South Africa: Concourt Confirms Constitutionality Of LRA Retrenchment Consultation Process

Constitutional Court has confirmed the constitutionality of two key sections of the Labour Relations Act that are pertinent to employers contemplating retrenchments. These are section 23 (1)(d), concerning the principle of union majoritarianism, and section 189(1), dealing with who must be consulted on retrenchments.

In a majority judgment issued on 23 January 2020, the ConCourt upheld the constitutionality of these two sections, dismissing a constitutional challenge by the Association of Mineworkers and Construction Union (AMCU).

The outcome of the judgment is that the Constitutional Court confirmed that where there is a collective agreement with a majority union regulating retrenchments, an employer only has an obligation to consult with the unions specified in the collective agreement.

The matter is a highly contentious one, as is evidenced by the five-four majority split. Justice J Froneman wrote for the majority.

Background to the matter

The case arose in September 2015 when Royal Bafokeng Platinum Limited decided to retrench 103 platinum mine employees, some of whom were AMCU members.

When these AMCU members arrived at work on 30 September 2015, they were summarily issued with notices of retrenchment, dated two weeks earlier. Until that day, the employees had no idea that a retrenchment process was being undertaken and had been concluded.

AMCU, which represented 11% of employees at the mine concerned, was a minority union and had not been consulted during the retrenchment process. The employer had consulted only with the majority union, the National Union of Mineworkers (NUM), and another minority union, the United Association of South Africa Union (UASA). The decision on who to consult had been agreed upon in a collective agreement that regulated contemplated retrenchments.

AMCU then approached the Labour Court, requesting that the dismissal of its members be declared of no force and effect, and that they be reinstated, on constitutional grounds. It cited sections 23(1)(d) and section 189(1) of the LRA as constitutionally invalid. It was unsuccessful in both the Labour Court and Labour Appeal Court, after which the union turned to the Constitutional Court.

Reasons for the ConCourt's majority judgment

In dismissing AMCU's constitutional challenge to sections 21(1) and 189(1)(a) of the LRA, the ConCourt's majority judgment made the following important points about union majoritarianism and consultation on retrenchments:

• Dismissal based on operational reasons (meaning retrenchment) is not dependent on individual conduct or capacity, but on objective factors. This means that, unlike dismissal for misconduct, retrenchment does not necessitate consultation with individual employees.
• Since the introduction of the LRA, the courts have consistently interpreted section 189(1) of the Act to exclude any requirement of individual or parallel consultation outside the (majority union) hierarchy.
• Consultation is a statutory requirement (flowing from the LRA) and not a fundamental constitutional right.
• The retrenchment process differs fundamentally from a misconduct dismissal or criminal trial where the parties have the right to a hearing (as AMCU had contended).
• There is good reason why the principle of consulting the majority union stands. Unlike an individual employee or group of individual employees, who have little bargaining clout, a majority union wields 'coercive' power through the threat of industrial action.
• Lack of consultation with minority unions does not violate other constitutional rights such as freedom of association (as AMCU had contended). While an employee has the right to join any union of his or her choice, this does not mean that every union must be equal, regardless of its size in a particular workplace.
• There is no procedural unfairness in the consultation process under section 189 of the LRA because it relies on objective selection criteria, not individual conduct.
• Through the principle of legality, the LRA has safeguards to protect employees not belonging to the majority union from being unfairly affected.
• Even if the majority was wrong in holding the view that there is no fundamental right to individual consultation on retrenchments, any limitation of section 189 of the LRA would have to be subjected to a 'limitation analysis' under Section 36 of the Constitution.

This judgment is important for employers and majority unions in the workplace as it reaffirms the principle of union majoritarianism that is embedded in law and in international standards. It also confirms that employers may consult and conclude collective agreements with majority unions regulating amongst others, retrenchments, provided these are rational and subject to the LRA.

One point where we would advise employers to go beyond the LRA is in notifying employees not represented by majority unions about the contemplated retrenchments and informing them of the consultations that will take place with the unions specified in the collective agreement regulating retrenchments.

This is not a legal requirement but helpful in avoiding situations where employees find out without advance warning that they may be and/ or have been retrenched.

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.