In Fischer Tube Technik SA v Bayene and Another [2024] 9 BLLR 917 (LAC) the appellant, Fischer Tube Technik SA (FTT), closed down the portion of its business which dealt with specialised welding with the result that certain positions were no longer required. In conducting a retrenchment process FTT used the last-in, first-out (LIFO) principle as its selection criteria. FTT offered to ‘bump’ the affected employees to a department where they had previously worked at lower salaries, but the bumping offer was declined due to the associated lower rate of pay and the employees were dismissed in 2017.
The Labour Court (LC) accepted that FTT had established a commercial rationale for the abolition of the welding posts but found that the ‘vertical bumping’ was unfair. Vertical bumping occurs when there is a dismissal of an employee not initially selected for retrenchment to make way for another employee, usually an employee with longer service, whose position has become redundant. Thus, vertical bumping entails displacing an employee with shorter service in a lower position to the employee initially selected for retrenchment due to the redundancy of the employee’s position.
The court awarded the employees compensation. In an unopposed appeal, FTT contended that the LC had erred in finding that the vertical bumping was unfair; and that the compensation award of ten months’ remuneration in respect of each employee was excessive.
The Labour Appeal Court (LAC) held that an employee may refuse any offer of vertical bumping (including on account of the lower salary that would attach to the lower position) but that it does not necessarily follow that any dismissal consequent on that refusal is unfair, particularly where it can be shown that horizontal bumping is not feasible, as was the case in the current matter where no positions existed on a horizontal level. The LAC found that the parties had agreed to the vertical bumping, which was proposed by National Union of Metalworkers of South Africa (NUMSA); and stated that NUMSA must have realised that vertical bumping would naturally result in lower pay. Thus, the retrenchment was held to be substantively and procedurally fair and thus the appeal was upheld.
In National Union of Food, Beverage, Wine, Spirit and Allied Workers v Coca-Cola Beverages SA (Pty) Ltd [2024] 9 BLLR 948 (LAC), Coca-Cola Beverages SA (Pty) Ltd (Coca-Cola) undertook a redundancy process in response to adverse economic conditions and the imposition of a ‘sugar tax’, among other things. As an alternative to retrenchment, Coca-Cola invited employees to apply for positions which would be on less favourable terms.
In the LC the appellant trade union contended on behalf of its member employees that by offering the employees alternative positions at a lower rate of pay and then dismissing those employees who rejected the offer, Coca-Cola had contravened s 187 of the Labour Relations Act 66 of 1995, which prohibits an employer from dismissing employees for failing to accede to a demand.
On appeal, the appellants provided various grounds for appeal, including that –
The LAC confirmed that it is not an automatically unfair dismissal for an employer to dismiss an employee who refuses to accept an offer of alternate employment made in the context of a retrenchment process, where the reason for dismissal is the employer’s operational requirements. The offers of alternative employment were offers of alternative employment to avoid the prospect of dismissal. No compelling evidence established that the alternative employment was a demand by Coca-Cola. In addition, Coca-Cola had established sufficient financial grounds to prove and justify the operational need to reduce costs. Therefore, Coca-Cola could demonstrate that the operational requirements were the dominant cause for the dismissals.
The appeal was dismissed with costs and the decision to retrench was held to be fair in the circumstances.
Settlement agreements
In Moropene v Competition Commission of South Africa and Others [2024] 9 BLLR 935 (LAC) the appellant, Moropene, was summarily dismissed when the chief executive officer of the Competition Commission (Commission) discovered that the employee had been convicted of housebreaking and theft in 1999. The Commission gave the appellant 48 hours to show cause why he should not be dismissed with immediate effect, to which the appellant replied that his convictions had been expunged prior to him being appointed to the senior positions that he held at various times during his employment with the Commission.
Following his dismissal the appellant referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) on the basis that he had been both unlawfully and unfairly dismissed. The former claim was based on an alleged breach of the employee’s contract in that the employee had not been afforded a disciplinary hearing. The parties managed to settle the dispute without the assistance of the CCMA. However, the appellant subsequently brought a case to the Labour Court (LC) in terms of the Basic Conditions of Employment Act 75 of 1997 and argued that the settlement was not a settlement of all of his claims emanating from the dismissal as the CCMA lacked jurisdiction to rule on unlawful dismissals. The Commission contended in limine that all claims arising from the appellant’s dismissal had been fully and finally settled by payment to him of compensation of eight months’ salary.
The LC held that the settlement had not settled all the applicant’s claims but that the Commission had discretion to hold a disciplinary hearing and dismissed the application. The appellant appealed against that order and the Commission cross-appealed against the finding that the agreement had not fully settled the matter.
The material dispute of fact was thus whether the settlement agreement had resolved all the issues arising from the dismissal of the appellant, namely the unfair dismissal in terms of the Labour Relations Act 66 of 1995 and the breach of contract claim in terms of the Basic Conditions of Employment Act. Despite the dispute of facts, the appellant launched an application by motion proceedings claiming that, in terminating his employment without conducting a formal disciplinary hearing, the Commission had infringed his right to a disciplinary hearing and that such infringement was a breach of his employment contract which rendered the subsequent dismissal unlawful.
The Labour Appeal Court (LAC) found that the jurisdiction of the CCMA was irrelevant in this case as a settlement had been reached outside of the CCMA process. Furthermore, the matter was subject to a clear dispute of fact and therefore application by motion proceedings was inappropriate. The LAC also found that the appellant had met the Commission’s claim that all issues had been settled with bare denials. Accordingly, since there was no clear dispute on the papers, the matter had to be determined on the Commission’s version and therefore the commission’s point in limine that the matter had been settled by agreement had to be upheld.
Monique Jefferson BA (Wits) LLB (Rhodes) is a legal practitioner at DLA Piper in Johannesburg.
This article was first published in De Rebus in 2024 (Nov) DR 52.
