Employment law update – Section 189A(13) of the Labour Relations Act

March 1st, 2014

By Talita Laubscher and Monique Jefferson

In National Union of Mineworkers v Anglo American Platinum Ltd and Others [2013] 12 BLLR 1253 (LC) the applicant, NUM, brought an urgent application seeking the reinstatement of its members who were dismissed by the respondent, Amplats, for operational requirements pending Amplats’ compliance with ss 189 and 189A of the Labour Relations Act 66 of 1995 (LRA) or an order for compensation. In addition, NUM alleged that Amplats acted unfairly in that it failed to comply with s 52 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA), which requires notice of potential retrenchments to be submitted to the Minister where it is contemplated that more than 500 employees may potentially be retrenched, and for an investigation to be conducted and recommendations made to the Minister.

Amplats commenced a consultation process with the unions in January 2013 after announcing that it was considering retrenching about 14 000 employees. The process was suspended while Amplats’ management, the Department of Mineral and Energy Resources (DMR) and the unions embarked on a tripartite process that lasted for an initial period of 60 days, during which all parties were given access to documentation contained in an electronic data room.

The tripartite process was later converted into a bilateral engagement between Amplats and the DMR during which discussions were held on the proposed restructuring and anticipated retrenchments. After this, the second tripartite process commenced and the information from the bilateral process was shared with the trade unions. The parties then entered into a written agreement identifying the number of employees potentially affected by the proposed restructuring, which at the time was identified as being potentially 6 000 employees, and also alternatives to retrenchment.

A revised s 189(3) notice was issued to the potentially affected employees reflecting the revised proposals and it was proposed that the consultation process would run for a further 60-day period. Consultation meetings unfolded with facilitation by a Commission for Conciliation Mediation and Arbitration (CCMA) commissioner and proposals were exchanged. During this consultation period a notice of the potential restructuring was sent to the Minister of the DMR as contemplated in s 52 of the MPRDA. The consultation process was completed in the middle of August 2013.

On 29 August 2013 NUM sent a letter to Amplats stating that it had not been engaged with in a meaningful joint consensus-seeking process. It requested that the process be extended and also queried whether notice had been given to the Minister. Amplats did not extend the consultation period and commenced issuing notices of termination to the employees identified for retrenchment. It was at this point that NUM applied to the Labour Court for urgent relief under s 189A(13) of the LRA.

Van Niekerk J considered the provisions of s 189A(13) and found that its purpose was to provide for the adjudication of disputes involving procedural unfairness in retrenchments at an early stage and that the court has wide powers in this regard. A consulting party may, however, not rely on s 189A(13) to raise complaints about substantive fairness. Thus, the purpose of s 189A(13) is to provide employees with a remedy to approach the Labour Court to set the employer back on track when there is genuine procedural unfairness that goes to the heart of the process.

The purpose is also not for the court to grant a remedy for every complaint about procedural unfairness, since this would open up the process to abuse and serve as a means to thwart the retrenchment process. Van Niekerk J said that he was therefore required to consider the complaints of procedural unfairness holistically to determine whether the overall purpose of the joint consensus-seeking process was achieved by Amplats.

Van Niekerk J considered NUM’s allegation that Amplats had not consulted on the selection criteria and severance pay and found that the issue of the selection criteria and severance pay had been on the agenda from the start of the consultation process. Amplats had even agreed to extend the consultation process by one week to consult specifically on these topics. Furthermore, Amplats had tabled proposals relating to severance pay and selection criteria, but NUM had refused to engage with it on these issues as it denied that there was any need to retrench. By the time NUM was willing to engage on selection criteria and severance pay, the lengthy consultation process had already concluded.

In the circumstances, Van Niekerk J concluded that NUM had frustrated the consultation process and simply wanted to delay the dismissals. He held that the remedies in s 189A may not generally be relied on by a party that has frustrated the consultation process or where the issues are raised after the completion of the consultation process. The court was accordingly satisfied that Amplats had complied with its obligations to consult on all issues required in terms of s 189(3), including selection criteria and severance pay.

The application by NUM was dismissed with no order as to costs.

Forfeiture of severance pay

In Astrapak Manufacturing Holdings (Pty) Ltd t/a East Rand Plastics v Chemical, Energy, Paper, Printing, Wood and Allied Workers Union [2013] 12 BLLR 1194 (LAC) the Labour Appeal Court (LAC) was required to consider the circumstances under which employees are entitled to severance pay. Astrapak implemented a continuous shift pattern to increase productivity and reduce costs. The union’s members did not accept the changes and issued a notice to go on strike.

Astrapak responded by issuing employees with a letter in terms of ss 189A and 189(3) of the LRA informing them about the possibility of retrenchment and inviting them to consult on its proposals. Facilitated consultation meetings then took place. Those employees who accepted the changes continued working while those who refused to accept alternative employment on the new shift pattern were retrenched without severance pay.

The union referred an unfair dismissal claim in respect of its members who were retrenched. The Labour Court held that there was an operational rationale for retrenchment and thus the dismissals were substantively fair. However, Mokoena AJ found that the refusal of the employees to accept alternative employment on the new shift pattern was not unreasonable and as such the retrenchees were entitled to severance pay. This was because the alternative was to work on the new shift pattern, which would have resulted in the employees’ overtime pay being significantly reduced and the employees earning far less than what they were accustomed to.

The LAC considered that the purpose of s 41(2) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) read with s 41(4) of the BCEA was to promote employment and therefore to discourage employees from rejecting employment, ‘simply because they might prefer cash in their pockets in the form of severance pay’. It was also to encourage employers to take the necessary steps to find alternative employment for potential retrenchees.

The LAC considered the fact that all the employees on the new shift system would incur less travelling expenses. It was also considered that, although the employees would receive reduced overtime pay, there was no right to overtime and Astrapak was accordingly not obliged to provide the employees with overtime work.

The LAC found that where employees were offered alternative employment on the same salary or slightly higher salaries on conditions that were not more onerous than their prior conditions, then the rejection of such alternative employment would be unreasonable and they would forfeit their right to severance pay. However, where employees would face reduced salaries, a refusal to accept the alternative employment would not be unreasonable and the employees would be entitled to refuse the offer of alternative employment and seek employment elsewhere. In such circumstances they would not forfeit their right to severance pay.

Astropak was accordingly ordered to pay severance pay to those employees who were retrenched after refusing to accept the offer of alternative employment at a reduced salary. Those employees who refused the offer of alternative employment on the same salary or an increased salary were not entitled to severance pay from Astropak.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.

This article was first published in De Rebus in 2014 (March) DR 46.