Dismissal for operational requirements South African labour law

1 dismissal operational requirements

1.1 context
1.2 employer’s similar needs
1.3 changes employee’s terms , conditions of employment
1.4 incompatibility , related reasons
1.5 breakdown in trust relationship
1.6 substantive issues

1.6.1 real reasons , increases in profits
1.6.2 large-scale dismissals

1.6.2.1 economic, technological, structural or similar needs
1.6.2.2 operationally justifiable on rational grounds
1.6.2.3 proper consideration of alternatives
1.6.2.4 selection criteria fair , objective




1.7 courts changing views
1.8 procedural aspects

1.8.1 consultation process
1.8.2 consultation topics

1.8.2.1 measures avoid dismissals
1.8.2.2 measures minimize number of dismissals
1.8.2.3 measures change timing of dismissals
1.8.2.4 measures mitigate adverse effects of dismissals
1.8.2.5 criteria dismissal , severance pay


1.8.3 written disclosure of information
1.8.4 representations , consideration of representations
1.8.5 selection criteria

1.8.5.1 seniority
1.8.5.2 conduct
1.8.5.3 efficiency, ability, skills, capacity, experience, attitude work , productivity
1.8.5.4 attendance
1.8.5.5 bumping
1.8.5.6 retirement
1.8.5.7 volunteers


1.8.6 severance pay


1.9 large-scale dismissal big employer

1.9.1 facilitation option
1.9.2 non-facilitation option


1.10 resolution of disputes
1.11 dismissal of strikers

dismissal operational requirements
context

an employer may find facing financial ruin (due unsound strategy, large clients or contracts having been lost, or factors in economy @ large). under pressure, employer may forced considering reducing wage bill restructuring organisation, may mean dismissing employees. in scenario, word retrenchment used.

section 188 of lra recognizes employer has operational requirements , needs, , that, in cases, these may fair , valid reason dismissal.

according section 213 of lra, operational requirements requirements based on economic, technological, structural or similar needs of employer.

there 4 categories of operational requirements. these categories clear reason dismissal not relate employee; due needs of employer, , therefore reason dismissal employer s.

an employer’s economic needs, example, include needs , requirements relating economic well-being of enterprise. 1 of common economic reasons dismissal financial difficulties (due to, example, downturn in economy or decrease in demand products).

technological needs refers introduction of new technology, such more advanced machinery, mechanization or computerization, leading redundancy of employees.

structural needs reason dismissal describes posts becoming redundant following restructuring of enterprise. follows merger or amalgamation.

employer’s similar needs

this broad category , must determined reference circumstances of case. there no clear , absolute dividing line between employer’s economic needs , similar needs, there considerable overlaps.

changes employee’s terms , conditions of employment

a business may have restructured or amalgamated enterprise, or mode of operation may have altered in order ensure survival or make more competitive.

these changes may lead employee s becoming redundant, changes of nature may lead employee s being offered new position, changes terms , conditions of employment.

if employee unreasonably refuses accept changes terms , conditions of employment, employee may dismissed operational requirements.

in wl ochse webb & pretorius v vermeulen, employee tomato salesman wl ochse (the employer) , paid basic salary , commission. earned more other employees, sale of tomatoes attracted higher commission sale of vegetables sold other employees. caused dissatisfaction among other workers, employer tried address proposing new remuneration system. salesman given 3 alternatives:

he proposed old system retained. when proposal rejected employer, resigned.

the court held employer had not acted unfairly, successful business requires contented employees. unhappiness can lead several problems, such labour unrest , drop in productivity. commercial rationale changes established employer.

dismissal compel employee accept changes terms , conditions of employment branded automatically unfair section 187(1)(c) of lra. primary motive dismissal must commercial rationale or operational reason in order dismissal fair.

the fundamental difference between operational requirement dismissal , automatically unfair dismissal employer’s reason dismissal. if employer dismisses employees because terms , conditions of employment must altered business continue being viable, employees may dismissed, no longer serve employer’s operational requirements.

in fry s metals v national union of metalworkers, court discussed difference between operational-requirement dismissal , automatically unfair dismissal:

in case of dismissal due operational requirements, purpose rid of employees not meet business requirements of employer, new employees meet business requirements can employed.
in case of automatically unfair dismissal, employer wants existing employees agree change of terms , conditions of employment, , has attitude that, if employees not agree changes, dismiss them.

a change in terms , conditions of employment need not result of changes regarding business. circumstances or attitude of employee change. have such serious economic repercussions employer latter deems vital change employee’s conditions of employment.

the nature of business may such special demands made on employees. may essential economic success of business, example, employees able , willing work overtime. employee’s inability or refusal jeopardise well-being of business; therefore dismissal fair.

incompatibility , related reasons

the courts have accepted employee actions negatively affect operation of business may dismissed. may occur actions of employee create disharmony among co-workers, when, example, antagonises co-workers continually making racist or sexist remarks.

in erasmus v bb bread, employees called dismissal of manager because of problematic attitude towards them, , having made derogatory remarks, particularly aimed @ black employees. industrial court (in terms of old lra) held dismissal valid , fair reason, employer entitled insist on reasonably harmonious interpersonal relationships between employees. if sound relationships appear impossible, employer may entitled remove employee scene.

in east rand proprietary mines v upusa, issue fairness of dismissal of number of zulu-speaking workers after violent clashes between them , workers belonging other ethnic groups. although court found dismissal had been unfair in circumstances, did acknowledge dismissal had roots in arbitrary ground, such ethnic origin, fair if employer prove dismissal option left ensure safety of targeted employees , continued well-being of business. court held employer may dismiss employees because cannot guarantee safety in light of ethnic hostilities, employer must able show had no other alternative.

breakdown in trust relationship

the relationship between employer , employee 1 of trust. entails confidence employee adhering common-law duty act in faith towards , in best interests of business.

if facts show duty breached, employee guilty of misconduct and, if sufficiently serious, may dismissed.

if employer unable prove such breach on balance of probabilities, employee may not dismissed misconduct, may dismissed operational reasons, such mistrust counter-productive operation of business.

in food & allied workers union v amalgamated beverage industries, industrial court accepted dismissal of number of employees on suspicion of assault had operational rationale it.

substantive issues
real reasons , increases in profits

before introduction of section 189a of lra in 2002, there no statutory definition of substantive fairness in case of operational-requirements dismissal. question factual one; employer must prove:

a dismissal operational reasons need not restricted cutting of costs , expenditure. profit, or increase in profit, or gaining advantage such more efficient enterprise, may acceptable reasons dismissal.

if employer can show profit made in accordance sound economic rationale, , follows fair process retrench employee, dismissal fair.

large-scale dismissals

section 189a of lra distinguishes between size of employers , size of dismissals when regulating substantive , procedural fairness of dismissal.

section 189a(1) distinguishes between small employer (less fifty employees) , big employer (more fifty employees).

in terms of s189a(1)(a) large-scale dismissal entail employer s dismissing

ten employees, if employer employs between fifty , 200 employees;
twenty employees, if employer employs between 200 , 300 employees;
thirty employees, if employer employs between 300-400 employees;
forty employees, if employer employs between 400-500 employees; and
fifty employees, if employer employs more 500.

in terms of s189a(1)(b), dismissal big employer of fewer prescribed minimum listed above still constitutes large-scale dismissal if number of employees dismissed, number of employees have been dismissed operational reasons in twelve months previously, exceeds number specified above.

this so-called rolling twelve-month period , must calculated backwards, starting date on employer gives notice in terms of section 189(3) of latest proposed dismissal operational reasons.

the purpose of twelve-month rolling period ensure employers not manipulate number of employees dismissed dismissal falls outside ambit of section 189a.

section 189a(19) of lra provides that, in dispute referred labour court concerning dismissal of number of employees in terms of subsection (1), court must find employee dismissed fair reason if

the dismissal give effect requirements based on employer’s economic, technological, structural or similar needs;
the dismissal operationally justifiable on rational grounds;
there proper consideration of alternatives; and
selection criteria fair , objective.

economic, technological, structural or similar needs

this requirement entails reason dismissal must operational requirements, defined in section 213. must real reason dismissal.

operationally justifiable on rational grounds

rational grounds grounds founded upon reason or logic. rationality test objective one, measuring acceptability of reasons dismissal against considered acceptable. not subjective test focussed on particular employer considered justifiable under circumstances.

proper consideration of alternatives

one of requirements procedurally fair dismissal consultations on measures avoid dismissals. inclusion makes procedural requirement requirement substantive fairness, , goes further requiring proper consideration.

proper consideration entails more merely considering alternatives. employer must apply mind , give defensible reasons dismissing such alternatives, , show dismissal last resort.

selection criteria fair , objective

one of requirements procedurally fair operational requirements dismissal parties must attempt reach consensus method used select employees dismissal. parties unable agree, criteria used must fair , objective. procedural requirement also, therefore, requirement substantive fairness.

courts changing views

in past, courts took view function of court not second-guess employer’s decision. not court ask whether best decision under circumstances; needed consider whether rational, commercial or operational decision.

now courts take closer view of employer’s business decisions.

in bmd knitting mills v sa clothing & textile workers union, court departed deferential approach , focused on fairness of reason both parties:

the starting point whether there commercial rationale decision. rather take such justification @ face value, court entitled examine whether particular decision has been taken in manner fair affected party, namely employees retrenched. extent court entitled enquire whether reasonable basis exists on decision, including proposed manner, dismiss operational requirements predicated. viewed accordingly, test becomes less deferential , court entitled examine content of reasons given employer, albeit enquiry not directed whether reason offered 1 have been chosen court. fairness, not correctness mandated test.

in chemical workers industrial union v algorax, court considered entitled scrutinize employer’s business reasoning , decision-making in considerable detail. reasoning given court should not hesitate deal issue requires no special expertise, skills or knowledge not have, requires common sense or logic.

the important implication of approach employer need convince court not has considered alternatives, has chosen option makes best business sense.

procedural aspects

there no clear dividing line between substantive , procedural fairness in dismissals operational reasons; issues overlap considerably.

consultation process

the consultation process @ heart of procedural fairness in case of dismissal operational requirements.

section 189(1) of lra provides that, when employer contemplates dismissing 1 or more employees reasons based on employer’s operational requirements, employer must consult

any person whom employer required consult in terms of collective agreement;
if there no such collective agreement,

a workplace forum, if such exists; and
any registered trade union members affected;


if there no workplace forum, registered trade union members affected; or
if there no such trade union, employees affected proposed dismissals or representatives nominated purpose.

in united national breweries v khanyeza, court held that, union recognized consulting party in collective agreement, entitled consult on behalf of employees, falling outside bargaining unit union recognised.

note consultation must take place when employer contemplates dismissal —when possibility of dismissal foreseen, final decision dismiss has not been reached. @ most, therefore, employer must have intention retrench.

item 3 of code further entrenches idea consultation must take place when dismissal contemplated.

this ensures employees afforded opportunity influence employer in final decision dismiss or not dismiss.

section 189 not prescribe period on consultation should extend, item 5 of code states circumstances of each case relevant determination of reasonable period.

item 6 further states more urgent need of employer respond factors giving rise contemplated dismissals, shorter consultation process be.

consultation entails parties must engage in meaningful joint consensus-seeking process , attempt reach consensus. means parties must embark on joint problem-solving exercise, striving consensus.

for process meaningful, employer must consult in faith , not go through motions. means employer cannot have made mind dismiss prior consultation, , must prepared keep open mind regard representations made.

the employees must engage properly, make representations , ensure representations founded , substantiated, , not merely prolong consultations.

should parties fail reach consensus, final decision remains of employer.

in nehawu v university of pretoria, labour appeal court held that, after restructuring had been exhaustively discussed steering committee, on stakeholders represented, university not required consult again on issues after formally giving notice in terms of section 189 of lra.

consultation topics

section 189(2) of lra provides employer , other consulting parties must engage in meaningful joint process, attempting reach consensus on

appropriate measures

to avoid dismissals;
to minimize number of dismissals;
to change timing of dismissals; and
to mitigate adverse effects of dismissals;


the method selecting employees dismissed; and
the severance pay dismissed employees.

measures avoid dismissals

there must proper consideration of alternatives. employer must apply mind proposals and, if applicable, give defendable reasons dismissing these alternatives , coming conclusion dismissal solution.

possible alternatives include following:

granting paid or unpaid leave;
reducing or eliminating overtime or work on sundays;
transferring employees other departments; and
training or retraining employees enable them take other positions in organisation.

the parties may consider spreading dismissals out on period of time allow natural attrition of numbers through retirements or resignations.

measures minimize number of dismissals

once dismissals have been agreed solution, number of dismissals must kept minimum. may mean

transferring employees other sections or departments;
asking volunteers means of offering voluntary severance package;
allowing natural attrition of numbers; or
training or retraining.

measures change timing of dismissals

while employer may prefer dismissals immediate, union may prefer them spread on period of time, or take place @ later stage.

measures mitigate adverse effects of dismissals

the employer may, example, assist employee in finding alternative work giving employee time without loss of pay search alternative work.

the employer may make office available in complete job applications , arrange interviews.

the employer may provide reference employee.

in sikhosana v sasol synthetic fuels, court noted lra contemplates hierarchy of consulting parties, each if applicable excluding successors. courts apply section 189(1) strictly. held that, although appropriate measures mitigate adverse effects of dismissals should taken, employers not required actively seek alternative work retrenched employees.

the employer may undertake give priority dismissed employee should vacancy arise.

criteria dismissal , severance pay

consensus must reached on criteria used select employees dismissed , amount of severance pay employee entitled to.

written disclosure of information

the employer must disclose relevant information in writing. verbal assurances, explanations , information employer not suffice; other party may demand employer put down in writing or provide documentation such financial reports.

according section 189(3) of lra, relevant information must disclosed. may include, inter alia,

the reasons proposed dismissals;
alternatives considered , reasons rejection thereof;
the number of employees affected;
the proposed method selecting employees dismiss;
the time when dismissals take effect;
severance pay proposed;
any assistance employer proposes offer;
the possibility of future re-employment of employees dismissed;
the number of employees employed employer; and
the number of employees employer has dismissed operational requirements in preceding twelve months.

relevance question of fact , entails information allow effective consultation.

the onus on employer prove information has refused disclose not relevant purposes sought.

privileged information, information may cause harm if disclosed , private personal information relating employee not required disclosed, if relevant.

representations , consideration of representations

section 189(5) of lra provides employer must allow other party opportunity make representations on matter on parties consulting. representations on issues regarding reasons dismissal, alternatives dismissal, measures minimise number of dismissals, timetable dismissal, assistance offered, severance pay, etc., therefore allowed.

representations disclosure of information , other matter relating proposed dismissals allowed: example, socio-economic effect mass dismissal have on local community.

the employer must engage representations , consider , respond them.

selection criteria

employees must selected dismissal in terms of selection criteria have either been agreed upon or fair , objective.

this means criterion should not arbitrary; must relevant, in relates conduct of employee, such length of service, ability, capacity , needs of business.

the following criteria commonly used:

seniority;
conduct;
efficiency, ability, skills, capacity, experience, attitude work , productivity;
attendance;
bumping;
retirement; and
volunteers.

seniority

this last in, first out or lifo principle. long-serving employees retained @ expense of shorter service in similar or less-skilled categories of work. method minimises use of subjective judgment decide shall retrenched. why favoured unions.

the code acknowledges lifo fair , objective criterion, provides should not operate undermine agreed affirmative-action programme.

exceptions may include retention of employees based on criteria (like special skills) fundamental successful operation of business.

conduct

this criterion fair , objective if based on objectively determined conduct, attendance records , previous warnings, , if employee @ times made aware employer found such conduct unacceptable.

efficiency, ability, skills, capacity, experience, attitude work , productivity

these criteria favored employers. regarded objective, provided not depend solely upon opinion of person making selection, can objectively tested.

furthermore, may used if employee knew employer considered them important.

attendance

this criterion allowed if can proved employee knew employer regarded absences work seriously.

bumping

if retrenchment affect 1 department in enterprise, practice retrench on lido basis , drain off remaining employees in department other departments.

retirement

employees have reached minimum retirement age may identified first population retrenchment. after these employees have been retrenched, lifo used. criterion applied in jobs require level of fitness , strength.

volunteers

parties may agree employer first ask volunteers before embarking on selection process.

severance pay

section 41 of commission conciliation, mediation , arbitration creates statutory duty employer pay severance workers dismissed operational reasons.

severance pay amount each completed year of continuous service.

section 84 of commission conciliation, mediation , arbitration suggests that, purposes of determining length of employee’s employment, previous employment employer must taken account if break between periods less 1 year.

the duty pay severance not absolute. if employee unreasonably refuses alternative position, loses right severance pay.

the question of whether or not refusal reasonable 1 of fact. item 11 of code states reasonableness determined consideration of reasonableness of offer of alternative employment , reasonableness of employee’s refusal. objective facts such remuneration, status , job security relevant.

if offered position amounts demotion, refusal not unreasonable.

large-scale dismissal big employer

section 189a introduces additional requirements procedurally fair dismissal in case of large-scale dismissal.

firstly section 189a affords either party right ask commission conciliation, mediation , arbitration appoint facilitator assist parties during consultations; secondly, section 189a introduces moratorium of sixty days, during employer may not dismiss.

facilitation option

only commission conciliation, mediation , arbitration may approached appoint facilitator.

the employer must make request when gives notice in terms of section 189(3) employee party contemplating large-scale dismissal.

the employee party (the union, example) representing majority of employees may ask facilitator. employee party must notify commission conciliation, mediation , arbitration within fifteen days of employer s notice of contemplated dismissal.

if neither party asks facilitator within above timeframes, may agree ask 1 appointed during consultation process.

if facilitator appointed, facilitation must conducted in terms of regulations made minister of labour conduct of such facilitation.

these regulations relate time period , variation of such time periods facilitation, powers , duties of facilitators, circumstances in commission conciliation, mediation , arbitration may charge fee appointing facilitator, , amount of fee.

an employer may not dismiss before sixty days have elapsed date on notice in terms of s189a(3) given.

non-facilitation option

if none of parties request facilitator, section 189a stipulates minimum period of thirty days, when notice in terms of section 189a(3) given, must have lapsed before dispute may referred ccma or other council.

resolution of disputes

disputes regarding procedural , substantive fairness of dismissals small employer, , small-scale dismissal big employer, referred labour court.

in large-scale dismissals, disputes procedural fairness must referred labour court within thirty days after notice of dismissal has been given employees.

in large-scale dismissals, there disputes substantive fairness, there 2 choices:

in case of dismissal operational reasons of single employee, employee may refer dispute substantive or procedural fairness either arbitration or labour court.

dismissal of strikers

in terms of section 67(5), employees engaged in protected strike may dismissed if

they guilty of misconduct during strike; or
operational requirements require such.