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Labour court stricter on retrenchments

Article by lvan lsraelstam, Chief Executive of Labour Law Management Consulting

The courts are required to ask three key questions when deciding whether a retrenchment is fair:

  • Did the employer follow the statutory retrenchment consultation procedure?
  • Did the employer have a genuine and fair operational reason for retrenching?
  • Did the employer apply acceptable retrenchment criteria?

For some years after coming into existence, the Labour Court was loathe to second guess the employer’s reason for retrenchment. However, the Court has more recently shown that is prepared to look much more deeply into:

  • whether there could have been some way of saving jobs, and
  • whether the employer tried hard enough to save jobs.

In the case of FAWU vs SA Breweries Ltd (Contemporary Labour Law Vol 14 No. 2 September 2004) the employer retrenched employees after a major reorganisation in the way that work was done. In order to establish whether its employees had the required skills to work in the changed jobs the employer applied, amongst others, the Adult Basic Education and Training (ABET) test. Certain employees who failed these tests were selected for retrenchment.

The Labour Court found that:

  • SAB acted unilaterally in applying the ABET levels.
  • These ABET levels were not a valid test of the retrenchees’ ability to work in the newly created jobs. This is because ABET measures more general abilities rather than the specific skills required for the specific jobs in question. The employees’ experience should also be taken into account in assessing their suitability for the jobs.
  • SAB did not argue that it did not have the funds to devise a valid and appropriate test to assess the suitability of the employees for the newly created positions. The employer therefore could have and should have had such appropriate tests designed.
  • The retrenchees had long service records.
  • Due to apartheid, the employees’ only schooling option had been ‘Bantu education’.
  • SAB had not taken adequate steps to assist the employees in obtaining the desired ABET skills levels.
  • SAB had been inflexible as regards the consultation process.
  • The retrenchments of these employees was unfair both procedurally and substantively (i.e. was for unfair reasons).

Employers need to learn from the above case that:

  • The law keeps changing and all employers need to keep up with these changes.
  • Retrenching employees is becoming harder and harder.
  • The biggest, most powerful and most experienced of employers can lose in the Labour Court. Therefore, no effort must be spared in ensuring legal compliance.
  • Designing practical skills tests is often essential.
  • The need to apply labour law expertise, including the design of appropriate and legally compliant skills tests, is not a luxury but a basic necessity.
  • Such expertise must be applied before a retrenchment decision is made.

To attend our 22 September seminar in Centurion on DEFEATING THE DANGERS OF DISMISSAL, please contact Ronni via or on 0845217492.

Labour Law Management Consulting is a proud member of the National Small Business Chamber (NSBC).