Remedies for Large-scale Retrenchments

By Neil Coetzer, Partner, Employment Law, Benefits & Industrial Relations, Cowan-Harper Attorneys

labour-guideLarge-scale retrenchments seem to be happening more frequently of late. Depressed economic growth and lack of investment are only two factors that are forcing South African employers to reconsider their operating models and structures. Section 189A of the Labour Relations Act 66 of 1995, as amended (“the LRA”) regulates such large-scale retrenchments by providing additional obligations for employers and also remedies for affected employees. One of those remedies is contained in section 189A(13) which permits employees to approach the Labour Court on an urgent basis in order to compel the employer to, inter alia, comply with a fair procedure.

On 18 March 2016 the Labour Court delivered judgment in Association of Mineworkers and Construction Union (AMCU) and Another v Tshipi E Ntle Manganese Mining (Pty) Ltd (J332/16) [2016] ZALCJHB 105. After the employer issued notices in terms of section 189(3) of the LRA on 4 and 10 November 2015, four consultations facilitated by the CCMA and three ‘unfacilitated’ consultations were held. The employer subsequently dismissed several employees for operational requirements in early February 2016.

The Union, AMCU, approached the Labour Court on an urgent basis in terms of section 189A(13) alleging that it had not been consulted on the selection criteria used by the employer to identify the employees to be dismissed for operational requirements. To that end it contended that the employer had failed to follow a fair process and requested the Court to order the employer to follow a fair procedure and to reinstate its members until a fair procedure had been complied with. The employer opposed the urgent application on several grounds, including that the positions previously occupied by the Union’s employees no longer existed after the new structure had been implemented. It argued that reinstating the employees would make little sense in those circumstances. In any event, it argued, if the Court were to do so, it would be recreating positions which had ceased to exist. 

The Court, referring to section 189A(13), considered what relief would be appropriate in circumstances where a retrenchment process has already been completed. The Court remarked that section 189A(13) had to be read with the time-limits set out in section 189A(17) as it contemplates intervention by the Court ‘at a time that is appropriate given the circumstances of the case’. The Court also noted that by the time the application was set down for hearing, the employees had already been dismissed for almost one month and the retrenchment process had been completed. The Court accordingly found as follows:-

“[32]  In my view the horse has indeed bolted and the remedies provided for in section 189A(13)(a) and (b) are no longer feasible. The purpose of section 189A will not be served if I were to grant an interdict against dismissal and issue directions to compel the Respondent to comply with a fair procedure at this late stage. These remedies are inappropriate where the retrenchment process is completed.”

On the merits of the dispute, the Union alleged that it had not been consulted on the selection criteria. The employer, however, alleged that it had in fact consulted with the Union on the selection criteria. Accordingly, the Court found that there was a dispute of fact which could not be resolved with reference to the respective affidavits filed by the Union and the employer. It accordingly ordered that the matter be enrolled for oral evidence to enable the Court to make a finding on this issue.

The judgment serves as a practical response to difficulties which may arise from the reinstatement of employees in circumstances where the retrenchment process has already been completed. The judgment also makes it clear that some of the remedies set out in section 189A(13)(a) – (d) may not be appropriate in certain circumstances.

For more information please contact Neil Coetzer at or (011)  783 8711 /(011) 048 3000

Article published with the kind courtesy of Cowan-Harper Attorneys

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