Anton Myburgh SC Analysing s 189A of the LRA

Anton Myburgh SCAnalysing s 189A of the LRA

INTRODUCTION • 4 main innovations introduced by s 189A • How it has been interpreted and applied over the past decade • Why the section is so troubling – the • De Beers principle

The numerical trigger • The threshold and calculation on an annual basis • NUMSA v Vanchem • Lessons to be learnt

Increase in numbers triggering s 189A • Continental Tyre (LAC): • ‘The s 189 processes commenced in this case and continued almost to conclusion before the s 189A process began. They were separate processes. It may well be that a process begins under s 189 which had just commenced when the employer contemplates a larger process of retrenchments covered by s 189A. If the employer then ignores the implications of s 189A, on the particular facts, it could be held to have acted in a manner so as to avoid the scope of s 189A and thereby to have subverted the hard-earned rights won by employees in terms of the Act.’

Increase in numbers triggering s 189A (cont) • Continental Tyre (LAC) (cont): • ‘However, based on these papers … it is … not possible … to conclude that the appellant initiated, as it was obliged to do, a s 189 process with regard to the [two] departments when it had already contemplated retrenchments within the meaning and scope of s 189A.’ • Lesson to be learnt

Longevity of the s 189A process • General Motors (LC): • ‘… it is my view that the retrenchments contemplated by GM in February 2009 were not anticipated by the invitation to consult issued on 1 July 2008, and that the consultation process initiated by that invitation came to an end in 2008. It was reasonable for the consulting parties to assume, as NUMSA did, at least by 3 September 2008, that no compulsory retrenchments were contemplated by GM consequent on that invitation. It follows that if GM contemplated further dismissals, as it did in February 2009, it was obliged to issue a fresh notice in terms of s 189(3).’ • Lesson to be learnt

The facilitation route • Outline of the process • Powers of a facilitator – NUM v CCMA (LC): • ‘In other words, but for issues of disclosure of information, the Regulations do not contemplate that a facilitator is empowered to make substantive decisions about the rights of the consulting parties, or the universe within which those criteria must be applied. In the absence of agreement between the consulting parties, these are matters for the employer to determine, in the discharge of the statutory obligation to conduct a fair procedure, and at the risk of a challenge based on the fairness of its conduct.’

The non-facilitation route • The controversy before De Beers • The decision in De Beers • Importantly, a dispute will exist unless actual agreement on the retrenchment is reached

The De Beers principle • S 189A(2): ‘In respect of a dismissal covered by this section … an employer must give notice of termination in accordance with the provisions of this section.’

The De Beers principle • De Beers (LAC): • ‘In short, if the employer fails to comply with the mandatory requirement of consultation in terms of section 189A(2) and moves to terminate the employment in breach of these provisions, then the dismissal must be considered to be invalid and accordingly of no force and effect. A valid notice … could only have been issued once the certificate of outcome had been produced.’

Other situations where the principle has been invoked • The danger lies in the potential extension of the De Beers principle: • SACCAWU v DBSA • NUM v Anglo Platinum

Was De Beers correctly decided? • Unlawfulness v unfairness • Johnson & Johnson (LAC): not a mechanical checklist approach; consider whether overall purpose achieved; if so, there has been compliance with the section, despite non-compliance with certain provisions

Was De Beers correctly decided? • Unlawfulness v unfairness (cont) • S 189 is cast in peremptory terms in 8 sub-sections • Further trilogy of LAC judgments: Federal Insurance; Stocks Civil; Chester Wholesale Meats • General Motors (LC): ‘The requirements of s 189A are not mechanical, nor are they intended to be mechanically applied.’

Was De Beers correctly decided? • (1) Unlawfulness v unfairness (cont) • Two main errors in De Beers: • Elevation of a sub-section to a self-standing substantive right capable of being enforced independently of an enquiry into fairness • Adopted, in effect, a mechanical check list approach to s 189A

Was De Beers correctly decided? • (2) Invalidity arising from a breach of s 189A • Howard v Bodington (PD): • ‘No universal rule can be laid down for the construction of statutes, as to whether mandatory enactments shall be considered directory only or obligatory, with an implied nullification for disobedience. It is the duty of courts ... to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.’

Was De Beers correctly decided? • (2) Invalidity arising from a breach of s 189A (cont) • Liebenberg NO (CC): • ‘It is clear from the authorities that even where the formalities required by statute are peremptory it is not every deviation from the literal prescription that is fatal. Even in that event, the question remains whether, in spite of the defects, the object of the statutory provision had been achieved.’

Was De Beers correctly decided? • (2) Invalidity arising from a breach of s 189A (cont) • Liebenberg NO (CC) (cont): • ‘It is important to mention that the mere failure to comply with one or other administrative provision does not mean that the whole procedure is necessarily void. It depends in the first instance on whether the Act contemplated that the relevant failure should be visited with nullity and in the second instance on its materiality.’

Was De Beers correctly decided? • (2) Invalidity arising from a breach of s 189A (cont) • Liebenberg NO (CC) (cont): • ‘Rather, the question is whether the steps taken by the local authority are effective when measured against the object of the Legislature, which is ascertained from the language, scope and purpose of the enactment as a whole and the statutory requirement in particular.’

Was De Beers correctly decided? • (2) Invalidity arising from a breach of s 189A (cont) • Liebenberg NO (CC) (cont): • ‘Therefore, a failure by a municipality to comply with relevant statutory provisions does not necessarily lead tothe actions under scrutiny being rendered invalid. The question is whether there has been substantial compliance, taking into account the relevant statutory provisions in particular and the legislative scheme as a whole.’

Was De Beers correctly decided? • Invalidity arising from a breach of s 189A (cont) • How could the legislature have intended invalidity? • This is contrary to the scheme of the LRA • This is contrary to the LAC’s jurisprudence on s 189 • This is at odds with the right to engage in a retaliatory protected strike in terms of s 189A(9)

Was De Beers correctly decided? • Steenkamp v Edcon: Constitutional challenge • The interpretation in De Beers violates: • Edcon’s right to fair labour practices • Edcon’s right to equality • The rule of law and principle of legality

Strike action • The right to strike has not proven to be particularly effective • Exxaro Resources (LC)

Challenges to procedural fairness: s 189A(13) • Policy and purpose – Old Mutual Services (LC): • ‘The overriding consideration under s 189A(13) is to correct and prevent procedurally unfair retrenchments as soon as procedural flaws are detected, so that job losses can be avoided. Correcting a procedurally flawed mass retrenchment long after the process has been completed is often economically prohibitive and practically impossible.’

Challenges to procedural fairness: s 189A(13) • Only a substantial failure warrants intervention - Schuurman Metal Pressing (LC): • ‘… the aim of section 189A(13) is to provide a remedy to employees to approach the Labour Court to set their employer on the right track where there is a genuine and clear cut procedural unfairness which goes to the core of the process. The section is aimed at securing the process in the interests of a fair outcome. It follows that not every minor transgression of a procedural nature will invite the benefit of the court’s discretionary power to grant a remedy. To hold otherwise would be to open the door to excessive litigation, abuse and unnecessary delay in the process of consultation. Section 189A(13) is aimed at unjustifiable intransigence …’

Challenges to procedural fairness: s 189A(13) • Rejection of 11th hour proposals will not warrant intervention • De Beers (LC) • Shanduka Coal (LC) • ABSA Bank (LC)

Challenges to procedural fairness: s 189A(13) • Orders should be crafted to address specific defects • Reinstatement is typically inappropriate where retrenchment already effected • Disputes of fact and referrals to oral evidence / trial

Test for substantive fairness • S 189A(19)(b): whether the ‘dismissal was operationally justifiable on rational grounds.’

Test for substantive fairness • Old Mutual Life Assurance (LC): • ‘… the test involves a measure of deference to the managerial prerogative about whether the decision to retrench is a legitimate exercise of managerial authority for the purpose of attaining a commercially acceptable objective. … the court is entitled to look at the content of the reasons given to ensure that they are neither arbitrary nor capricious and are indeed aimed at a commercially acceptable objective. The second leg of the enquiry is directed at the investigation of the proportionality or rationality of the process by which the commercial objectives are to be achieved. Thus, there should be a rational connection between the employer’s scheme and its commercial objective, and through the consideration of alternatives an attempt should be made to find the alternative which least harms the rights of the employees in order to be fair to them. The alternative eventually applied need not be the best means, or the least drastic alternative. Rather it should fall within the range of reasonable options available in the circumstances ….’

Test for substantive fairness • Less stringent tests than the measure of last resort test • LR Amendment Bill deletes section 189A(19)

Conclusion • Success of the innovations: • CCMA intervention? • The right to strike? • S 189A(13) applications? • Lesser test for substantive fairness?

Anton Myburgh SC Analysing s 189A of the LRA