BACKGROUND
| In 2014, Aveng Trident Steel (“Aveng”) initiated a consultation process in terms of section 189 of the Labour Relations Act (“the LRA”) with the union NUMSA. Aveng recognised that a reduction of staff would not be sufficient to resolve its operational problems. It needed to achieve an improvement in productivity as well by, inter alia, reviewing job descriptions to allow for the combining of certain functions (“redesigned job descriptions”). Subsequent to several consultations to discuss the issue, Aveng addressed a letter to NUMSA informing it that the consultation process had now been exhausted and gave notice that it would implement the new structure as per the redesigned job descriptions. None of the employees would have been financially prejudiced by accepting the offer; all could have continued working for Aveng and no retrenchments would have been necessary. However, all the employees refused to accept the new terms and conditions of employment as contemplated in the redesigned job descriptions and were accordingly dismissed. NUMSA contended that the reason for the dismissal was the refusal by the employees to accept Aveng’s demands in respect of the altered job descriptions and grade structure, which were alleged to be matters of mutual interest, and thus the dismissal was automatically unfair in terms of section 187(1)(c) of the LRA. The matter was first heard in the Labour Court and subsequently taken on appeal by NUMSA to the Labour Appeal Court. Labour Court (“LC”): The LC held that the proposal to alter the job descriptions was an appropriate measure aimed at avoiding or minimising the number of dismissals and thus the dismissal was for a fair reason. Aveng was faced with operational difficulties and the only viable answer was to restructure and redesign the jobs. Labour Appeal Court (“LAC”): S 187(1)(c) of the LRA (as amended) provides as follows: “A dismissal is automatically unfair…if the reason for the dismissal is… (c) a refusal by employees to accept a demand in respect of any matter of mutual interest.” NUMSA averred that Aveng made a demand relating to a matter of mutual interest when it informed the employees that it intended to implement the new structure as per the redefined job descriptions. Aveng argued that the wording of s187(1)(c) does not suggest that because a proposed change to terms and conditions is refused and a dismissal thereafter ensues, the reason for the dismissal is necessarily the refusal to accept the proposed change. The LAC reasoned that the essential inquiry under s187(1)(c) is whether the reason for the dismissal is the refusal to accept the proposed changes to employment. The court must determine: |
- Factual causation, by asking whether the dismissal would have occurred if the employees had not refused the demand; and
- Legal causation, namely whether such refusal was the main, dominant, proximate or most likely cause of the dismissal.
| HELD |
| The LAC held that the primary purpose of Aveng in making the proposal was to restructure for operational reasons and to ensure its long-term survival. The LAC also found that the failure of the employees to accept the proposals caused an insurmountable operational problem for Aveng, which constituted a fair reason for dismissal. |
The dismissals accordingly fell within the zone of permissible dismissals for operational requirements and did not contravene s187(1)(c) of the LRA.
VALUE
In the context of operational requirements, employer’s may dismiss employees for refusing to accept a change to their conditions of employment. However, employers are required to demonstrate that a fair consultation process has been followed and there were no reasonable alternatives for the retrenchments.
Written by Jordan Dias and Pierre van der Merwe
