By Reinhard Evans
Associate
In the recent judgment of Umicore Catalyst South Africa (Pty) Ltd v National Union of Metalworkers of South Africa o.b.o 5 Members (PA3/23) [2024] ZALAC 37, the Labour Appeal Court (“LAC”) confirmed the principal that employers are not permitted to use redundancy as a pretext for retrenching employees, where the actual motivation / reason for dismissing employees are unrelated to the employee’s operational requirements.
In the aforesaid matter the employer, Umicore Catalyst South Africa (Pty) Ltd (“Umicore”), retrenched 52 of its employees, including four laboratory employees (“the Employees”) as a result of the it restructuring its operations.
The Employees, feeling aggrieved by their retrenchments, approached the Labour Court for relief and specifically challenged the fairness of the selection criteria used by Umicore in selecting them as the employees to be retrenched.
In accordance with Section 189 of the Labour Relations Act 66 of 1995, if an employer retrenches (dismisses) employees based on operational requirements (defined as the economic, technological, structural or similar needs of an employer), the employer will have to:
- Prove that the retrenchments were based on valid operational requirements; and
- Prove that the method used in selecting the employees to be retrenched (referred to as the “selection criteria”) was fair and objective.
Selection criteria may include length of service, skills or qualification, and during the retrenchment proceedings parties should attempt to reach agreement on the selection criteria that will be used. In the absence of the parties reaching an agreement in respect of the selection criteria, the selection criteria used by the employer must be fair and objective.
Umicore initially based their selection criteria on length of service (last in, first out) but then changed the criteria to skills retention. In order to assess the skills of the employees earmarked for retrenchment, Umicore requested all the employees to complete a behavioural questionnaire.
The Employees refused to complete the questionnaire on the basis that they were of the view that same was unfair.
Notwithstanding the fact that the Employees did not complete the questionnaire, Umicore, still used the questionnaire as part of the selection criteria and ultimately concluded that the Employees were part of the group of employees that should be retrenched.
The LAC took issue with the behavioural questionnaire that was used by Umicore, and held that the said questionnaire was neither objective nor fair in that inter alia:
- The questionnaire focused on subjective characteristics such as employees’ initiative, enthusiasm and determination and asked employees to share their opinions, feelings and personal experiences, instead of focusing on the facts and the measurable information pertaining to the employees’ laboratory skills; and
- The questionnaire was drafted in such a manner that the panel members (who were appointed to grade the employees based on the questionnaire) had to consult with the laboratory manager before choosing their preferred candidate, tainting the entire process with the subjective views and thoughts of the laboratory manager.
In light of the aforesaid, the LAC upheld the judgment of the Labour Court who ruled that the retrenchment of the employees was substantively unfair and ordered the reinstatement of the employees.
The aforesaid judgment is important for employers to take note of, as it emphasises:
- The danger of employers using retrenchment proceedings as a “smokescreen” to “get rid” of employees for reasons not related to operational requirements; and
- That retrenchment proceedings will be unfair if employers fail to use fair and objective selection criteria.
For employees, the judgment also highlights the fact that retrenchment proceedings should be challenged if employers use impartial or unfair selection criteria, or where retrenchments proceedings are used merely as a smokescreen to disguise the employer’s true reason(s) for wanting to dismiss employees.
Ultimately, retrenchments can be difficult to navigate but we can assist in guiding both employers and employees to deal with retrenchments effectively.
