Case summary written by Celeste Frank and checked by Jordan Dias
08 October 2020
BACKGROUND
In and during 2009 and 2010, Massmart Holdings Limited (“Massmart”) retrenched 503 employees who worked for Game stores and several other locations, citing operational reasons. On 27 September 2010, Massmart announced that the Wal-Mart Stores (“Wal-Mart”) intended to acquire a controlling interest in the company by virtue of an acquisition of 51 percent of the ordinary share capital of Massmart. This transaction came to the attention of the retrenched employees and the South African Commercial, Catering and Allied Workers Union (“SACCAWU”). SACCAWU took the view that the only reasonable inference to be drawn was that, given the timing of the retrenchment viewed with the process of merger negotiations, the retrenchments were merger related.
Massmart contested SACCAWU’s position, contending that the decision to implement the regional distribution structures (which gave rise to the retrenchments) was made in 2002, before any suggestion of a merger with Wal-Mart. The Tribunal concluded that there was insufficient evidence before it to support the conclusion that the employees’ retrenchment had been merger specific.
On 9 March 2012, the Competition Appeal Court of South Africa (“the Court”) approved the merger between Wal-Mart Stores (“Wal-Mart”) and Massmart Holdings Limited (“Massmart”) in terms of s 16(2)(b) of the Competition Act 89 of 1998 (“the Act”) subject to a number of conditions, one of which was the following:
“2.1.2 The merged entity is required to reinstate the 503 employees who were retrenched in 2009 and June 2010 and must take account of these employees’ years of service in the Massmart Group.”
The issue before the Court was whether, properly interpreted, the Court’s reinstatement order of 9 March 2012 was retrospective in effect.
Massmart argued that once a court has duly pronounced a final judgment or order, it has itself no authority to correct, alter or supplement because it is functus officio. The Court may only clarify its judgment or order in limited instances where the judgment was ambiguous, obscure or otherwise uncertain.
SACCAWU argued that in terms of section 66(b) of the Act, the Court or Tribunal would be able to rescind or vary its judgment in cases of obvious error or ambiguity. SACCAWU’s contention was that the reinstatement order was ambiguous to insofar as to whether it applied retrospectively and thus, warranted the Court to clarify its judgment and order.
In rebutting the arguments of SACCAWU, Massmart argued that the Constitutional Court’s understanding and interpretation of ‘reinstatement’ in the Equity Aviation Services (Pty) Ltd v Commission for Conciliation Mediation and Arbitration & Others[1] is relevant and should be followed. This decision confirms that the ordinary meaning of reinstatement is simply that the reinstated employee resumes his or her service from the date of the order on the same contractual terms that applied when his or her services were terminated. Accordingly, retrospectivity is not automatic and is dependent on discretion of the court or arbitrator.
COURT HELD
The Court found in favour of Massmart’s submissions insofar as the interpretation of reinstatement is concerned and rejected SACCAWU’s argument that it had been implicit in the judgment that 503 employees had been “unlawfully or unfairly” dismissed. The Court highlighted that upon reinstatement, the years of service up to date of retrenchment had to be taken into account in determining the years of service of the reinstated employees. If the reinstatement order was intended to mean that the retrenchments were unlawful and should be regarded as never having happened, there would have been no break in the service and no requirement for the second part of the condition.
In concluding, the Court held that the reinstatement order only permitted one interpretation, namely resumption of service with no implication of retrospectivity.
VALUE
The Equity Aviation decision still stands as the locus classicus in the interpretation of reinstatement (outside of the LRA) which not only highlighted the definition but also that retrospectivity is not automatic in reinstatement cases. It is important to consider the facts and issues surrounding the judgment which resulted in this conclusion before applying it to your case at hand.
[1] 2009 (1) SA 390 (CC).
