A recent landmark judgment handed down by the Constitutional Court has significant implications for both employers and employees, particularly in relation to Section 189A(18) of the LRA. Understanding these implications is crucial for the effective management of dismissals for operational requirements. In the case of Regenesys Management (Pty) Ltd t/a Regenesys v Ilunga and Others the Court conducted an in-depth analysis of the Labour Court's jurisdiction to adjudicate disputes regarding the procedural fairness of dismissals for operational requirements. The judgment provides a comprehensive analysis of Section 189A(13) and Section 189A(18) of the Labour Relations Act, Act 66 of 1995, as amended (the LRA), as well as Sections 189, 189A, and 191, highlighting the implications of procedural fairness in large-scale retrenchment dismissals. Justice Zondo seized the opportunity to address these issues.
Background
Regenesys (the Company) called its employees to a meeting on 17 June 2015 where it informed staff that there was a need for retrenchment because of its financial position. There were follow up meetings and on 22 June 2015, the Company gave the employees the final structure reflecting various positions. The company invited employees to apply for positions to which they wanted to be appointed in the new structure. The selection criteria for electing individuals to fill the positions were competence which included knowledge, skills, and behaviour. On 24 June 2015, the employees were informed that their applications were unsuccessful, that they would be retrenched with effect from 31 July 2015 and that July would be their notice month. Following the termination the affected employees referred a dispute to the CCMA alleging an unfair dismissal. The dispute was not resolved at conciliation. The matter was thereafter referred to the Labour Court where the affected employees brought an urgent application to the Labour Court to request an order reinstating them to the company’s employ until the company had complied with a fair procedure in terms of Section 189A(13)(c) alternatively an award for compensation in terms of Section 189A(13)(d).
In the Labour Court, Prinsloo J found that the dismissal of all the employees had been procedurally unfair and that the dismissal of some of the employees have been substantively unfair. On appeal the Labour Appeal Court found that the Labour Court did not have jurisdiction to consider the procedural fairness of the retrenchments. The matter was thereafter referred to the Constitutional Court. The Constitutional Court concurred with the Labour Court.
Primary Issue
The primary issue of the judgment dealt with the jurisdiction of the Labour Court to determine the procedural fairness of a dismissal in large-scale retrenchments. Sections 189A(13) and 189A(18) of the LRA were read to mean that the Labour Court was divested of jurisdiction to determine procedural fairness in large-scale retrenchments after 30 days from the date of the dismissal or from the date that notice of the dismissal was given. The understanding for this section was that the procedural fairness of the retrenchment could immediately be corrected and put back on track by using this process. Section 189A applies to employers with more than fifty employees and sub-section 189A(13) provides:
If an employer does not comply with a fair procedure, a consulting party may approach the Labour Court by way of an application for an order –
(a) compelling the employer to comply with a fair procedure;
(b) interdicting or restraining the employer from dismissing an employee prior to complying with a fair procedure;
(c) directing the employer to reinstate an employee until it has complied with a fair procedure;
(d) make an award of compensation, if an order in terms of paragraphs (a) to (c) is not appropriate.
In this judgment, the Constitutional Court reasoned that section 189A(13) has two purposes. The primary purpose of subsection (13) is to enable the Labour Court to make an order to compel the employer to comply with a fair procedure before employees may be dismissed finally for operational requirements. These orders are contemplated in paragraphs (a) to (c) above.
The secondary purpose of subsection (13) is to hold, an employer who has finally dismissed employees for operational requirements without a fair procedure, accountable and ensure that the employees whose rights have been infringed are granted appropriate relief without insisting on compliance with a fair procedure. This relief relates to an order for the payment of compensation contemplated in paragraph (d) above and would apply when the primary purpose of the section is no longer applicable.
From a reading of the section, it is evident that there is only a limited time during which orders contemplated in paragraphs (a) to (c) may appropriately be granted but, once that period has expired, only an order of compensation contemplated in paragraph (d) can appropriately be granted. In other words, an order contemplated in paragraph (d) is an order that is granted only when an order contemplated in paragraphs (a) to (c) is not appropriate.
The Constitutional Court remarked that various courts, including the Constitutional Court, have incorrectly found by virtue of section 189A(18) that the Labour Court does not have jurisdiction at all to adjudicate disputes about the procedural fairness of dismissals based on the employer’s operational requirements when the dismissal was premised on section 189A of the LRA.
Precedent Judgment
The essence of the judgment is that the Constitutional Court rejected the notion that the Labour Court does not have jurisdiction to adjudicate a dispute about the procedural fairness of a dismissal for operational requirements to which section 189A applies. The judgment sets a precedent that offers guidance for future disputes regarding retrenchments. Employers should heed these changes to effectively navigate the legal landscape of retrenchments. Employers must understand their obligations to prevent procedural unfairness and potential legal repercussions or disputes, while employees must be aware of their rights and the correct channels for addressing any
disputes. This mutual awareness ensures that retrenchment processes will be conducted fairly, hopefully reducing the likelihood of disputes, and fostering a more stable and predictable employment environment.