NUMSA & others v Greenfields Labour Hire CC & another: Procedural fairness in dismissals based on operational requirements

Case Law & Legislation Review:

By Gary Watkins

# NUMSA & others v Greenfields Labour Hire CC & another: Procedural fairness in dismissals based on operational requirements

ISSUE: To determine whether there was adequate opportunity to consult – dismissals based on operational requirements – Union alleges that consultation was abruptly and unfairly ended - no merit in the complaint that there was an inadequate opportunity to consult in relation to the issue of voluntary retrenchments - satisfied that the consultation process was adequate and complied with the requirements of s189 of the LRA

SUMMARY OF EVIDENCE: It is common cause that some consultation did take place both between the trade union and employees and also with the assistance of a facilitator appointed in terms of Section 189A. The trade union alleges that the consultations were abruptly and unfairly ended. The process commenced when management sent a letter to the union indicating the need for the retrenchment of all general workers based on operational requirements, and lack of contracts due to a financial situation that prevails. A meeting was held where management informed the trade union/employees of the failure to secure contracts which had resulted in management having no further work for the employees.

A letter was sent out detailing various proposals as to selection criteria, severance pay and other issues relating to the contemplated termination. An alternative to retrenchment "in the short term" was stated to be "that of a lay-off for one month and then to reassess the situation as to whether to continue with retrenchment or not". The CCMA appointed a facilitator who chaired a meeting where it was agreed that the employer could lay off employees for the period of a month, and that they would reconvene at the end of the month to assess to employer’s financial situation. Various other issues relating to the retrenchments were also discussed at this meeting, including that some workers may want to take a voluntary retrenchment package.

A further meeting was held to discuss the practical issues relating to the layoffs, and arrangements were agreed to that regard. At a later meeting, management indicated that the financial situation had improved slightly and that they could retain the services of 11 employees. A further letter from the trade union indicated that there were employees that would volunteer for retrenchment and stated their conditions. In the CCMA facilitator’s final meeting both sides agreed on the selection criteria. In the following meeting, the final list of names, severance pay, recall procedure, company assistance and the selection of the 11 retrenchees was discussed. A final list of retrenchees was submitted by the employer (which included some of the names put forward for voluntary retrenchment), as well as a notice to retrench. The employer stated that the employees would have a financial statement at the end of the month to prove that management could not pay more than the statutory minimum. The trade union then replied that they were in dispute over the selection criteria for the retrenchment, including the need to retrench. In management’s answer, they informed the employees that management might reconsider retaining the original 11 employees as well as its offer of reemployment. Both parties agreed that the matter should be referred for arbitration, which was aborted when the employer notified the employees that they would be paying the retrenchment packages the next day.

SUMMARY OF JUDGEMENT: The Court held that here was a full consultation process in relation to the severance package applicable to retrenchees in general. Any complaint that individuals may have had in relation to their selection for retrenchment was capable of being referred to arbitration, which the trade union elected not to pursue. The only issue before this court is whether there was an adequate opportunity to consult. In the court’s view there was such an opportunity and it was adequate. It was submitted by the trade union that had there been further opportunity to consult, it could have yielded acceptance of voluntary retrenchments so as to avoid compulsory retrenchments. Only eight indicated an acceptance of voluntary retrenchment. Management agreed to retrench most of those, while electing to retain the minority in the interests of skills retention. The Court found that there was accordingly a process of consultation, allowing the union to make its proposals and representations. Management was then entitled to take its decision. The Court considered that it would be difficult to see how any further consultation was either necessary or appropriate, or could have affected the final decision to retrench. Therefore, the court was satisfied that the consultation process was adequate in the circumstances, and complied with the requirements of the LRA. Accordingly, the application failed and the union was directed to pay the costs.