South Africa: What Does "Employees Likely To Be Affected" Mean In Retrenchments?

Section 189(1) of the Labour Relations Act, 1995 ("LRA") stipulates that, if an employer contemplates dismissing employees on the grounds of its operational requirements, it must give notice to this effect to the trade union or employees concerned and enter into a consultation process on the topics referred to in section 189. As per section 189(3)(c), the required notice must also indicate the number of employees "likely to be affected" by the process.

Additionally, in the case of so-called "large-scale" operational requirement dismissals, section 189A becomes applicable. This means that the parties to the consultation process envisaged in section 189 can request the appointment of a facilitator to assist in the consultation process. This also means that, under certain circumstances, a protected strike can take place opposing the proposed dismissals, and an employer cannot dismiss employees for a period of 60 days calculated from the date on which the notice of contemplated dismissals was provided.

A large-scale retrenchment occurs when an employer who employs more than 50 employees contemplates dismissing more than a prescribed number of employees. The prescribed number varies depending on the number of employees employed by the employer. In the case of an employer who employs up to 700 employees, the prescribed number is 50 employees. This is qualified by section 189A(1)(b) which states that, when determining if section 189A applies, the number of operational requirement dismissals that took place in the 12 months preceding the date of the notice of contemplated dismissals should also be considered.

In the recent judgment in Solidarity obo Members v Die Humansdorpse Landbou Ko?perasie Ltd, the Labour Court had to determine whether section 189A applied to a retrenchment exercise carried out by the employer.

Brief facts

In this case, the facts were largely common cause. The employer employed a workforce of approximately 712 employees. This implied that section 189A would apply if it contemplated the termination of more than 50 employees' employment. On 30 March 2023, the employer issued a section 189(3) notice to 63 of its employees, indicating that it was contemplating their dismissal based on its operational requirements. In the notice, the employer mentioned that it had dismissed eight employees in the preceding 12 months for operational reasons and that it contemplated retrenching between 35 and 45 employees on this particular occasion. At the commencement of the consultation process, the employer clarified that a maximum of 40 employees would be retrenched and that the previous number, referring to 45 employees, had been issued in error.

After what seems to have been a brief consultation process, the employer began issuing termination of employment notices to employees. Solidarity, representing its members, then launched an urgent application under section 189A(13). They sought an order compelling the employer to comply with a fair procedure. Solidarity argued that the employer should have followed a section 189A large-scale retrenchment process instead of the section 189 small-scale retrenchment process. They believed the employer had indicated that the process would "affect" 63 employees.In contrast, the employer contended that section 189A was not applicable because the number of employees it contemplated dismissing (ie, a maximum of 40 employees) and the number dismissed in the preceding 12 months (ie, 8 employees) did not reach the threshold of 50 employees set in section 189A(1). Hence, the employer argued that the Labour Court lacked jurisdiction to adjudicate the matter. Essentially, the employer argued that it had given 63 employees notice under section 189(3) because their jobs were potentially "at risk", but this did not mean that they would necessarily be dismissed. Whether they would be among the 40 employees it planned to dismiss would depend on the applied selection criteria.

Analysis and findings

Central to the Labour Court's analysis was whether the number of employees an employer contemplates dismissing per section 189(1) differs from the number of employees likely to be affected as per section 189(3)(c).

The Labour Court determined that, since the employer had issued notices to 63 employees, each of these employees was, legally speaking, likely to be affected by the proposed dismissals. The Labour Court came to this conclusion despite the employer having indicated in the notice that only 40 employees were likely to be affected. This was due to the employer not clarifying the basis of the identification of 63 employees or, at a minimum, the reason any one of the 63 employees could be seen as not under the dismissal contemplation. The conclusion that 63 employees were likely to be affected triggered the application of section 189A.

The Labour Court ordered the reinstatement, with retrospective effect, of Solidarity's members who had been dismissed. It also directed the employer to embark on, and continue with, a meaningful joint-consensus seeking process as set out by section 189 and section 189A. The Labour Court also prohibited the employer from dismissing any of Solidarity's employees prior to complying with a fair procedure.

Comment

It is vital to emphasise that, contrary to the Labour Court's finding, there is a discernible difference between the number of employees likely to be affected and the number contemplated for dismissal. This distinction stems from the fact that an employer, when contemplating retrenchments, first identifies the departments most likely to face the retrenchments, thus setting a category of employees. The employer then pinpoints within that category the number of employees that are contemplated for dismissal to meet its operational requirements and consider appropriate selection criteria.

However, this process does not prevent the employer from notifying and inviting all employees within the established category who occupy the same job roles to consult. This is because any one of these employees could potentially be part of those who will eventually be retrenched This perspective was confirmed in Delport v Parts Incorporated Africa of Genuine Parts (Pty) Ltd, where the Labour Court held that "once the employer believes that he has to terminate the employment of any employee for operational requirements, it needs to collectively meet with its employees within the category of employees from which category it seeks to minimise the staff complement."

If one accepts that the 63 employees who were given notices were those contemplated for dismissal, this would imply that the number of dismissals was predetermined to be 63 employees at the start of the process, making the retrenchment a fait accompli. Adopting this stance would be contrary to the objectives of the LRA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.