Earlier judgments overturned: Interpretating LRA 189A

3 Comments

1. 

   GilesFiles on May 25, 2015 at 7:03 am

   Reported
   [2015] 6 BLLR 549 (LAC)
   (2015) 36 ILJ 1469 (LAC)

2. 

   GilesFiles on July 31, 2015 at 4:58 pm

   Extract from Employment Law (2015) June issue published by LexisNexis [subscription required]

   “Invalid” dismissals are no more: The LAC invalidates two of its own judgments

   Can a dismissal be declared void and of no effect, rather than unfair? John Grogan considers a case in which that question was asked and answered in a manner in which it has been answered differently by the Labour Appeal Court twice before, and may yet be answered differently by the Constitutional Court.

   Edcon v Steenkamp and others [2015] 6 BLLR 549 (LAC) is a striking judgment in more ways than one. Firstly, the Labour Appeal Court agreed to sit as a court of first instance in terms of section 175 of the LRA. Secondly, having done so, the court overruled not one, but two of its earlier judgments and in the process ruled that the Labour Relations Act 66 of 1995 does not provide for situations in which dismissals can be ruled null and void, as opposed to procedurally and substantively unfair. Thirdly, the LAC granted relief that must be categorised as highly unusual.

   The judgment had its roots in the convoluted provisions of section 189A of the LRA, the newish provision that caters for large scale retrenchments which involve the dismissal of stipulated numbers of employees by employers with workforces of various sizes (section 189A(1)). Edcon had to comply with that provision when it retrenched about 3 000 of a workforce of about 40 000. This meant that, apart from issuing the standard section 189(3) notice, either the company or the majority union was entitled to ask the CCMA to appoint a facilitator to help them through the process (section 189A(3)). Nobody did so in this case, and after some consultation, Edcon gave notice, as it thought, in terms of section 189A(8).
   . . . .
   Common law
   The Edcon court made much of the common law principle that failure to give notice where it is due does not mean that employment does not terminate in fact, and that the consequence of such a wrongful dismissal is merely to give the employee a remedy, which would be to claim the notice due. The same applies where statutory notice is withheld when it is due (although it has been held that the giving of notice during an employee’s vacation in contravention of section 14(2) of the former BCEA 3 of 1982 rendered the dismissal null and void: see Anderson v Toyota SA Motors (Pty) Ltd t/a Toyota SA Stamping Division (1993) 14 ILJ 452 (IC)).
   Whether a parallel can be drawn between terminations without contractual or statutory notice and dismissals before the expiry of the periods set by section 189A(8) is debatable. Section 189A(8) sets two periods, not one. It allows the employer to give the notice required by section 37(1) of the current BCEA only after the periods mentioned in section 64(1) have elapsed – ie after the dispute has been certified unresolved or 30 days after the dispute was referred for conciliation, unless the parties have agreed to extend that period. The same periods are set for the giving of notice of a strike or a reference to the Labour Court to challenge the substantive fairness of the dismissal.
   . . . .
   The conclusion reached in Edcon that there is no such thing as an “invalid” dismissal also seems difficult to square with the line of cases dealing with premature terminations of fixed term contracts, starting with Fedlife v Wolfaardt, supra. In Fedlife, the SCA held that Chapter VIII of the LRA “is not exhaustive of the rights and remedies that accrue to an employee upon the termination of a contract of employment”. Employees whose fixed term contracts are prematurely terminated can still elect to sue for breach of contract, rather than for unfair dismissal. Indeed, the LAC has gone so far as to hold that the rights acquired under a fixed term contract are so entrenched that employers may not rely on the most pressing operational requirements to breach them (Buthelezi v Municipal Demarcation Board [2005] 2 BLLR 115 (LAC)). In that judgment, the court said that the employer “had no right in law to terminate the contract prematurely” and that operational requirements, if any existed “did not in law give the respondent the right to terminate the contract”. The Municipal Demarcation Board was well and truly deprived by this judgment of the right to defend the “substantive fairness” of its decision to retrench Mr Buthelezi. According to Masethla v President of the Republic of South Africa & another 2008 (1) BCLR 1 (CC) and Abdullah v Kouga Municipality & another [2012] 5 BLLR 425 (LC), unless employers can prove that employees on fixed term contracts are in material breach, they are obliged to reinstate them unless the court is satisfied that the trust relationship has been destroyed or, if it has, to pay them the salaries they would have earned had the contracts run their course. In these cases, fairness does not enter the picture at all.

   A further point raised by Edcon that merits attention is the nature of the relief granted. As noted above, this was confined to a declaratory order, the substance of which stated that De Beers and Revan Civil Engineering were wrong and that non-compliance with sections 189A(2)(a) read with 189A(8) “does not lead to an invalid dismissal” (meaning that such dismissals possibly lead only to unfair dismissals, which must be challenged as such if they are challenged). The substantive relief afforded by that declaratory order is unstated, but real. The order effectively means that the employees were deemed to have taken an irregular step by pressing a claim under section 189A(13) and by relying exclusively on the “invalidity” of the dismissals. That step can presumably be rectified only by a referral under section 191(5)(b)(ii).

   Because the dispute in Edcon had its origins in section 189A, the employees will not be able by virtue of section 189A(18) to challenge the procedural fairness of their dismissals and the Labour Court “must” find in terms of section 189A(19) that the employees were dismissed for a fair reason if the dismissal was to “give effect to a requirement based on the employer’s economic, technological, structural or similar needs”, was “operationally justifiable on rational grounds”, that Edcon had properly considered alternatives, and that it had used fair and objective criteria to select the employees for dismissal, all of which criteria were probably satisfied. If they were, the employees will be denied any relief. Ironically, therefore, the former Edcon employees may be victims, rather than beneficiaries, of section 189A, which was specifically designed to grant additional protection to employees caught up in mass retrenchments.

3. 

   GilesFiles on May 13, 2017 at 5:28 pm

   Appeal disallowed by Constitutional Court

   Steenkamp v Edcon Limited(CCT46/15, CCT47/15) [2016] ZACC 1; (2016) 37 ILJ 564 (CC); 2016 (3) BCLR 311 (CC); [2016] 4 BLLR 335 (CC); 2016 (3) SA 251 (CC) (22 January 2016)

   CC summary
   Labour Relations Act — dismissal for operational requirements — non-compliance with section 189A(8) — premature notices of termination — dismissal not invalid but may be unfair — requirements of section 189A(8) relating to procedural fairness — LRA remedy for LRA breach not common law remedy — workers to use LRA mechanisms — remedies in section 189A(8)(9) and (13) adequate — reinstatement not competent for invalid dismissal — appeal from LAC — application dismissed

   Minority judgment — section 189A(7) and (8) create a dismissal-free zone — dismissals in breach of section 189A invalid