Most Recent Publications

Breaking News



Important guidance from the constitutional court on validity and fairness in large-scale retrenchments

By Gillian Lumb, Director and Regional Head, Employment Practice, Cliffe Dekker Hofmeyr

 

The state of the South African economy has contributed to an increase in retrenchments. There have been a number of important judgments over the last few months relating to retrenchments of which employers should be aware.

 

One of these is the decision of the Constitutional Court handed down on 22 January 2016 in the case of Steenkamp and Others v Edcon Ltd (2016) [ZACC1]. The case deals with a so-called large scale retrenchment. A large-scale retrenchment is regulated in terms of s189A of the Labour Relations Act, No 66 of 1995 (LRA). Section 189A prescribes a minimum consultation period must elapse before notice of termination of employment may be given. If a CCMA facilitator is appointed to assist the parties in the consultation process, the minimum period is 60 days from the date on which the employer issued the employees with notice of possible retrenchment. If a facilitator is not appointed, the duration of the minimum consultation period is somewhat uncertain. The LRA requires that in such an event either party must refer a dispute to the CCMA for conciliation during the consultation process. The crucial legal issue that was addressed in the Edcon case is the impact if neither the employer nor the trade union refers a dispute to the CCMA and the employer issues the employees with notice of termination of employment prematurely ie before the expiration of the minimum consultation period.

 

In the Edcon case, the trade union challenged the dismissals as being invalid, as a result of being in breach of the provisions of s189A of the LRA. The employer argued that the dismissals were not invalid, but may have been unfair. The distinction between validity and fairness is important, particularly given the consequences. If a dismissal is found to be invalid, the employees may be reinstated with back-pay. If a dismissal is found to be unfair and the unfairness is limited to procedural unfairness, the employees are not entitled to reinstatement, but only compensation.

 

In the majority judgment the Constitutional Court found that the failure to comply with s189A(8) may impact on the procedural fairness of the dismissals, but not their validity. The court highlighted that the LRA does not provide for invalid dismissals and that the employees should have sought relief in terms of the LRA and not the common law. The relief they could have sought included embarking on strike action, referring a dispute to the Labour Court seeking, for example, an order compelling the employer to comply with a fair procedure, interdicting the employer from dismissing employees prior to complying with a fair procedure, or directing the employer to reinstate employees until it has complied with a fair procedure.

 

This case gives critical guidance to employers when embarking on a large-scale retrenchment, in particular some of the steps which an employer must adhere to in order to ensure that the retrenchment is procedurally fair.

 

For more information, please contact Gillian Lumb at This email address is being protected from spambots. You need JavaScript enabled to view it.

Article published with the kind courtesy of Cliffe Dekker Hofmeyr www.cliffedekkerhofmeyr.com

Courses and Workshops

Our Clients

 

Managing Day to Day Issues/ Problem Employees Full day workshop

29 September 2017

Southern Sun: Elangeni & Maharani, Elangeni Towers: Durban

13 October 2017

Southern Sun: OR Tambo International Airport

Workshop Policies and Procedures

05 October 2017

Southern Sun: OR Tambo International Airport

Basic Labour Relations

06 October 2017

Emperors Palace: Convention Centre

Skills Development Committee Training

12 October 2017

Southern Sun/Tsogo Sun Hotel: Or Tambo International Airport

19 October 2017

Protea Hotel By Marriott Tyger Valley: Cape Town

Workshop Chairing Disciplinary Hearings

12 & 13 October 2017

Emperors Palace: Convention Centre

Skills Development Legislation and Review

18 October 2017

Protea Hotel By Marriott Tyger Valley: Cape Town

26 October 2017

Emperors Palace: Convention Centre

The OHS Act and the Responsibilities of Management

27 October 2017

Southern Sun/Tsogo Sun Hotel : Or Tambo International Airport

17 November 2017

Protea Hotel By Marriott Tyger Valley: Cape Town

Health and Safety Representative Course

03 November 2017

Emperors Palace: Convention Centre

15 November 2017

Protea Hotel By Marriott Tyger Valley: Cape Town

Occupational injuries and diseases in the workplace

08 November 2017

Southern Sun/Tsogo Sun Hotel : Or Tambo International Airport

16 November 2017

Protea Hotel By Marriott Tyger Valley: Cape Town