After the devastating effects of the COVID-19 pandemic on businesses in South Africa and worldwide, many employers have been placed in a position where they have to retrench some or all of their employees (dismissal based on operational requirements).
The law provides strict requirements for retrenchments, and employers must ensure that they comply with the same to ensure that the process is run fairly and correctly. Employees who claim to have been retrenched unfairly can approach the CCMA or relevant Bargaining Council (where one employee has been dismissed) or the Labour Court (if more than one employee has been dismissed).
Section 189 of the Labour Relations Act 66 of 1995 (the LRA) sets out that when an employer contemplates retrenching their employees, they must consult with any relevant party, including the employees and registered trade unions.
The parties must engage in a meaningful joint consensus-seeking process and attempt to reach a consensus on the dismissals, minimise the number of dismissals, change the timing of the dismissals, mitigate the adverse effects of the dismissals, the method for selecting the employees to be dismissed, and the severance pay for dismissed employees.
Regarding selection criteria for the proposed retrenchment, companies commonly use measures such as LIFO (Last In First Out), skills retention, and qualifications. If the parties cannot agree on selection criteria to be used, the employer must use selection criteria that are both fair as well as objective.
In the case of Solidarity Members v Barloworld Equipment Southern Africa and Others [2022] ZACC 15, the Constitutional Court highlighted the fact that joint consensus-seeking does not mean that there has to be an actual agreement between the parties on the aspects they are seeking consensus. Failing to reach a consensus on any element does not necessarily mean that the consultation process conducted between the parties was not meaningful.
The Constitutional Court further found that for a consultation process to be meaningful, the employer must show a willingness to respond to requests for further information, consider the proposals received from the parties and provide reasons for the rejection of any proposals and representations after giving them serious consideration. The employer must disclose sufficient information to make the process meaningful and keep an open mind to any parties’ suggestions. Only relevant information needs disclosure, and confidential information or information that could harm the business need not be disclosed.
In the above case, Barloworld was embarking on a large-scale retrenchment. The Constitutional Court had to deal with procedural fairness in large-scale retrenchments (in terms of section 189A of the LRA). The Court stated that section 189A(18) of the LRA prevents the Labour Court from determining procedural fairness of alleged unfair dismissal disputes which are brought in terms of section 191(5)(b)(ii) (the section in the LRA allowing employees to refer dismissal for operational requirements cases to the Labour Court). However, there are other ways for employees and/or consulting parties to ensure that the employer follows fair processes.
The LRA allows a facilitator to be appointed to facilitate the retrenchment and assist with a joint consensus-seeking process in large-scale retrenchments. Furthermore, employees have a constitutional right to strike over issues arising from procedural defects in the consultation process. Consulting parties can also approach the Labour Court to compel an employer (that has prematurely issued notices of dismissal) to comply with a fair procedure.
Where an employer has already issued notices of dismissal, consulting parties can approach the Labour Court to interdict the dismissal of employees. Where the employer has already dismissed the employees without complying with the fair procedure, the LRA allows consulting parties the right to approach the Labour Court for an order reinstating the employees until the employer complies with a fair process.
The Constitutional Court decided that for the Labour Court to entertain a claim of procedural unfairness in dismissals for operational requirements, the Labour Court must be approached in terms of section 189A(13) based on non-compliance with the procedures set out in sections 189 and 189A of the LRA. In this regard, the Labour Court will be entitled to grant any remedies in section 189A(13) where an employer fails to follow the prescribed procedures.
As stated above, employees have many remedies if a company fails to comply with the proper process when conducting a retrenchment. Thus, employers must ensure that they comply with the prescribed procedures in terms of the LRA. Invictus can assist in running large and small-scale retrenchments and ensuring that the correct processes have been followed.
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