EMPLOYERS ARE NOT PRECLUDED FROM RELYING ON OPERATIONAL REQUIREMENTS TO DISMISS EMPLOYEES WHO REFUSE TO ACCEPT A CHANGE IN WORKING CONDITIONS

By Helen Wilsenach Tuesday, January 30, 2018
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The case of NUMSA & others v Aveng Trident Steel (A Division of Aveng Africa) (Pty) Ltd (Aveng) provides some comfort to employers dealing with retrenchments where employees refuse to accept a change to working conditions.

An employer who dismisses employees for operational requirements, where they refuse to accept a change in employment conditions offered as a genuine alternative to retrenchment, should avoid being caught by the provisions of section 187(1)(c) of the Labour Relations Act 1995 (LRA).

This is provided that the dismissals are final and the employer does not intend re-employing the employees if they subsequently accept the demand. Even if it can be shown that the dismissals are not automatically unfair, an employer is still required to show that the dismissals are substantively fair and that there are genuine operational reasons to change the conditions of employment.

What an employer communicates to employees as its intended reason for the dismissals is also an important evidential factor in determining the true reason for the dismissals.

In the Aveng case, the first respondent (Aveng) had been facing a decline in profits. In 2014, it began a consultation process as part of its restructuring exercise. In an attempt to avoid job losses, it amended its job descriptions as part of a new company structure. Employees who had not opted for voluntary severance packages and who were not engaged on limited duration contracts, which were to be terminated, were offered alternative roles within the new company structure. Employees who did not accept the offer of alternative employment would be retrenched.

Of all the employees, 71 accepted the alternative roles, while the remaining 733 were retrenched. NUMSA referred an unfair dismissal dispute to the Labour Court on behalf of its members who were retrenched, alleging that the dismissals were automatically unfair in terms of section 187(1)(c) of the LRA. This section provides that a dismissal is automatically unfair if the reason for the dismissal is “a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer”.

The court in this matter confirmed the decisions of Fry’s Metals (Pty) Ltd v NUMSA & others (Fry’s Metals) and Chemical Workers Industrial Union & others v Algorax (Pty) Ltd (Algorax) as good law.  In these cases, the courts held that what must be established is the true reason for the dismissals and whether that reason is prohibited by the LRA.

An employee who alleges an automatically unfair dismissal must produce credible evidence to prove that the true reason for his or her dismissal was one that rendered it automatically unfair. Thus, even if all three elements of section 187(1)(c) are present (i.e. a demand, a refusal and a dismissal), it does not automatically follow that there is a causal connection between the dismissal and the refusal. The test is to look at the dominant reason for the dismissal.

The court, in this matter, found that the true reason for the dismissals was due to Aveng’s operational requirements as it could no longer afford to employ those employees in accordance with its old structure and that it was not an attempt by Aveng to flex its muscles in a collective bargaining context. It found that the dismissals were not automatically unfair and in addition, that the dismissals were substantively fair as Aveng had done all it could to try and avoid the retrenchments.

While the Aveng case brings welcome clarity to employers, it remains to be seen whether the case will be taken on appeal to the Labour Appeal Court and thereafter potentially to the Constitutional Court.

For more information on the Aveng case or retrenchment matters, please contact our Employment and Benefits practice.