What happens to a permanent replacement employee when the dismissed employee wins their case of unfair dismissal against the employer?

July 1st, 2020
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It is not unusual when an employee has been dismissed and the employee is still challenging such a dismissal through the relevant fora that the employer then fills the vacancy. That is not a problem, as the work that the employee performed is not going to wait for someone who is still busy fighting battles. However, the contract between the replacement employee and the employer may create issues if it is not carefully drafted. There seems to be no issue when such a contract stipulates, for example, that the replacement is temporary. Both parties know that it will end, perhaps, when the proceedings are done. However, issues arise when, according to the contract of employment, the replacement employee is employed permanently. What happens to this permanently employed replacement employee when the dismissed employee wins their unfair dismissal and becomes entitled to reinstatement? What remedies does the replacement employee have under these circumstances?

Reinstatement in terms of the s 193(2) of the Labour Relations Act 66 of 1995 (LRA)

According to s 193(2) of the LRA, if it is found that an employee was found to have been (substantively) unfairly dismissed, the Labour Court (LC) or the arbitrator, must make an order that the employee be reinstated, unless:

  • the employee does not wish to be reinstated;
  • the circumstances surrounding the dismissal are so that a continued employment relationship would be intolerable;
  • it is not reasonably practicable for the employer to reinstate the employee; or
  • the dismissal is unfair only because the employer did not follow a fair procedure.

The employer cannot simply say that they are not going to reinstate the employee on the basis that they have employed someone else. In this regard, the court in Mashaba v SA Football Association (2017) 38 ILJ 1668 (LC), at para 13, held that ‘[t]he right which the LRA provides by virtue of s 193(2) is the right of an employee to be reinstated if their dismissal is found to be substantively unfair and provided none of the subsections are applicable. [As such], an order of reinstatement pays no heed to other contractual arrangements that might have come into existence between the employer and a replacement. That is of no concern to the arbitrator or the court and the employer is left to its own devices to sort out the mess it finds itself in having employed someone and then being ordered to re-engage someone in the same position.’

It happens that once there is an order of reinstatement, the dismissed employee and the employer would negotiate to either pay the employee or create another position for them. However, if the dismissed employee wants to be reinstated in the position where they were in before dismissal, what then happens to the replacement employee who was employed on a permanent basis because the employer was convinced that the dismissed employee would not come back?

In Mashaba, the court goes on to say that, ‘if the employer does not take suitable steps in its contract with the replacement, it ought to realise that it runs the risk that it will be faced with the possibility of terminating that relationship or of trying to renegotiate the replacement’s contract if the former incumbent is reinstated’.

Paragraph 115 of the Commission for Conciliation, Mediation and Arbitration: Guidelines on Misconduct Arbitration provides that: ‘The fact that another employee has been appointed in place of the unfairly dismissed employee is not in itself a reason to deny reinstatement, as the reinstatement of an unfairly dismissed employee may constitute a ground for terminating the employment of the newly appointed employee on the grounds of the employer’s operational requirements’. This guideline suggests retrenchment as the solution for the employer.

Retrenchment of replacement employee

Retrenchment will not be an easy way out for the employer. The replacement employee must be satisfied that the process of retrenchment has been properly followed. Here we are referring to someone who was never told that they may lose their job if the dismissed employee had to return. For individual employees, the retrenchment procedure is found in s 189 of the LRA.

Section 189 of the LRA does provide that:

‘(1) When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult –

(a) any person whom the employer is required to consult in terms of a collective agreement;

(b) if there is no collective agreement that requires consultation –

(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and

(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;

(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or

(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.’

Section 189 provides for a process of consultation with the employee potentially facing retrenchment based on operational requirements. With regard to consultation, the court in Johnson & Johnson (Pty) Ltd v Chemical Workers Industrial Union (1999) 20 ILJ 89 (LAC) stated that ‘[t]he ultimate purpose of s 189 is thus to achieve a joint consensus seeking process. In this manner the section implicitly recognises the employer’s right to dismiss for operational reasons, but then only if a fair process aimed at achieving consensus has failed. This is also apparent from s 189(7) which provides that the employer must select the employees to be dismissed on criteria either agreed to, or if that is not possible, on criteria that are fair and objective’.

As such, the permanently employed employee who now faces retrenchment must be consulted with the aim of achieving a consensus. However, such consultations may not yield a favourable outcome for the employee – retrenchment might be justified. In that case, the question would be, based on the fact that the employer failed to provide for such eventuality in the employment contract, would it then be fair to dismiss the permanently employed employee based on operational requirements?

Conclusion

Considering that the replacement employee (permanently employed) may end up being unemployed if the retrenchment process appears to be justifiable, it is not clear what other remedies there are to protect them against job loss. It is, therefore, imperative that employers cater for this in the employment contract where there is still a pending unfair dismissal proceeding.

Khwezi Mqoboli BSS (Rhodes) LLB (Wits) is a candidate legal practitioner at Thapelo Kharametsane Attorneys in Pretoria and Mziwamadoda Nondima BA LLB (Rhodes) is a candidate legal practitioner at Boqwana Burns Inc in Port Elizabeth.

This article was first published in De Rebus in 2020 (July) DR 8.