Labour Court applies stricter tests for retrenchment fairness
In the past, the Labour Court has been fairly flexible in assessing if the reasons for a retrenchment are fair or not. Traditionally, where the employer could show a genuine operational requirement, the court was reluctant to second guess the employer's reason for retrenchment. However, it appears that the Labour Court is fast moving towards a position where it's prepared to look much deeper into the circumstances of each retrenchment case.
The courts are required to ask three key questions when deciding if a retrenchment is fair:
- Did the employer follow the statutory retrenchment consultation procedure?
- Did the employer have a genuine and fair operational reason for deciding that retrenchments were necessary?
- Did the employer apply legally acceptable criteria for deciding which employees to retrench?
Courts have always been strict about retrenchment procedure
Now the courts appear to be tightening up on the reasons for retrenching and for selecting who should be retrenched. For example, in the case of FAWU vs SA Breweries Ltd (Contemporary Labour Law Vol. 14 No. 2 September 2004):
- The employer retrenched employees after a major reorganisation in the way that work was done.
- This change required that production employees would need to be able to perform a much wider variety of work than previously was the case.
- To establish if these employees had the required skills to work in the changed jobs, the employer applied - among others - the ABET test:
- In the absence of other suitable educational qualifications, the employer tested the employees to assess their levels of at Adult Basic Education and Training (ABET).
- Certain employees who failed these tests were selected for retrenchment. - The Labour Court found that:
- Retrenchment has a "... deleterious impact on the life of workers and their families ..." and can be seen as a "death penalty".
- This means that an employer contemplating retrenchments must be able to prove that such dismissals were implemented as "a last resort".
- If there was a viable alternative to retrenchments, the employer would be obliged to implement it.
- SAB acted unilaterally in applying the ABET levels.
- These ABET levels were not a valid test of the retrenchees' ability to work in the newly created jobs. This is because ABET measures more general abilities rather than the specific skills required for the jobs in question. The employees' experience should also be taken into account in assessing their suitability for the jobs.
- SA Breweries didn't argue that it didn't have the funds to devise a valid and appropriate test to assess the suitability of the employees for the newly created positions. The employer therefore could've, and should've, had appropriate tests designed.
- The retrenchees had been with the employer for a long time and because of the apartheid system their only schooling option had been Bantu education.
- SA Breweries hadn't taken adequate steps to assist the employees to obtain the desired ABET skills levels and had been inflexible about the consultation process.
- The retrenchments of these employees was unfair, both procedurally and substantively.
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Ivan Israelstam is the Chief Executive Officer of Labour Law Management Consulting. He is known as a leading practitioner in labour law and pragmatic labour relations management with many years experience in corporate human resources management. He has an honours degree from The University of the Witwatersrand and an IPM diploma in Personnel Management and in Training. Contact Ivan: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. . |
