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.
