Retrenchment consultations: The hierarchy and priority given to collective agreements in the retrenchment consultation process challenged

July 1st, 2020
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AMCU and Others v Royal Bafokeng Platinum Ltd and Others 2020 (3) SA 1 (CC)

Retrenchments are, in South Africa, unfortunately always lingering in the air for workers, especially in these uncertain economic times. Hence, when such an eventuality materialises, trade unions have a great interest in ensuring the protection of the rights of employees who are adversely affected. In the case of AMCU and Others v Royal Bafokeng Platinum Ltd and Others 2020 (3) SA 1 (CC), the Constitutional Court (CC) dealt precisely with this point when it heard the appeal against the judgment and order of the Labour Appeal Court (LAC) on the applicants’ constitutional challenge of ss 189(1) and 23(1)(d) of the Labour Relations Act 66 of 1995 (LRA).

Background facts

In the workplace of the first respondent (Royal Bafokeng Platinum Ltd), the second respondent, the National Union of Mineworkers (NUM), which was the majority trade union representing 75% of the workforce. The second respondent together with third respondent (United Association of South Africa) a minority trade union had signed a collective agreement with the employer to consult exclusively over any possible retrenchment in the workplace. Pursuant to this collective agreement, they signed a retrenchment agreement to the exclusion of the applicants, the Association of Mineworkers and Construction Union (AMCU), a minority trade union, which was then extended to all the employees in the workplace. The majority of the people who were affected by the retrenchment agreement were represented by AMCU.

AMCU launched a constitutional challenge to s 189(1) of the LRA, they argued that the impugned sections by creating an exclusive consultation regime, impermissibly infringes the employees right to fair labour practices. AMCU argued that this impugned section should be interpreted to mean the employer is obliged to consult with all the employees who are likely to be affected by the retrenchment process notwithstanding a valid collective agreement. They also challenged s 23(1)(d) of the LRA, which was used to extend the retrenchment agreement to those who were not a party to the consultations.

The judgment

The minority judgment delivered by Ledwaba AJ recognised that the s 189(1) cascading hierarchy of consultation in the retrenchment process gives primacy to collective agreements, but if properly understood, the section aims to ensure consultation with all employees who are to be affected by the retrenchment processes, notwithstanding the dictates of the collective agreement.

The court held that since AMCU challenged the procedures followed in their members’ dismissals, their challenge went to the heart of whether the section is truly fair in considering the objectives and purposes of the LRA and the Constitution. The court had to give due regard to the right to fair labour practice by striking a balance between the competing interests, namely, to run an effective business for the employer, and to avoid retrenchment or to mitigate its effects for the employee.

The court held the respondent’s submissions (arguing that if there was an infringement to the applicants’ rights) was nevertheless justified because it served to uphold the employer’s right, and conflates consultation with collective bargaining. Consultation in the context of retrenchment is a joint consensus process and all that is required from the employer is a bona fide attempt to reach consensus, but the employer retains the discretion to continue with the proposed retrenchment or not. Therefore, the limitation to consult inclusively under the circumstances serves no purpose.

The court held inclusive consultation is not a bar to the extension of the collective agreement to non-parties thereto, thereby dismissing as all judgments did the s 23 constitutional challenge. There is no reason why the employer cannot consult all the affected employees and then still conclude a valid bargaining agreement that will be extended to the entire workforce.

The limitation also does not promote the objectives of the LRA, such as labour peace in the workplace, since it leaves out minority voices and it also leaves minority trade unions powerless, thus encouraging the joining of majority trade unions. The court accordingly concluded that the impugned provision was unconstitutional and invalid.

The majority judgment delivered by Froneman J held that right to fair labour practice in the Constitution does not guarantee a right to be consulted individually in the retrenchment process. The court held that retrenchment for operational requirements is based on objective factors, therefore, it is not necessary to consult individually.

The court stated that consultation in the retrenchment process is a statutory entitlement flowing from the LRA and not the Constitution, therefore, it is incomprehensible that the very source limits it and that a fair consultative procedure is exhaustively set out in s 189(1) of the LRA. The court held that consulting inclusively – where the employees cannot affect the outcome – is near futile. The court questioned whether the consultative procedure in the s 189(1) passed the constitutional test for rationality and was convinced that it did.

Lastly, the court held that the consultation needs to also be substantively fair and in circumstances where the collective agreement is extended to non-parties in terms of s 23(1)(d) such extension is subject to legality review. Therefore, those who were not consulted are not remediless.

Jafta J and Theron J delivered supporting judgments to the first and second judgments respectively, where Jafta J challenged the second judgment’s articulation that besides the s 189(1) infringement there were no rights neither implicated nor argued by the applicants. He listed numerous rights and detailed how they are implicated. Theron J held that from a separation of powers point of view, s 189(1) should be tested against the standard of rationality and not reasonableness.

Conclusion

With the above case in mind, one may ask if the collective agreement still enjoys primacy if it contemplates consulting with an employee that is in the minority union or will it not be affected by retrenchments? If so, is that rational? Furthermore, is it true that consultation is near futile and the threat of industrial action posed by majority trade unions and its effect on the employer might be the only reason they have the right to consult? These are some of the questions that will need answers.

Mdumseni Gambushe Bachelor of Laws (LLB) (UKZN) is a candidate legal practitioner at Venns Attorneys in Pietermaritzburg.

This article was first published in De Rebus in 2020 (July) DR 32.