment in breach of these provisions, then the dismissal must be considered to be invalid and accordingly of no force and effect’.

Edcon, the employer in casu, approached the court for a declaratory order.

Edcon sought an order declaring the decision of the LAC in De Beers was wrong in that a termination in breach of the time periods set out in s 189A(8), should not be deemed void where employees are automatically reinstated as a result of the employers non-compliance with a procedural issue. Under such circumstances, according to Edcon, a court should accept that there was indeed a dismissal and from there decide whether the dismissal was fair or not.

Given the importance of the case, the Judge President directed that the matter be heard by the LAC acting as a court of first instance.

In brief, Edcon’s declaratory was launched in response to three separate applications brought against it by employees whom Edcon retrenched and who relied on the principle set out in De Beers to argue their dismissals were void and, therefore, they should be automatically reinstated retrospectively. In all three applications the employees did not allege their dismissals were unfair but rather in breach of s 189A(8).

As a starting point the LAC held that the definition of ‘dismissal’, as set out in the LRA is wide enough to include an invalid termination in breach of statutory or contractual notice period.

Having made this point the court went on to say that a mere non-compliance with a statutory provision does not automatically lead to a nullity. Various factors must be taken into account in deciding whether such breach leads to any consequential act being declared void. These factors include the subject matter of the prohibition, its purpose in the context of the legislation, any statutory remedy which is provided in the event of a breach, any inconvenience that may flow from invalidity.

The court held that if a statute provides a remedy when one of its provisions are breached or if the declaration of invalidity would have disproportionate or inequitable consequences, then these would be significant factors to support the conclusion that the breach in question does not lead to a nullity.

In analysing s 189A in its entirety, the LAC noted that there was a statutory remedy available to employees. In terms of s 189A(9) when an employer does not comply with the time periods set out in s 189A(7) and (8) and in so doing issues a premature notice of termination, it is open for the employees to give the employer notice to embark on a protected strike. Under this section employees would be entitled to embark on strike action without first having to refer a dispute to the CCMA and waiting for a certificate before giving the employer notice to strike. Alternatively employees may approach the Labour Court on an urgent basis, in terms of s 189A(13) to order the employer to reinstate the employees or prevent the employer from dismissing the employees until such time as the former complies with a fair procedure.

In addition, the court held that compensation was the only remedy available to an employee whose dismissal was unfair for procedural reasons only. However, any violation of the time periods set out in s 189A(8), which must be considered a procedural issue, will be met with reinstatement on the basis that such a breach leads to a consequential dismissal being void – this according to the LAC went against the general scheme of the LRA. The remedy of compensation, as opposed to automatic reinstatement as a result of a statutory breach, under such circumstances would lead to a more proportionate and less capricious consequence.

In arriving at this conclusion the LAC held:

‘In the premises, we are persuaded that non-compliance with section 189A(8) of the LRA was not intended by the legislature to result in the invalidity or nullity of any ensuing dismissals. Consequently, we are of the opinion that the decisions in De Beers Group Services (Pty) Ltd v NUM and Revan Civil Engineering Contractors and Others v NUM were wrongly decided.’

The court ordered the declaratory relief Edcon sought with costs.

• Moksha Naidoo will be conducting a one day labour law seminars on behalf of the Legal Education and Development arm of the Law Society of South African at various provinces in June 2015. For more information and to register please visit www.lssalead.org.za and click on labour law seminar.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

This article was first published in De Rebus in 2015 (May) DR 53.