Until the 2002 amendments to the Labour Relations Act (LRA) were introduced the CCMA and bargaining councils had no jurisdisction to decide retrenchment matters once conciliation failed to resolve the dispute. However, the amendments gave jurisdiction to the CCMA and bargaining councils to arbitrate retrenchments where:

  • Only one employee had been retrenched; and
  • The employee elected to refer the matter to arbitration.

However, the section of the LRA extending this jurisdiction to arbitrators did not mention what the parameters of the arbitrator’s jurisdiction were. This has led to a strange decision made by the Labour Court. In the case of Rand Water vs Bracks NO and others (2007, JOL 20091) the Court decided that a CCMA arbitrator did not have jurisdiction to determine the procedural aspects of a retrenchment matter. The basis for this interpretation of the LRA is most unclear and, should the legislators have intended this restriction, it is most likely (if not certain) that they would have stated it specifically. This is because an employee would need to be aware that he/she would have to sacrifice the right to relief for unfair retrenchment procedure should he she chose to refer the dispute to arbitration instead of to the Labour Court.

In the case of Scheme Data Services (Pty) Ltd vs Myhill NO & others (4 BLLR 381) the CCMA had found that the employee’s retrenchment was both substantively and procedurally unfair. The employer took this decision on review to the Labour Court and, citing the Rand Water decision described above, claimed that the CCMA had no jurisdiction to decide on the procedural aspects of the case. However, the Labour Court judge disagreed with the Rand Water decision made in 2007 and decided that the LRA does not remove the CCMA jurisdiction to hear the procedural aspects of a case involving retrenchment of only one employee.

The Court went on to say that procedural aspects of retrenchment disputes are not necessarily more complex than substantive aspects and that the power of the arbitrator to determine the procedural aspects should not be curtailed for reasons that arbitrators are not able to determine complex matters. To an extent, it is understandable that the Court in the Rand Water matter may have made its contentious decision in order to relieve CCMA arbitrators of the duty to decide on what it considered to be an aspect of law too complex for arbitrators to handle. I say this because, in order to be an arbitrator, one does not need to have a law degree or to be registered as an attorney or advocate. However, I concur with the judge in the Scheme Data Services case where he says that the courts do not have the latitude to read into statutes provisions that are not there in order to make law. Should the legislators have wished to relieve arbitrators of duties beyond their abilities and if they had believed that retrenchment matters fell into this category, they would not have introduced this amendment in 2002.

Another aspect of the review in the Scheme Data Services case reported above was the rationality of the CCMA arbitrator’s finding that the employer had unfairly failed to consult with the employee on an alternative position. In this case the employer acknowledged that it had not consulted on this issue but alleged that the employee had waived her right to such consultation. The Court found that a person cannot waive a right of which she is unaware. The employee might have accepted an alternative position had it been offered to her and the CCMA arbitrator was correct to have pointed this out. The Court therefore turned down the review application and ordered the employer to pay the legal costs of the employee.

The outcome of the Scheme Data Services case should act as a reminder to employers that:

  • Retrenchment law very strongly protects the employee’s right to employment and it does so because being unemployed can well prove disastrous to the employee and his/her dependants.
  • The CCMA, bargaining councils and Labour Court will only consider accepting a retrenchment as fair if the retrenchment could not be avoided, if the decision to retrench the employee is based on a fair criterion and if the employee has been given a proper opportunity to consult on ways of avoiding the retrenchment. While other factors also come into play the above three factors are at the very heart of the law protecting employees from unfair retrenchment.
  • Employers have the legal duty to prove that a retrenchment is fair in every way. This means, in part, that the employer cannot just go through the motions of retrenching; it must take the lead in ensuring that the employee gets the opportunity to consult properly. In my experience employers who go this route properly and sincerely end up at the CCMA much less often than those who fail to consult.
  • Employers cannot afford to implement retrenchments without the assistance of a reputable expert in labour law who has solid experience in managing retrenchment matters.

To attend our 12 May 2017 seminar in Johannesburg on WINNING THE WORKPLACE WAR please contact Ronni at ronni@labourlawadvice.co.za or on 0845217492 or (011) 782-3066.

BY   lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: ivan@labourlawadvice.co.za. Go to: www.labourlawadvice.co.za