SOUTH AFRICA: CONCOURT SETTLES THE LAW ON VARIOUS ISSUES RELATING TO LARGE-SCALE RETRENCHMENTS

By Amandla Makhongwana,Yonela Sicam Wednesday, May 11, 2022
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On 6 May 2022, the Constitutional Court handed down judgment in the matter of Solidarity obo Members v Barloworld Equipment Southern Africa and Others (CCT 102/21) [2022] ZACC 15.

The case is an important one, in which the Court settles various issues in relation to applications instituted in the context of a large-scale retrenchment exercise, in terms of section 189A(13) of the Labour Relations Act, 1995 (LRA). 

The facts

In April 2020, Barloworld Equipment embarked on a section 189A retrenchment process. During the consultation, affected employees were represented by various trade unions including NUMSA and Solidarity.

Barloworld Equipment issued termination notices in August 2020. This was met by an urgent application launched by Solidarity and NUMSA in the Labour Court – in terms of section 189A(13) – in which they alleged that the consultation process followed by Barloworld Equipment was inadequate and resulted in an unfair procedure.

The Labour Court held that section 189A(13) does not entail a determination simply on whether procedural fairness, in itself, was observed but rather, whether there was compliance with a fair procedure.

The Labour Court took the view that to determine procedural fairness, the net would be wider than is the case with determining whether there has been compliance with a fair procedure. The latter is what was envisaged by section 189A(13). The Labour Court held that neither Solidarity nor NUMSA ought to succeed in their applications, and their respective applications were dismissed.

After leave to appeal was refused by both the Labour Court and the Labour Appeal Court, Solidarity approached the Constitutional Court, which granted the desired leave. 

The Constitutional Court’s findings 

Meaningful consultation and joint consensus-seeking process

The Constitutional Court 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 consulting parties; and provide reasons for the rejection of proposals and representations after seriously considering them.

The Constitutional Court held that during the consultation process, the employer must keep an open mind and disclose sufficient information to make the consultation process a meaningful one. However, this obligation does not extend to information that is not of relevance to the consultation process, is not available, and/or could harm the employer’s business interests if disclosed, such as trade secrets and other confidential information.

The Constitutional Court reiterated that the purpose of consultations is to seek consensus and there is no requirement that the parties should reach agreement. The failure to reach consensus or agreement does not necessarily translate to there not being any meaningful consultation process.

Procedural fairness vs compliance with a fair procedure

The Constitutional Court held that section 189A(18) of the LRA precludes the Labour Court from adjudicating any dispute about procedural fairness of a dismissal for operational requirements referred to it in terms of section 191(5)(b)(ii) of the LRA (which is the section in the LRA that gives employees the right to refer unfair dismissal disputes).

The Constitutional Court held that in light of the limitation in section 189A(18), the LRA in section 189A(13) provides adequate protection for employees where a fair procedure has not been observed. Section 189A(13)(a) of the LRA provides a remedy to a consulting party to approach the Labour Court to compel an employer that has not issued notices of dismissal to comply with fair procedure. 

Where an employer has already issued notices of dismissal, section 189A(13)(b) provides a remedy to a consulting party to approach the Labour Court to interdict the dismissal of employees. Where the employer has already dismissed the employees without complying with fair procedure, section 189A(13)(c) affords the consulting party recourse to approach the Labour Court for an order reinstating the employees (which may be retrospective) until the employer complies.

The Constitutional Court held further that there is no authority in support of the Labour Court’s finding that there is a distinction between ‘compliance with a fair procedure’ and ‘procedural fairness’. Although there is no clear example in law where non-compliance with sections 189 and 189A would not translate to procedural unfairness, one cannot rule out that possibility. Therefore, until such time, the Labour Court’s jurisdiction to adjudicate procedural fairness is only ousted in respect of unfair dismissal proceedings brought in terms of section 191(5)(b)(ii).

It follows, therefore, that in order 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) on the basis of non-compliance with the procedures set out in section 189 and 189A of the LRA. In this regard, the Labour Court will be entitled to grant any of the remedies set out in section 189A(13), where an employer fails to follow the prescribed procedures.

Finally, the Constitutional Court held that section 189A(17)(a) provides an aggrieved consulting party 30 days after the issuing of dismissal letters to approach the Labour Court for relief in terms of 189A(13). Therefore, an aggrieved consulting party can approach the Labour Court during consultations and up to 30 days after dismissal letters are issued.

Ultimately, the Constitutional Court found that Barloworld Equipment had followed a meaningful consultation and joint consensus-seeking process and had followed a fair procedure prior to dismissing the employees.

Major take-aways

  • The Constitutional Court has settled what constitutes ‘meaningful consultation’.
  • Joint consensus-seeking process does not mean there has to be an agreement.
  • Where the employer fails to observe a fair procedure prior to dismissing the employees in retrenchment processes, employees have recourse to the remedies set out in section 189A(13) of the LRA.
  • The Labour Court is precluded by section 189A(18) of the LRA from adjudicating any dispute about procedural fairness of a dismissal for operational requirements referred to it in terms of section 191(5)(b)(ii) of the LRA.
  • There is, at least at this stage, no distinction between ‘compliance with a fair procedure’ and ‘procedural fairness’.
  • An aggrieved consulting party can approach the Labour Court during consultations and up to 30 days after dismissal letters are issued.