Constitutional Court finds no fault with retrenchment consultations

We recently wrote about the difficulties inherent in identifying the correct parties to consult with in terms of section 189(1) of the Labour Relations Act 66 of 1995, as amended (“the LRA”). In that article, we explored whether it was fair to consult only in accordance with the hierarchy established by section 189(1), which may inevitably result in employees being retrenched without even being advised or consulted about their retrenchment.

Written By of Cowan-Harper-Madikizela Attorneys

The uncertainty raised in our article has finally been answered by the Constitutional Court in Association of Mineworkers and Construction Union and Others v Royal Bafokeng Platinum Limited and Others [2020] ZACC 1.

The facts of the matter were briefly as follows:- the National Union of Mineworkers (“NUM”) represented approximately 75% of the employees in the workplace of the employer, while the Association of Mineworkers and Construction Union (“AMCU”) and the United Association of South Africa (“UASA”) representing a minority of the employees. The employer and NUM had concluded a recognition agreement, which was amended in March 2015 to require the employer to consult exclusively with NUM and UASA in respect of any possible retrenchments in terms of section 189(1) of the LRA.

During August 2015 the employer commenced consultations with NUM and UASA in terms of section 189 of the LRA. Following the consultations, the employer, NUM and UASA concluded a retrenchment agreement in September 2015 in terms of which some 103 employees were to be retrenched. That agreement was extended in terms of section 23(1)(d) of the LRA to employees who were neither members of NUM nor UASA. The agreement also included a clause in ‘full and final settlement’ which stipulated that all parties to the agreement waived the right to challenge the lawfulness or fairness of the retrenchments.

Shortly after the conclusion of the retrenchment agreement, various employees who were members of AMCU arrived at the workplace to commence work. To their surprise, their attempts to clock in were unsuccessful. They were, unfortunately, unaware that they had been retrenched and only at that point did the employer issue the employees with notices of their retrenchment.

AMCU, acting on behalf of its members who had been retrenched, approached the Labour Court in terms of section 189A(13) of the LRA. This application was withdrawn when the employer, in its answering affidavit, showed that a valid collective agreement had been concluded between it and NUM. Instead, AMCU mounted a constitutional challenge to section 189(1)(a) – (c) and section 23(1)(d) of the LRA, seeking to have those sections declared unconstitutional. AMCU also sought the setting aside of the collective agreement and/or the extension of the agreement to its members. After slugging it out in the Labour Court and Labour Appeal Court, the matter came before the Constitutional Court.

The majority of the Constitutional Court found that section 23 of the Constitution does not expressly or impliedly guarantee a right to be individually consulted in a retrenchment process. The Court found that the requirements to ensure procedural fairness in retrenchments are codified in section 189 of the LRA. The Court found that section 189 specifically renounced a system of ‘dual consultation’ and that an employer is only obliged to consult with the parties identified in section 189 of the LRA.

This approach accorded with the principle that the consultation process should be collective rather than individual in nature. The Court was alive to the reality that an employee could, in terms of the provisions of section 189(1), be retrenched without ever being consulted directly or even advised that their employment is in jeopardy. This was, however, not unfair since it was expressly permitted by section 189(1) of the LRA and requiring an employer to engage in a parallel process of consultation would undermine the very purpose of that section.

The Court found that the procedure in section 189 of the LRA passed the requirement of rationality. It found that even if an individual employee was afforded the right to consult with the employer in terms of section 189, the representations provided by these employees would merely be brushed aside. It is the majority union’s bargaining power and clout in the form of threatened industrial action that acts as a coercive force to influence the employer’s decision. Accordingly, the principle of audi alteram partem is not offended in that the principle only operates where the right to be heard may influence the outcome of the matter. In the retrenchment consultation context, an individual’s participation in that process is unlikely to influence the employer’s decision. The majority thus dismissed AMCU’s appeal.

The minority judgment, which is not discussed here in any detail, indicated that the provisions of section 189(1) were unconstitutional. The Court was split narrowly (5-4) and it is concerning that the principle of majoritarianism was not fully endorsed by the whole Court. The judgment does, however, make it clear that employers are only required to consult with those parties that are identified in section 189(1) of the LRA. Where possible, and as a matter of good industrial relations, we believe that employers should nevertheless seek to consult with all affected employees. Doing so reflects a humane approach to the issue and will not impede the ability to conclude a retrenchment agreement with any Unions representing the majority of employees and extending it in terms of section 23(1)(d) of the LRA.

Neil Coetzer

Neil Coetzer
Head of Employment

Courtney Wingfield

Courtney Wingfield
Senior Associate of Employment

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