In South African Commercial Catering and Allied Workers Union obo Thage v Connect Financial Services (Pty) Ltd [2024] 11 BLLR 1130 (LAC) the employer embarked on a headcount reduction in its credit division. An s 189(3) letter was issued to 118 employees. There was a genuine operational rationale for the headcount reduction in the credit division as there had been a downturn in the volume of work and revenue of the credit division with fewer customers seeking credit as well as increased business efficiencies through the automation of loan processing systems and the reduced need for the processing of loans by an employee in the credit division. There were 50 vacant positions in the credit division and 68 employees would potentially be retrenched. The letter listed redeployment to elsewhere in the group as an alternative to retrenchment subject to vacancies and the willingness of employees to accept alternative work.
There were four facilitated consultation meetings and thereafter it was agreed that the employees in the credit division would be assessed so that 50 employees could be appointed to the available positions in the credit division. The remaining employees could then apply for positions in the call centre or would be retrenched. Twenty-nine employees did not apply for the 25 vacant positions in the call centre and were retrenched. The union later sent a letter demanding that the retrenched employees be reinstated into the advertised call centre positions. The employees did not apply and, therefore, they were not reinstated to those positions.
The union representing these employees then launched an urgent application to the Labour Court (LC) in terms of s 189A(13) of the Labour Relations Act 66 of 1995 (LRA) alleging procedural unfairness in that there had been no consultation on the vacancies in the call centre as an alternative to retrenchment. The urgent application was dismissed. The union then made an application for leave to appeal and thereafter a petition for appeal, both of which were dismissed.
The union then launched an unfair dismissal application in terms of s 191(5)(b)(ii) of the LRA, alleging that the dismissals were substantively unfair on the basis, inter alia, that the employees had not been offered positions in the call centre as an alternative to retrenchment. The application was dismissed as the LC found that the consultation with the employees had been in good faith and that there had been agreement reached during the consultation process that employees would not automatically be placed in roles in the call centre and would need to apply for vacancies. The LC found further that the call centre positions were not related and that they were not an alternative to retrenchment as they were very different positions with a different remuneration structure. It was found that the dismissals were substantively fair and that the issue was in any event res judicata as procedural fairness had been determined in the s 189A(13) application.
On appeal, the Labour Appeal Court (LAC) was required to determine whether the LC’s finding that the dismissal was substantively fair was correct, given the fact that prior to the dismissal of the employees, the employer had been aware of and had later advertised 25 vacancies in its call centre but these vacancies were not considered as an alternative to the retrenchment. What was essential was whether these vacancies were alternatives to retrenchment. The LAC found that the unfair dismissal application was not res judicata as the s 189A(13) application only dealt with procedural fairness but the second application dealt with substantive fairness as well. It was held that there was a valid operational reason to dismiss and that the LC had made a correct finding that those credit division employees who were not selected to be retained were required to apply for vacancies but had failed to do so. The union’s argument that the employees were not informed of the vacancies failed because there had been agreement on that issue during the consultation process. The appeal was dismissed with no order as to costs.
In Umicore Catalyst South Africa (Pty) Ltd v National Union of Metalworkers of South Africa [2024] 11 BLLR 1138 (LAC) the employer embarked on a redundancy process as a result of duplication of functions following the acquisition of another catalytic converter plant. Approximately 52 positions were affected. The selection criterion of ‘last in, first out’ (LIFO) was applied across all departments save for in the case of laboratory technicians. In the case of laboratory technicians, the selection criterion was a behavioural assessment. This was applied by a panel made up of the laboratory manager and two senior managers from other departments. Four employees refused to appear before the panel and the assessment was conducted in their absence with the result that they were dismissed. Another employee who appeared before the panel was offered a demotion.
An unfair dismissal dispute was then referred to the Labour Court (LC). The employer argued that the assessment was used because of the highly technical nature of the work of laboratory technicians. Furthermore, when the union had objected to this selection criterion during the consultation process additional criteria were added such as performance appraisals and attendance and disciplinary records. The LC held that once LIFO had been agreed as the selection criterion the employer was not entitled to unilaterally introduce a selection criterion of behavioural assessment. The dismissals were found to be substantively unfair, and the employees were reinstated.
The employer then appealed the LC’s decision. On appeal, the Labour Appeal Court (LAC) had to determine whether using behavioural assessment as a selection criterion was fair. The employer had relied on factors such as personality traits, initiative, enthusiasm and determination which were all subjective criteria. It was found that the assessment was overwhelmingly subjective and should not have been used unless there had been agreement with the employees. Therefore, the employees were not selected on an objective and fair basis. The LAC found that the inclusion of some fair and objective criteria did not remediate the subjectivity of the laboratory assessment and, therefore, the dismissals were substantively unfair, and the appeal was accordingly dismissed.
Monique Jefferson BA (Wits) LLB (Rhodes) is a legal practitioner at DLA Piper in Johannesburg.
This article was first published in De Rebus in 2025 (Jan/Feb) DR 39.
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