Nkutha-Nkontwana AJ in SACCAWU v Woolworths (Pty) Ltd (J3159/12, JS1177/12) [2016] ZALCJHB 126 (5 March 2016) at para [49].

“Even if cost efficiency was a standalone operational requirement, Woolworths did not produce any evidence pertaining to the costs associated with the employment of full-timers, total amount of targeted cost reduction and whether such a target had been met. Slabbert only dealt with the ultimate saving that had been made without any reference to the actual costs before restructuring or a set target for reduction.

Accordingly, I could not agree more with the court’s findings in Ndhlela v SITA Information Networking Computing BV (Incorporated in the Netherlands (2014) 35 ILJ 2236 (LC) to the effect that:

‘in the absence of this information, it is not possible for a court to decide if the decision is not arbitrary or capricious. Nor is it possible to decide if the decision is a rational or reasonable one, based on the information which was available to an employer at the time it decided to embark on a restructuring exercise’.”

Further excerpts without footnotes

[28]     Woolworths’ counsel submitted that Woolworths was entitled to seek to address the issues of equality in order to anticipate the impending equal pay amendments at that time, which have since came into effect. Notably, section 198C(3) of the LRA, introduced in 2014; and section 6(4) of the EEA, introduced in 2013, enjoin the employers to deal with income differentials and pay discrimination. Since SACCAWU had 15% representation at that time, Woolworths could not have opted out of the EEA obligations through a collectively bargained option. As a result, Woolworths would have been exposed to equal pay claims by the 85% of employees who were not union members, so it was argued further.

. . . . .

[36]     The issue that arises in this matter is whether Woolworths’ decision to dismiss employees for operational requirements in order to eliminate discrimination based on pay inequity was operationally justifiable. Since I was referred to section 198C of the LRA, it will be more expedient to quote it in its entirety as I do hereunder: . . . . .

[37]     Clearly, in terms of subsection 3(a), employers could still maintain a different reward system for full-timers and part-timers if they have a justifiable reason for different treatment. This, then, takes me to section 6 of the EEA, which provides that: . . . .

[38]     Whilst both sections quoted above prohibit unfair discrimination in provision of terms and conditions of employment, including remuneration, there is an acknowledgement that a room exist for justification of any identified differentiation.

. . . . .

[41]     I accept Woolworths’ Counsel’s submission that Woolworths was entitled to seek to address the issues of equality in order to anticipate the impending equal pay amendments at that time, which have since came into effect. However, I am not certain as to what canons were applied to justify Woolworths’ decision to use equity as one of its grounds for operational requirements. What is apparent now, with the benefit of having both the LRA and EEA amendments enforced, is that the foul that Woolworths hoped to anticipate was illusory.

[42]     It is also patent that the pay inequity that arose as result of implementing flexitime contracts could have been easily justified in terms of Regulation 7(1)(a) since the full-timers had longer service period than the flexi-timers. Alternatively, Regulation 7(1)(d) could have been a perfect justification because as a result of the whole restructuring and grading system, the full-timers had to be demoted, so to say. In essence, this Regulation gives credence to SACCAWU’s submissions that it was unfair to dismiss long serving employees when there were realistic alternatives in a form of natural attrition and/or a wage freeze for full-timers.

[43]    It is also clear from the Code of Good Practice on Equal Pay/Remuneration for Work of Equal Value that even if there are instances where differentiation is found not to be justifiable, employers would have to develop plans to address inequalities identified and, pertinently, without reducing the pay or remuneration of affected employees in order to bring about pay equity.

[44]     Section 27 of the EEA deals with income differentials and provides that: . . . .

[45]     In a nutshell, the principles expounded in Dudley v City of Cape Town and Another [2008] 12 BLLR 1155 (LAC); (2008) 29 ILJ 2685 (LAC) are also applicable in this instance. Indeed, whilst unfair discrimination disputes falling under chapter II of the EEA can be referred to the Labour Court for adjudication and this can be done by an individual, a “right to affirmative action” or “pay equity” in this instance, is not an individual right. Accordingly, it is incompetent for an employer to seek to protect an individual right not to be unfairly discriminated through an operational requirements process and thereby circumventing its obligation under Chapter III of the EEA to develop a plan to deal progressively with any unfair pay differentiation. Woolworths, as designated employer, ought to have dealt with pay inequity issues in accordance with chapter III of the EEA.

[47]   Interestingly, Woolworths’ section 189(3) of the LRA notice states only one reason for the retrenchments being that ‘the company needs to be in a position to employ employees who are able to be used on a flexible basis’. . . . .

Cost efficiency operational requirement

[48]     Whilst it is given that Woolworths might have made huge savings consequent to the implementation of flexitime contracts, those savings are inextricable linked to the drastic reduction of full-timers’ pay and changes to their conditions of employment. As such, since it is clear that pay equity ground was untenable, the cost saving ground must also suffer the same demise.