Section 189 of the LRA is clear and should not be held up as check-list to conduct consultation by litigation.  It is not appropriate to judge each of the requirements separately.  It must be done prudently.  Failure to comply with any one requirement should not necessarily result in procedural unfairness.  Management contemplating a termination must engage in a ‘joint consensus-seeking process’.  Both parties must exchange views and proposals honestly and openly.  Management must seriously consider proposals to ensure the fullest exchange of views.  Employees must also participate actively and seek mutually agreed outcomes.

Vermeulen v Investgold CC (JS 113/13) [2014] ZALCJHB 516; [2015] 4 BLLR 447 (LC) (15 December 2014) per Van Niekerk J

After holding that a dismissal based on operational requirements was substantively fair Justice André van Niekerk restated the legal requirements for procedural fairness.

Introduction

[1]        The applicant has referred two disputes to this court for determination.  The first concerns what she contends to be her dismissal for a reason that is automatically unfair, in this instance, a reason related to a transfer in terms of s 197 of the Labour Relations Act.  The second dispute concerns what the applicant contends to be her unfair retrenchment in December 2012.  At the commencement of the trial, the applicant abandoned the first of her claims and it remains therefore for this court to determine only whether the applicant’s retrenchment was substantively and procedurally unfair.

Factual background

[2]        The material facts, by and large, are not in dispute.  The applicant was employed by the first respondent as a stock controller on 14 October 2008.  On 6 December 2012, the first respondent issued a notice of anticipated retrenchment in terms of s 189(3) of the LRA.  The applicant testified that the notice was wholly unexpected; there had been no prior indication that her employment was at risk.  In the notice, amongst other things, the first respondent cited the substantive reason for the retrenchment is one concerning ‘structural or similar needs’.

There is a dispute about the nature and extent of the engagement between Mr. Robbetze (the first respondent’s operations manager) and the applicant at the time that the notice was handed to the applicant.  Be that as it may, it is not disputed that the applicant was told to pack her things, leave the premises and remain at home until 12 December 2012, when a meeting between Robbetze, the applicant and other affected employees had been arranged.

[3]        The meeting commenced at 11:30 on 12 December 2012, and continued until 13:15.  A brief minute of the meeting kept by Robbetze indicates that the applicant was represented by one Caroline Pilatowicz, and that after discussion on the restructuring of the Johannesburg office administration, the consideration of alternative positions, using LIFO and qualification as criteria, proposals to avoid retrenchments, the timing of the retrenchment and severance pay, two issues emerged.

The first was an alternative proposed by the applicant’s representative that the applicant be retrained to qualify for appointment to the vacant post of an assistant accountant.

Secondly, it was proposed by the applicant that the severance package on offer, the statutory minimum, should be enhanced.

[4]        Later on the afternoon of 12 December 2012, the applicant addressed an email to Robbetze in which she said the following: ‘One point left out on the agenda was that I will also not accept less pay than what I am currently on’.

The applicant testified that by sending the email she had intended to convey what she considered to be a bargaining position.  She had viewed the meeting as a negotiation and in that context; wished to reflect that any alternative position offered to her should attract at least her current level of remuneration.

Robbetze testified that the first respondent viewed the email for what it said – that any offer of alternative employment that did not attract at least the applicant’s current level of remuneration was not acceptable to her.

[5]        On 13 December 2012, the applicant addressed a letter to Robbetze in which she referred to the meeting held on 12 December 2012.  In response to an invitation by Robbetze that she put her proposal discussed at the meeting in writing, she proposed ‘a much better retrenchment package’ than the legal minimum (the applicant specifically proposed the payment of three weeks remuneration for every completed year of service) as well as her normal salary for December, a months’ notice pay for January 2013, and the value of her accrued leave.

In the letter, the applicant noted that she was four months pregnant and therefore unlikely to find alternative employment.  She also noted that she had been a loyal employee of the company for four years and that she considered being retrenched two weeks before Christmas without warning as unfair.  The letter concludes with a reiteration that the applicant considered herself deserving of ‘a much better package than the legal minimum’.

[6]        On 14 December 2012 the applicant was called to the first respondent’s office.  In her mind, she had expected a continuation of the process commenced on 12 December.

When she arrived at the office, she was given a retrenchment notice, and details of her retrenchment package.  That package included notice pay for the month of January, the payment of accumulated leave and the severance package that reflected the statutory minimum.

Robbetze’s evidence is that he told the applicant at that point that she could not be considered for the alternative position of assistant accountant since it would take some 8 to 12 months to train her to a level at which she could manage the accounts to the point of trial balance.

[7]        It is also common cause that in early January, Robbetze sent an email to the first respondent’s staff in which he announced the appointment of three new staff members.

The persons concerned were appointed to the positions of safekeeping administrator, filing clerk, and assistant accountant.

Robbetze testified that the applicant was not considered for any of these positions since the remuneration paid in each case was less than that which the applicant had earned and on the basis of the email dated 12 December 2012, it had been assumed that she would not be interested in any of the posts.

Analysis

[8]        The first issue to be decided is the substantive fairness of the applicant’s dismissal.

In this regard, the applicant has challenged first the existence of any legitimate commercial rationale for her retrenchment and secondly, as I have indicated, she contends that she ought to have been appointed into the position of assistant accountant, thus avoiding any need to retrench her.

[9]        Roberts’s evidence was that the first respondent had offices both in Johannesburg and George.

After the devastating effect of a theft in which goods to the value of R8.5 million were stolen by an employee, the first respondent decided to discontinue the administrative operations in its George office and to relocate the administrative staff in that office to Johannesburg.

This had resulted in what he referred to as a duplication of functions, which necessitated a restructuring of the first respondent’s business operation.

In regard to the applicant, who was employed as a stock controller, he (Robbetze) had assumed her duties, and her post had effectively become redundant.

The applicant did not directly attack the commercial rationality of this decision.

Rather, her claim of substantive unfairness was based on the availability of alternative positions and the first respondent’s failure to appoint her to any of those positions.

In this regard, the applicant contended that with training, she was capable of performing the function of assistant accountant, and that she was suitably skilled and qualified to perform the functions of filing clerk and safekeeping administrator, posts which at the time of her retrenchment were vacant.

[10]      In regard to the position of assistant accountant, the applicant has no accounting qualifications nor does she have any advanced accounting skills or experience.

The position required the appointment of a person who could prepare books to the point of trial balance.

On her own version, the applicant could not immediately meet this requirement.  In so far as the applicant might have acquired the relevant skills through further training, Robbetze’s evidence was that after discussion with the finance manager Jordaan, it had been estimated that 8 to 12 months training would be required and that the business at that point could not sustain that delay.

There is nothing in the evidence to gainsay that view, and I accept that it was not unreasonable of the first respondent to take the view that the applicant was not suitable for appointment as assistant accountant.

Insofar as the positions of safekeeping administrator and filing clerk are concerned, while the applicant might well have been able to perform the tasks associated with these posts, the remuneration attached to each (and for that matter to the post of assistant accountant) was less than that which the applicant earned.

In my view, given the nature of the applicant’s communication to the respondent on 12 December 2012 in which she unequivocally states that she would not be prepared to accept any position at a lower rate of remuneration, the first respondent cannot be blamed for excluding her from consideration for appointment to either of these positions.

[11]      In short, in my view, the evidence discloses that the decision to restructure the first respondent’s business operation was commercially rational and that no blame can be attached to the first respondent for any failure to appoint the applicant to any alternative position.

The applicant’s retrenchment was accordingly substantively fair.

[12]      In regard to procedural fairness, the applicant contends that the consultation process was conducted in the face of a fait accompli, in that the first respondent had taken a decision in respect of the applicant’s termination of employment prior to 6 December 2012.

Further, the applicant contends that the first respondent failed to conduct bona fide consultations as required by s 189 and in particular that the first respondent failed to attempt to reach consensus on any bona fide basis in relation to measures to avoid or minimise the retrenchment, suitable alternatives to retrenchment, the timing of the retrenchment, mitigating the adverse effect of the retrenchment, selection criteria and severance pay.

The first respondent contends that the exchange of correspondence between the parties, oral intimations and emails constituted a bona fides joint consensus seeking consultation process.

[13]      I accept that at the meeting held on 12 December 2012 there was discussion in general terms on the matters recorded in Robbetze’s minute and that by the end of the meeting, the outstanding issues were the prospect of the applicant being appointed to the post of assistant accountant, and the quantum of a severance package.

I also accept that the applicant subjectively expected further meetings to be convened and that she was not under the impression that the consultation process had effectively come to an end.

This is evidenced by the email sent on the afternoon of 12 December 2012, and the letter sent the next day in which she makes proposals in relation to an enhanced severance package.

[14]      A claim of procedural fairness is not to be adjudicated on the basis that each of the requirements for consultation is to be treated discretely, with a failure to comply with any one of necessarily establishing procedural fairness.  Even less is it appropriate, after the event, to hold up s 189 as a checklist and in effect, to conduct a consultation by litigation.

Section 189 is clear.  It requires an employer and employees faced with the prospect of retrenchment to engage in a joint consensus-seeking process.  This requires an honest and open engagement in which both parties exchange views and proposals in relation to a contemplated retrenchment.

It requires an employer party, in particular, to give serious consideration to proposals made by employees and their representatives and to allow the fullest possible exchange of views.

It requires an employee party to participate actively in the process and to seek mutually agreed outcomes.

In the present instance, discounting what was an introduction to consultation issued on 6 December 2012, the consultation process was commenced and concluded in less than two hours.

Of course, there are those instances where a truncated consultation process can be justified, for example, in the case of acute financial distress where time is of the essence and the survival of the business is at stake.  This is not one of those cases.

There is no evidence to justify the brief exchange that took place on 12 December 2012, even less is there any justification for implementing a decision to retrench as soon as 14 December 2012.  Robbertze stated on a number of occasions that he was acting on the advice of an employer organisation, and that he conducted the consultation process on the basis of that advice.

The first respondent was poorly served by the employer organisation.  The proper advice in the circumstances, as I have indicated, is that in the absence of facts that limited consultation a fuller exchange of views ought to have been permitted.

The applicant clearly anticipated further discussions following on the meeting of 12 December 2012 and not unreasonably so, particularly since the affected employees had specifically been invited to make proposals in response to what Robbetze had said during the meeting.

It would have cost the first respondent very little, if anything at all, to have continued the consultation process during December, or even to have resumed the process in January 2013.

Had the first respondent done so, it is clear that whatever misconceptions may have existed regarding the applicant’s willingness to assume alternative employment at an acceptable rate might have been dispelled, and some reason for the first respondent’s refusal to pay any more than the statutory minimum severance package might have been explored.

There was no reason to complete the consultation process in a day, even less was there any justification for permitting further engagement only by way of an exchange of correspondence thereafter.

[15]      In the circumstances, in my view, the first respondent failed to engage in a joint consensus seeking exercise as envisaged by the Act.  The applicant’s retrenchment was effected with indecent haste.  For that reason, the applicant’s dismissal was procedurally unfair.

Remedy

[16]      The applicant seeks compensation.  The court has a discretion to determine an amount of compensation that is fair, subject to a maximum of the equivalent of 12 months remuneration.

In the present instance, I must necessarily take into account that the applicant’s dismissal was only procedurally unfair, and that while there is little to commend the first respondent’s conduct and especially the timing of the retrenchment, some effort to engage in consultation was made.  While the departure from the norm was significant enough to attract a finding of procedural unfairness, it was not gross.  In the circumstances, in my view, a fair award is an amount equivalent to 3 months’ remuneration.

[17]      Insofar as costs are concerned, the first respondent specifically and charitably stated that it was not pursuing any order for costs against the applicant.

For the above reasons, I make the following order:

  1. The applicant’s dismissal was procedurally unfair
  2. The applicant is awarded compensation equivalent to 3 months’ remuneration, calculated on the basis of her level of remuneration as at 14 December 2012.