IN THE LABOUR COURT OF SOUTH AFRICA

HELD AT DURBAN

CASE NO: D 677/06

In the matter between:

NATIONAL UNION OF METAL 
WORKERS’ OF SOUTH AFRICA  		First Applicant

PETROS PHETHULA & 10 OTHERS		Second to Further Applicants

and

ROADHOG TRAILERS CC			Respondent

________________________________________________________________
JUDGMENT
________________________________________________________________
 Bhoola AJ

Introduction 
[1]	The applicants filed a statement of claim in which they contend that the dismissal of the second to further applicants (“the individual applicants”) by the respondent on 17 March 2006 was  procedurally unfair in that it had not been effected in compliance with section 189 of the Labour Relations Act, 66 of 1995 (“the Act”). The individual applicants do not challenge the substantive unfairness of their dismissals. 
  
[2]	At the commencement of the trial the parties indicated that they had reached agreement on the in limine points concerning  condonation and locus  standi of the individual applicants.  In addition the parties agreed that:
(a)	Applicants 10 and 11, Mr. M Mthembu and Mr. A B Mini, should be removed as parties to the claim;
(b)	Paragraph 2.7 of the pre trial minute should be struck out in that it is common cause that no meeting was held on 28 February 2006; and
(c)	The individual applicants do not seek reinstatement but only relief in the form of compensation.

The respondent’s version
Evidence of Leslie Winkworth
[3]	The respondent assumed the duty to begin. Its first witness was Leslie Winkworth, the Human Resources Manager. The material aspects of his evidence were that :

(1)	Prior to January 2006 the respondent had commenced negotiations with potential partners regarding the outsourcing of areas of the business that were not core functions. This affected the spray paint division in which the individual applicants were employed. Discussions were concluded with an outside service provider, Honeycorp, to manage the spray paint division as well as the respondent’s employees in that division.   	

(2)	When the sale transaction was finalized, the individual applicants were informed on 31 January 2006 that the division would be outsourced with effect from 7 February 2006, and as such they would be retrenched but that alternative employment had been secured for them with the new company.
 
(3)	The spray paint division was not sold as a going concern and the transfer of employees, as it was loosely referred to, was not a transfer as contemplated in section 197 of the Labour Relations Act, 66 of 1995 (“the LRA”). 

(4)	The retrenchments did not take effect on 7 February due to a request for a meeting from the local organizer, Vusimuzi Shezi (“Shezi”) of the first applicant (“NUMSA”) which was agreed would take place on 28 February 2006. On 20 February 2006 a meeting was held with Shezi in regard to other issues and he was informed about the outsourcing of the division to Honeycorp cc., the employment of the individual applicants by the new entity and the need to convene a meeting with the new owner. Shezi reminded the respondent of its obligations in terms of the LRA in effecting the retrenchments. On 23 February 2006 Shezi wrote to the respondent requesting a meeting in regard to the retrenchment.  The meeting of 28 February did not materialise, and the parties agreed to meet on 4 March which did not happen either.

(5)	On Friday 10 March the parties met with Shezi as well as the shop steward, Petros Phethula (“Phethula”) representing NUMSA and the individual applicants and Winkworth and Gary Reddan representing the respondent. It was agreed that those employees who were willing to accept jobs with the new entity would meet the owner on 14 March (however on the applicants’ version the date agreed was 15 March), and those who opted not to accept the offer of alternative employment would be retrenched with effect from 17 March 2006.

(6)	The respondent was under pressure from the new owner to finalise the process.

(7)	On 14 March the individual applicants embarked on an illegal work stoppage. Winkworth was not on site and received a telephone call to this effect When he arrived he summoned the shop steward , who refused to come and he then requested the employees to elect a representative. They appointed Emmanuel  Mhlongo. Reddan and Winkworth then telephoned Shezi and Mhlongo spoke to him in their presence. Winkworth could not remember Mhlongo’s name and testified that the spokesperson informed management that none of the individual applicants were willing to accept the offer of alternative employment. The employees resumed work.

(8)	Winkworth accordingly drafted the letter dated 14 March to NUMSA in the belief that no further purpose would be served by consultation with the new owner. The respondent believed it had done everything possible to ensure a smooth transition and avoid job losses. The letter states as follows:

“ Further to our meeting held on Friday, 10 March 2006, we wish to place on record, and bring to your attention the following:
1.	Your shop steward informed us today, 13 March 2006, that no one wishes to accept alternative employment and that they all have chosen, of their own free will, rather to be retrenched.
2.	As this is a complete turnabout to the spirit of the negotiations on Friday, the company is left with no alternative but to state that all the affected employees will be retrenched on Friday, 17 March 2006.
3.	The company reserves the right, in terms of section 196 (3), whether to pay severance pay or not.

Taking the above into account, we believe the meeting proposed by yourselves to meet the new owners is no longer appropriate, and as such we see no reason to go ahead with this meeting”.

Evidence of Riaan Human
[9]	The next witness for the respondent was Riaan Human, who testified that he had commenced discussions with the respondent in around January 2006 with a view to taking over the respondent’s spray paint division. It was agreed that the arrangement would take effect on 17 March 2006 and that he would continue to employ the individual applicants at their current terms and conditions, including their current  rate of remuneration. This would give him the benefit of avoiding recruitment and training costs at the start up of his new enterprise. He interacted with the individual applicants on a daily basis prior to 17 March whenever he supplied paint to the respondent. They were aware that he was the owner of Honeycorp. He recognized all the individual applicants in court and testified that a few of them had confirmed to him that they would join the new entity should he take over.  After 17 March he employed individual applicants Zakhele Zondi (third applicant), Innocent Mkhize (seventh applicant) and Emmanuel Mlombo (ninth applicant incorrectly described on the pleadings whose correct name is Mhlongo). Mkhize and Mhlongo are still in his employ (having been employed during June and July 2006) and he identified them as being present in court. Zondi, he stated, was at work and was not present in court.    

[10]	In cross examination he confirmed that each of the individual applicants knew him well as he had built up a relationship with them over the years when he worked as a sales person for Super Auto paints and made deliveries to the respondent about 2 -3 times weekly. He confirmed that he knew the individual applicants personally and had each of their cellphone contact numbers. He confirmed that he had not set up a Provident Fund as at 17 March and that the company had not yet been registered (it was registered in 2007), but he was in the process of attending to this as he was not familiar with all the administrative steps required to set up a company. He was not able to confirm whether the individual applicants were members of a Provident Fund while at the respondent. 

[11]	It was put to him in cross examination that the version of the individual applicants was that he contacted Mhlongo and Zondi after their retrenchments for assistance with painting trailers, and that Mkhize had only worked for him for 3 months. He testified that Mhlongo had worked for him for longer than 3 months. Also, Mhlongo denied having commenced employment with Human in June 2006 but says he commenced in June 2007. Human replied that this was incorrect as Mhlongo had a disciplinary enquiry in January 2007 for abandoning his workplace in December 2006.  
  
[12]	Human confirmed that he had not been asked to attend a meeting at the respondent on 14 or 15 March, but was aware that a meeting between NUMSA and the respondent was planned. He would have been prepared to meet with NUMSA at any point had this been requested. In any event, he pointed out, he was at the respondent’s premises at that stage almost on a daily basis and would have made himself available for a meeting at short notice if this had been necessary or had been requested by either the individual applicants or the respondent.

[13]	He was only informed on 17 March that he would not have the workforce he was dependant on and had to make other arrangements. He was never contacted by NUMSA since the dismissals in regard to employing the individual applicants and he would have taken them on and sorted out their concerns relating to the provident fund, medical aid and other issues.

Evidence of Karl Rachman

[14]	The next witness for the respondent was Karl Rachman. He was not at the meeting of 10 March but was informed that afternoon by Reddan that the “guys had decided they would move over to Honeycorp”. He confirmed that the individual applicants were aware that Human was the new owner and that they would be transferred to the new entity without loss of benefits.     

[15]	On 13 March he called Phethula to give him work related instructions, as he was the paint shop foreman, and he had a good relationship with him, and asked if he had met with the individual applicants about their decision. Phethula said he had not and Rachman gave him an extra 10 minutes during the tea break and listened in to the discussion. He was informed by Phethula that the individual applicants had decided they would not transfer to the new employer. This shocked him since he understood that on Friday 10 March in the meeting with Shezi and Phethula they had agreed to discuss which of the employees would accept transfer to the new company. They asked questions about severance pay which he was not in a position to answer. The conversations were held in English in which Phethula was proficient, although in his testimony he implied that he could barely understand English.       

[16]	Phethula did not arrive for work on the morning of 15 March. After tea the individual applicants walked out of the paint shop yard at 42 Harden Avenue towards 45 Harden Avenue where the respondent's offices were. They told him they were waiting for a decision from NUMSA. He then called Winkworth who arrived and asked the employees to elect a representative to speak on their behalf. They accordingly elected Emmanuel Mhlongo. Winkworth and Mhlongo telephoned the NUMSA office, Mhlongo spoke to Shezi and told him that they were not accepting the offer. Mhlongo then informed Winkworth that Shezi was not coming. Rachman said he was present during this discussion. Winkworth asked the individual applicants to return to work and the decision was made to proceed with the retrenchments. He disputed the version of the individual applicants that they stopped work to meet with the new owner. If this was the case they had not indicated so on the day. 

[17]	There was no approach to management by the individual applicants after 15 March in order to seek to avoid their retrenchments on 17 March. If this had been done he would have made an effort to assist them. 

[18]	He dealt with the letter of 15 March from NUMSA to the respondent and confirmed the correctness of paragraphs 1, 2 and 3 thereof. 
The letter states:
“RE : CANCELLATION OF MEETING SCHEDULE FOR 15 MARCH 2006  
Further to the above and our telecom on 15 March 2006 at 9h05 we advise that we have investigated your allegations as contained in a letter dated 14 March 2006 as follows:
1.	Our members advised at 12:00 hours on 15 March 2006 that in the morning of 13 March 2006 your Mr K Rachman approached the shop steward Petros Phethula to find out about the decision of the employees identified by the restructuring, to which the shop steward reported having not yet spoken to them.
2.	Mr K Rachman then offered the shop steward 10 minutes during working hours to discuss with the affected employees. 
3.	Mr K Rachman personally observed the discussion later on to assist (sic) address certain clarities.  One of the employees Nzimande clock number 1 raised the question as to whether the old employer would pay the severance prior to the transfer of their contracts of employment to which Mr K Rachman failed/refused to answer and closed the meeting.
4.	According to our information, at no stage did the shop steward inform Mr K Rachman or any member of management that the affected employees had decided to or not to accept management’s offer of alternative employment.
5.	After this meeting the shop steward and the affected employees were informed by Mr K Rachman that Mr Shezi of NUMSA was late for the meeting and management were waiting.
6.	All members were waiting for the outcome of the meeting between management and the union before making any decision.
7.	It was on this basis that management informed the affected employees that the retrenchment process would be finalised on 17 March 2006. The undersigned will not be available until 23 March 2006.
In the above light and the deliberate misinformation of our members by Management we propose that the consultation process in terms of Section 189 of the Act be rescheduled for Wednesday 22 March 2006 at 14h00.
Yours faithfully
Mr V Shezi
Local Organiser “

[19]	Rachman disputed paragraph 4 and confirmed that he was informed by Phethula that the employees would not be moving over to the new entity. In relation to paragraph 5 he testified that Shezi was required to inform his members of the decision made on 10 March but had not done so. In relation to paragraph 6 he commented that the decision to transfer had been made on Friday 10 March by NUMSA and the shop steward and they had obviously failed to inform the individual applicants thereof. In relation to paragraph 7 he stated that after the discussion on 13 March he informed Reddan and on that basis the respondent decided to go ahead with the retrenchments.

[20]	In cross-examination he confirmed that it would have been too late to inform the employees of the agreement on Friday 10 March as they had already finished work for the weekend. He confirmed that the reason he asked Phethula if he had met with the employees was to find out if NUMSA had passed on the message about the Friday meeting to them. He confirmed that agreement had been reached at the meeting of 10 March and his only concern was whether the message had been passed on to the individual applicants. It was put to him that this contradicted the evidence of Winkworth that the individual applicants had to still decide who would accept the offer and who would opt for retrenchment. 

[21]	He denied that the individual applicants were told Honeycorp was from Johannesburg but admitted that he told them that Honeycorp was the company to which the paint division had been outsourced. He conceded that they might not have known that Human was the owner of Honeycorp.

[22]	He admitted in cross-examination that the individual applicants came to the office and the wage clerk issued to them with their retrenchment notices in his presence on 17 March 2006.  He did not recall any of them asking what the letters were for and he denied informing them that they were “getting leave".

Applicant’s version

Evidence of Vusimusi Shezi

[23]	The first witness for the applicant was Vusimusi Shezi, the local organizer for NUMSA. His testimony was that the pending retrenchments were mentioned incidentally by the respondent at a meeting to discuss organisational rights of NUMSA on 20 February 2006. The notices issued to the individual applicants of 31 January 2006 were only brought to his attention after 20 February, hence his letter to the Respondent of 23 February requesting that they comply with the LRA in regard to the retrenchments and proposing a meeting on 28 February. 

[24]	A number of meetings were postponed and it  was common cause that the parties met on 10 March 2006 when the respondent informed the union it was outsourcing the paint division in order to focus on its core business of building trailers, and that it had secured alternative employment for the individual applicants with the new entity. He requested a meeting with the new owners and undertook to inform employees of the respondent’s decision. Severance pay had also been discussed, and the respondent said it would not pay severance because workers were not losing their jobs, but it subsequently agreed to pay one week per year of service. The parties agreed to meet the new owner at 8.30 on 15 March, the purpose of which was to verify that the individual applicants would be employed by the new owner on the same terms and conditions as pertained to their current employment. 

[25]	Shezi admitted that he had no contact with the individual applicants after the 10 March meeting, as he was not expected to be present when the shop steward gave them feedback on 13 March 2006. 

[26]	In the late afternoon of 14 March 2006 he received the letter from the respondent cancelling the meeting scheduled for the following day. The next day he telephoned Winkworth to enquire about the reason for this and was informed that the shop steward had informed management that that the individual applicants were not prepared to accept employment with the new company and there was no point in proceeding with the meeting. The shop steward then called to inform him that management and the employees were expecting him. He then went to the premises at noon on 15 March and met with the individual applicants. 

Evidence of Petros Phethula        

[27]	Petros Phethula was employed as a General Operator earning R2000- per month. 

[28]	He testified that on 31 January the individual applicants were summoned to a meeting with Winkworth and handed notices in terms of section 189 (3) which they were asked to sign. They refused to sign and were informed that they were being retrenched with effect from 7 February 2006. The individual applicants informed management that they would consult with NUMSA, and at the end of the day he collected all the retrenchment notices and arranged for them to be delivered to the NUMSA local office the following day by his son. He confirmed that the notices were delivered to Shezi on 1 February 2006 and that he communicated with Shezi regularly by telephoning him at the office or meeting with him personally. That afternoon he met with Shezi who informed him that he would communicate with the respondent. He went back to the NUMSA office a day or two later and Shezi showed him a letter he had written to the respondent . He confirmed that the letter sent to the respondent on 23 February requesting further consultation was the letter he had been shown by Shezi.  

[29]	He was present at the meeting of Friday 10 March together with Shezi, when they were informed that the spray paint division was closing and all employees would be transferred to a new employer. It was agreed that he would inform the individual applicants of the decision on Monday 13 March and canvass their views. He confirmed that they had been told the new company was Honeycorp, a company from Johannesburg. The name of the owner was not disclosed but it was agreed that they would inform the individual applicants on 13 March and a meeting with the new owner would be scheduled for 15 March.  

[30]	On 13 March he was approached by Rachman to enquire whether he had informed the individual applicants of the transfer to the new company, and he replied that he had not met with them. Rachman gave him 10 minutes to convene a meeting, and Rachman was present when he informed the individual applicants that they were being offered alternative employment with the new owner, whom they would meet at 8:30 on 15 March. The individual applicants asked whether their length of service would be kept intact and Rachman indicated that everything would be sorted out on 15 March and they all returned to work. He confirmed that Shezi was not expected to meet with the individual applicants on 13 March. He denied that he told Rachman the individual applicants were not willing to be transferred to the new employer. 

[31]	On 15 March at 8:30 the individual applicants left their work stations to convene for the anticipated meeting with the new owner. Rachman stopped them and informed them their representative was not coming and the meeting had been cancelled. He denied that the meeting had been cancelled on account of the individual applicants having informed the respondent that they rejected the offer of alternative employment. He confirmed that no decision had been taken on 13 March, however he admitted in cross examination that he had to report back and also establish which of them were going to accept the offer. Phethula telephoned Shezi using his cellphone and asked him why he was not present. Shezi informed him that the respondent had cancelled the meeting. Shezi arrived during the lunch break and showed them a copy of a letter from the respondent dated 14 March informing NUMSA that the meeting with the new owner was not proceeding. After the meeting with Shezi they resumed work.

[32]	He denied that they had embarked on a work stoppage or that he had refused to obey Winkworth’s instructions to meet with the respondent. He denied that Winkworth had summoned him at all although he was at work that day.  He had no knowledge of the nomination by the individual applicants of Emmanuel Mhlongo as their representative in his absence.  

[33]	Phethula denied that the individual applicants had refused to meet with the new owner. All they were concerned about was whether “all our papers and service would be registered, and everything will be in order, whether he will still accept us as we are members of the union”.

[34]	He confirmed that was not at work on 16 and `17 march because he was ill. Before he returned to work on 20 March he was informed by the individual applicants that they had been dismissed on 17 March. He was issued with his letter of termination by Rachman on 20 March and told he could ask his union for an explanation. He did not sign the notice. However in cross examination he persisted with his version that up until 20 March he had no knowledge that he would be retrenched despite reference to 17 March in the section 189 (3) notice of 31 January 2006. 

[35]	He knows Riaan Human as someone who supplied paint to the respondent but had never had any discussions with him. He denies that Human discussed his purchase of the spray paint division with the individual applicants.  In cross examination he denied that the individual applicants had been informed that Human was the owner of Honeycorp. When it was put to him that, accordingly to his evidence everyone was lying i.e. Winkworth, Shezi and Human, he said that the only evidence of Human’s he disputed was that he had told them he was the new employer.

[36]	Phethula denied that his English was good and testified that he could read and understand only a little. He denied when it was put to him in cross examination that he had a good relationship with Rachman and it was improbable that he would not have asked Rachman about alternative employment with a different company. He explained that he did not see a need to do so as he was being represented by NUMSA and had no mandate to discuss issues with management.        

Evidence of Innocent Mkhize

[37] 	Innocent Mkhize confirmed that he did not know Human was the new owner and believed the new owner was from Johannesburg. He denied that Human had informed them of the new arrangement. He only got to know that Human was the new owner of Honeycorp in June 2006 when Human contacted him telephonically to offer him a job. He worked for Human for the whole of 2006 and left in 2007. He confirmed that the respondent had informed them about the arrangement of alternative employment with a new company from Johannesburg and that their response as employees was that they wanted to consult with management to ensure that their benefits would be intact. 

[38]	He denied that he refused the offer of alternative employment and states that the respondent failed to facilitate a meeting with the new company regarding their benefits. 

[39]	He confirmed the version of Rachman regarding the meeting of 13 March that states that when Rachman  was asked whether their terms and conditions of employment would remain the same he explained that the new manager would explain this when they met on 15 March 2006. 

[40]	It is common cause that the meeting 15 March never happened. He testified that they were told to assemble at 8:30 on 15 March to meet with the new manager and then were subsequently told that the meeting had been postponed because the NUMSA organiser was running late. Phethula then telephoned Shezi to enquire about his whereabouts and he indicated that he had received a letter from the respondent cancelling the meeting. Shezi arrived at noon to confirm that he had received a letter cancelling the meeting. They met in Rachman’s office and he testified that the employees carried on working normally and he could not recall whether they were affected by the aborted meeting. The meeting lasted less than 10 minutes and the employees returned to work. He denies that there was any illegal work stoppage on 15 March. He confirmed that Phethula was at work on 15 March, and denies the respondent's version that the individual applicants elected Mhlongo as a representative.

[41]	On 17 March when he received his retrenchment notice he did not read it. The respondent explained it was to “close the account". Phethula was not present as he had gone home. On Monday 20 March when Phethula arrived and he was also issued with a notice they proceeded to the NUMSA offices and realised their services had been terminated. He confirmed that he would have accepted alternative employment whether Human was the owner or not. He confirmed that there was interaction with Human before the retrenchments and that they had exchanged telephone numbers.

[42]	It was put to him in cross examination that he was very hesitant and soft-spoken although he had been confident when giving his evidence in chief, and he admitted that he was scared because he was not accustomed to court proceedings.  

[43]	He could not recall when the letter of 31 January 2006 had been given to him, and after he was given time to recall he stated that it could have been on 7 February, but he was uncertain. He admitted that he had never informed his attorney that he only received the letter on 7 February. He was unable to recall what he did after receipt of the letter, but was able to recall that he refused to sign the letter because it could not understand it. He confirmed that he was with Mthembu and Mini when he received the letter and when it was put to him that they had both signed receipt of the letters on 31 January 2006 he was adamant that it would have been 7 February. He however finally conceded that it must have been issued on 31 January 2006. He confirmed that after receipt of the letters Phethula took them to NUMSA, but because he was on his way home he did not seek an explanation about the contents from Phethula or anyone else.   

[44]	He admitted that he placed his employment in Phethula’s hands and took no further steps to safeguard his job or make enquiries about an alternative. He admitted that he heard in the week before 17 March that there was another job available but he did not approach the respondent or anyone else about this. Even after his retrenchment he conceded that he had Human’s contact number but did not telephone him to seek employment, despite his concern about how to meet his financial obligations. 

[45]	He admitted that a meeting was held on 10 March but he was not present and not informed of the contents thereof. He did explain to Phethula on the Saturday (11 March) that if the new employer was taking over the spray paint section he would have no hesitation in continuing to work for the new employer. He was not able to dispute that the individual applicants were not adequately kept informed by the shop steward or NUMSA and explained that “very little was discussed because time was limited”. He had a very brief discussion with Phethula on the Saturday as they were only working half day and he had to rush home afterwards.  He admits that he was aware of a meeting to be held on Monday the 13 March as well as 15 March when they were to meet the new owner. He was not aware of a meeting scheduled to meet the new owner on 14 March, and despite the discrepancy on the dates confirmed that a meeting had been set the purpose of which was to meet the new owner, but did not take place. He admitted that his concern was to meet with the new owner and to know “how he was going to pay me and whether he was going to register me”. If he had been informed after the 10 March meeting that the new owner had agreed that they would remain on the same terms and conditions as the current employment and that their UIF and Provident fund would be sorted out he would have had no hesitation in continuing with the new owner and would not have been retrenched. 

[46]	He did not recall that during the meeting on 13 March Rachman was informed that the individual applicants were not interested in the alternative employment. He testified that the individual applicants had never decided against the new employer and was not aware of a meeting where Phethula had been instructed that they did not accept the offer.

[47]	He denies there was any legal work stoppage on 15 March and confirms that Phethula was present at work. The only concern of employees on 15 March was to meet with the new owner and they did not know it was Human.  

[48]	He stated in cross examination that although he spoke with Phethula after the retrenchments on 17 March they did not discuss the retrenchments or alternative employment with Honeycorp. He denied that the main reason for not accepting the offer of alternative employment was that they were instructed not to do so by the shop steward NUMSA. He remained adamant that they trusted the shop steward and Shezi equally, and said that if it came to a choice as to credibility this court should accept the evidence of Phethula. 

[49]	He confirmed that three months after his retrenchment he commenced employment with Human, and that this was on better terms and conditions than with the respondent, but he left in 2007 after Human had reneged on his promise to “register” him.

Evidence of Nkosinathi Emmanuel Mhlongo

[50]	Mhlongo testified that he did not know Human would be the new owner of Honeycorp prior to the retrenchments. In June 2006 he was informed by Mkhize that Human was managing the paint shop and required assistance.  He then commenced employment with Human but as at the date of these proceedings he had not yet been registered by Honeycorp. 

[51]	He testified that on 13 March Rachman called them together and informed them as follows : “Listen gentlemen seeing as Phethula has not told you I am telling you now. There will be some changes and the paint section will now be managed by Honeycorp”. One employee questioned him about severance pay and he  stated that this would be dealt with in the meeting of 15 March when they would meet with the new owner and part of the discussion would be whether the respondent or the new owner would pay their severance pay.  

[52]	He denied that there had been any illegal work stoppage on 15 March and they had assembled at 8:30 to meet with the new owner. He confirmed that the shop steward was present and they were told to return to work as the organiser was late. The organiser only arrived at around noon. He denies that he was elected to represent the employees on that day and that he telephoned NUMSA. He denied that the individual applicants had informed the respondent that they rejected the offer of alternative employment from Honeycorp, or that the meeting of 15 March had been cancelled for this reason. 

[53]	He confirmed that he would have accepted alternative employment if he knew that the owner of the new company was Human, but would not have accepted the offer without meeting the new owner. He testified that it was important to establish the identity of the new owner and determine the implications of the transfer especially regarding severance pay and other benefits. 

[54]	He is currently employed by Human and had obtained leave for the purposes of attending these proceedings in November 2008 and when they resumed, although he was of the view that this was unpaid leave. He stated that Human was untruthful. He confirmed that he knew from Rachman that Honeycorp was the new owner but could not say whether Honeycorp was specifically mentioned at the meeting of 10 March because he was not present. He could not however dispute that Phethula and Shezi had been informed on 10 March that Honeycorp was the new owner. He was not at work on Saturday 11 March and would have heard about the developments for the first time on 13 March.

[55]	When he received the notice of retrenchment on 31 January he understood its contents as Phethula had explained to him it meant that the paint section was to be transferred to Honeycorp and some employees were going to be transferred whereas others could choose to be retrenched. He never met with NUMSA and all their communications were with Phethula as their shop steward.
He had not been informed that the respondent had offered to pay severance pay to those employees would did not accept the alternative, and stated that he did not receive severance pay.

[56]	He admitted that he had Human’s contact details since 2004 and often discussed issues with him when he arrived to deliver supplies. However, the first time he realised Human  had taken over the division was when Mkhize informed him that he was working for Human.

[57]	He also confirmed that in the event of conflicting versions between Shezi and Phethula, the version of Phethula should be preferred. He testified that he left things in the hands of the shop steward and NUMSA because they had legal expertise and they were competent enough to handle the situation.

Applicants’ submissions 

[58]	The attorney for the applicants, Ms Mamabolo, submitted that the respondent was obliged to consult when it first contemplated dismissal. In this regard Ms Mamabolo referred me to the following dicta:

SATU v The Press Corporation of SA Ltd [1998] 11 BLLR 1173 (LC) 
“ the consultation stage is preceded by a recognition by the employer that he needs to take certain steps to improve his financial position and then retrenchment becomes one of it. It is apparent in this matter that when the respondent offered voluntary retrenchments it had contemplated dismissing employees for operational reasons but then chose to offer voluntary retrenchments as an alternative to dismissals or to avoid dismissals. It is that contemplation or thought which triggers off the provisions of section 189 of the Act”.

Bekker v Nationwide Airlines (Pty) Ltd [1998] 2 BLLR 139 (LC) :
“even if the employee reaches an agreement with an employee regarding termination of the latter's services for operational reasons, the employer is obliged to consult with a view to reaching such an agreement. The duty is triggered by the employer's contemplation of dismissal, irrespective of whether an agreement is ultimately reached on any of the required topics of consultation”.

Irvin & Johnson Ltd v CCMA & Others [2002] 12 BLLR 1194 (LC) : 
“ once the decision was taken by the applicant to cease its canteen operation and applicant did not foresee transferring these employees elsewhere within its operation, the termination of employment must have been contemplated by the applicant. This contemplation would trigger or should have triggered the consultative process provided for under section 189(1) of the Act”.

[59]	On the basis of these authorities it was submitted that the decision to outsource the spray paint division was taken prior to December 2005 and despite this the respondent only commenced consultation on 10 March 2006 after the sale agreement was concluded. Furthermore, an attempt was made to consult after letters of termination had already been issued on 31 January 2006. The decision to consult was therefore taken contrary to the provisions of section 189 of the LRA and furthermore the termination letters did not meet the requirements of section 189 and should not be could not be construed to constitute proper notice in terms of section 189 (3).

[60]	Furthermore, the section 189(3) notices were issued to individual employees not to NUMSA and accordingly the union representing the individual applicants had not been consulted. Ms Mamabolo submitted that there had been no consultation preceding the termination of employment of the individual applicants, no proper notice had been issued in terms of section 189, and their termination was accordingly procedurally unfair.

[61]	Furthermore, Ms Mamabolo submitted, the alternative offer of alternative employment was with a non-existent company as Human testified that the company had only been registered in 2007, and it was disingenuous of the respondent to make this offer.

[62]	On the evidence, Ms Mamabolo submitted, the individual applicants did not reject the offer of alternative employment in that, inter alia, they gathered on 15 March for the purposes of meeting with the new employer. Secondly, some of the individuals accepted employment with the new employer subsequent to their retrenchment by the respondent. It is also improbable that they would agree to lose their years of service with the respondent which they could easily have secured by accepting the offer. All they sought to do was to clarify their concerns with the new owner and they had not been given the opportunity to do so. 

[63]	On the applicants’ version that reasonable alternative employment was rejected, the respondent was duty bound to consult the employees in regard to severance pay: Fourie and another v Iscor Ltd [2000] 11 BLLR 1269 (LC). Accordingly it was submitted that there was no consultation at all

[64]	On the evidence it is unlikely that there was any illegal work stoppage on 15 March in that this appears to be the date on which the individual applicants were informed that they would meet with the new owner. 

Respondent’s submissions

[65]	The respondent’s counsel, Mr Lalla, submitted that the respondent could not be faulted for an alleged lack of consultation, inadequate consultation or a failure to consult for, inter alia, the following reasons:
(1)	The consultation process spanned a period of a few weeks from January to March 2006;  
(2)	Prior to 13 March 2006 the respondent in good faith facilitated meetings and indicated a further willingness to meet;
(3)	The individual applicants were given an alternative to their retrenchments  in that they were offered alternative employment as far back as 31 January 2006;
(4)	The law does not require the respondent to negotiate the terms and conditions of employment under the new employer;
(5)	After bona fide alternatives to dismissal had been put forward by the respondent, nothing more was required of the respondent and in any event the respondent still facilitated a meeting with the new owner;
(6)	The union's participation (which was tardy and limited) would have permitted the respondent to only consult the union in the matter, but the respondent also engaged in parallel discussions with the individual applicants although it was not legally required to do so. 

[66]	It was submitted that the respondent's version was more probable, namely that an offer of alternative employment was turned down on 13 March 2006. 

[67]	Accordingly, the law favours an inference on these facts that the respondent had fully complied with the requirements of section 189 of the LRA in that inter alia:

An employer complies with the requirements of section 189 in dismissing the employees who rejected the alternative employment offered : CWIU & others v Algorax  (Pty) Ltd (2003) 24 ILJ 1917 (LAC) at 2173 H-J

The LRA imposes under section 189 an obligation on the employer, the most noticeable being to ensure that all possible alternatives to dismissal are explored : Strauss v Another v Plessey [2002] 1 BLLR 105 (LC) at 113H

Where the employer is consulting with the union there is no need to consult further with the individual employees : Cloet v Evander Gold Mines Ltd [2001] 4 BLLR 433 (LC) at 439 C

The duty to consult in good faith rests on both parties: NUM v Newcastle Diamond Cutting Works (Pty) Ltd [2001] 7 BLLR 809 (LC) at 813

The employer is entitled to retrench if the employees frustrate the consultation process by repeatedly claiming that the consultation process was inadequate: NUMSA v Tiger Wheels Limited Group [2001] 12 BLLR 1353 (LC) at 1357A.

Analysis of evidence and submissions 

Failure to consult

[68]	I agree with Ms Mamabolo that it is a trite principle in our law that an employer is obliged to consult once it contemplates dismissal for operational reasons. Insofar as the evidence was that the outsourcing was contemplated from as early as December 2005, the respondent was obliged to consult with the applicants at that stage. It only sought to do so after issue of the notices in terms of section 189 issued on 31 January 2006. However, the notice in terms of section 189(3) issued confirms that alternative employment had been secured, although it is another trite principle that employees are entitled to reject alternatives that are unreasonable. 

[69]	The purpose of consultation in essence is to safeguard employees against job losses, and to permit them the opportunity to make representations regarding, inter alia, alternatives to retrenchment, timing, and severance pay (should termination be unavoidable). The LRA makes this clear when it states the purpose of a notice in terms of section 189 (3) as follows:
“The employer must issue a written notice inviting the other consulting party to  consult with it and disclose in writing all relevant information, including, but not limited to-
(a)	the reasons for the proposed dismissals;
(b)	the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;
(c)	the number of employees likely to be affected and the job categories in which they are employed;
(d)	the proposed method for selecting which employees to dismiss;
(e)	the time when, and the period during which, the dismissals are likely to take effect;
(f)	the severance pay proposed;
(g)	the assistance that the employer proposes to offer to the employees likely to be dismissed;
(h)	the possibility of the future re-employment of the employees who are dismissed;  
(i)	the number of employees employed by the employer; and the number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months.”

[70]	The rationale behind these requirements is clear. They are necessary to ensure a fair and proper consultation process which is crucial to procedural fairness.  In Atlantis Diesel Engine (Pty) Ltd v National Union of Metal Workers of SA (1994) 15 ILJ 1247 (A) the court described this as follows :
“I agree that consultation, if circumstances permit, should be geared to achieve that purpose (bearing in mind that problem-solving is something distinct from bargaining and that the final decision, where consensus cannot be achieved, always remains that of management). Such a course would best serve the objectives of the Act and be conducive to industrial peace. The approach provided above is the one that should be followed as a general rule in a matter such as the present in order to achieve the required degree of fairness necessary to avoid falling foul of the unfair labour practice definition. It must be emphasised however, that whether an employer has, in a retrenchment matter, complied with the duty of prior consultation will inevitably depend upon the peculiar facts and circumstances of each individual case. The scope and extent of consultation may be attenuated in certain circumstances because of for example considerations of urgency or confidentiality or some equally compelling reason (cf Administrator, Transvaal & others v Zenzile & others 1991 (1) SA 21 (A) at 40C-E)). 

[71]	Thus although the procedural guidelines in section 189 do not need to be observed in a rigid manner, and the decision is ultimately that the of the employer, it is still important that the employer should engage in the process meaningfully and in good faith. Strict compliance would not have been necessary, or even possible in the circumstances in casu given the fact that the respondent had secured employment for the individual applicants on their current terms and conditions, and doing the same job with the new employer, as if they had been transferred in terms of section 197.  Accordingly I disagree with the applicants’ submission that the employer had an obligation to consult the representative trade union “over the alternative employment it had managed to secure with the new owner”. At the first consultation between the parties on 10 March NUMSA was advised that the individual employees would not lose their employment. On the applicant's own submissions the applicants indicated that they wanted to meet the new owner to discuss the terms and conditions of the employment and the respondent undertook to facilitate this.  This was the only outstanding issue. 

[72]	Insofar as the applicants attorney submitted that the notice of 31 January should have been issued to NUMSA, this was not disputed by the respondent, and it contended that at that stage NUMSA was in the process of seeking recognition at the respondent, which was the objective of the meeting on 20 February. In any event this is a moot point as NUMSA was made aware, irrespective of whether I accept the version of the individual applicants that this was done on 1 February 2006 and Shezi’s version of 20 February 2006, and Shezi did participate in the consultation meeting of 10 March 2006.    

[73]	Although I agree with Ms Mamabolo that this matter does not present similar delays to frustrate the process akin to that in Tiger Wheels (supra), the obligations pertaining to consultation are bilateral and require both parties to consult in good faith in an attempt to achieve the objectives specified in section 189: Davis AJA in Visser v Sanlam [2001] 3 BLLR 313 (LAC).  In my view there was no evidence that the respondent acted in bad faith, and although it cannot be said that the union acted in bad faith, or frustrated the consultations, it would appear to have been indifferent to the situation. On the other hand however, the union’s complacency could have arisen from the fact that the jobs of the individual applicants were not under threat and had been guaranteed with the new entity

[74]	In any event the purpose of section 189 is to achieve consensus on the objects listed in section 189 (2) , i.e. appropriate measures to avoid or minimise the dismissals, change the timing, mitigate the adverse effects; as well as the methods for selection and severance pay : Johnson & Johnson (Pty) Ltd v CWIU [1998] 12 BLLR 1209 (LAC), and it would appear, on respondent’s version, which I accept on the probabilities, that the respondent did everything possible to ensure this.  

[75]	Moreover, on the evidence presented it cannot be concluded, as the applicants submit, that the individual applicants were presented with a fait accompli.  

[76]	When an employer offers a reasonable alternative to retrenchment, the employees who reject such an offer will not be entitled to severance pay (see Pretorius v Rustenburg Local Municipality & Others (2008) 29 ILJ 1113 (LAC)). Despite the denial by Mkhize and Mhlongo that severance pay was paid, the version of the respondent in this regard stands. Shezi furthermore also confirmed that the respondent had offered to pay one week’s severance to employees who opted for retrenchment.  

[77]	I agree with the submissions by the respondent’s counsel, Mr Lalla, that the respondent cannot be faulted for an alleged lack of consultation, inadequate consultation or a failure to consult. Accordingly, it cannot be said that the respondent failed to fulfill the consultation requirements in section 189 of the LRA.  

Rejection of alternative employment

[78]	The applicants do not dispute the substantive fairness of their termination and in regard to procedural fairness it is clear that the respondent attempted to consult in good faith with both the applicant union and the individual applicants and that its attempts to obtain confirmation about the acceptance of the alternative offers of employment which it had secured with the new owner were rejected. 

[79]	It is clear from the evidence that, on the probabilities, the individual employees, knowingly or unknowingly, rejected the offer of alternative employment. There is no evidence that the offer was unreasonable or was considered to be unreasonable, despite the concerns they had about whether they would be entitled to membership of a provident fund. All communication with the applicants from the respondent confirmed that they would be employed on no less favorable terms than their current employment, and in fact the evidence of Mhlongo and Mkhize confirms that they were employed on more than favourable terms than their employment with the respondent. They were the unfortunate victims of a lack of communication and an indifferent union official, of which they sadly bear the consequences. It was quite clear on the evidence as a whole that the second to further applicants had placed their trust in the first applicant and it had failed them. Shezi admitted he was too busy to deal with the consultations. His first correspondence with the respondent was on 23 February despite notices having been issued to the individual applicants on 31 January 2006. The shop steward was almost single handedly tasked with collective bargaining responsibilities, and Shezi appears to have had no other involvement after 10 March and a brief meeting on 15 March, when he could have sought to intervene with the respondent if indeed it had misunderstood the rejection of the offer. Even though at the applicant's version they knew Honeycorp would be the new owner, Shezi made no enquiries regarding the details of the new owner. The evidence accordingly indicates a complete breakdown in communication among the applicants and accordingly between the applicants and the respondent.

 [80]	Phethula denied there had been a breakdown of communication with Shezi, and despite being contradicted by Shezi, indicated that they communicated regularly. Despite this he was not convincing when he failed to explain why he had not informed Shezi of the decision taken after the meeting of 13 March, or that he was expected by Shezi to report back. It is highly unlikely that given the decision taken by the individual applicants, he could still have anticipated that the meeting with the new owner would still continue on 15 March. He appeared to be reluctant and was evasive and avoided giving direct answers to certain questions. His evidence that he made no attempts to contact the individual applicants on the weekend prior to the briefing on 13 March is improbable if they were being retrenched a few days later.  Despite the evidence to the contrary, and Shezi’s evidence, he insisted that there was no outcome on 10 March and all he had undertaken to do was to inform the individual applicants of the meeting with the new owner on 15 March when a final outcome would be discussed. He denied informing Rachman after the meeting that the individual applicants rejected the offer of alternative employment. He denied when it was put to him in cross examination that he was conveniently absent when the retrenchments took effect on 16 and 17 June because he did not want to face the consequences of his actions. Despite Rachman’s assertion that he was proficient in English and was not only the foreman and the shop steward, he claimed not to have understood that the consequences of not accepting the alternative employment was that they would be retrenched. Accordingly, his evidence that the first time he understood that he had lost his job was on 20 March is completely untenable. For the first time in cross examination he mentioned that the applicants who had signed their letters of termination on 17 March had done so under a misconception and he sought to blame his attorney for not having dealt with this in cross examination. He furthermore directly contradicts Rachman’s evidence when he says he intended to meet with the individual applicants at 07:00 when he arrived at work.

[81]	Despite his contradictions in re-examination he confirmed the statement of claim correctly reflects what the parties agreed on 10 March as follows:
“The meeting on 10 March 2006 was held and pursuant to such a meeting it was mutually agreed by and between the first applicant, second to further applicants and the respondent that:
(a)	those employees who wish to take up the alternative employment would meet the new owner on 14 March 2006; and
(b)	that those employees who did not wish to be employed by the new owner would become retrenched on 17 March 2006 as their last working day and receive severance pay; and
(c)	the shop Steward would report back on 10 March 2006 after the weekend to give him time to caucus with the second to further applicants on their decision”.

[82]	Phethula moreover persisted in his denial that paragraph 23 of the applicant's statement of case was incorrect. Paragraph 23 states :
“On 13 March 2006 the shop steward reported to the respondent that none of the second to further applicants wanted to take up the alternative employment”      

[83]	In my view his evidence was inconsistent and implausible and stands to be rejected on the probabilities as well as on the basis of his credibility.  

Evaluation of other evidence

[84]	 On a balance of probabilities, and given the mutually destructive versions of the parties, I am satisfied with the evidence adduced by the respondents and, insofar as it formed part and parcel of my evaluation of the evidence as a whole, the credibility of the respondent’s witnesses. Winkworth, Rachman and Human were credible and reliable witnesses. Human in particular stood to be believed as he could identify the individual applicants and had their personal contact numbers, and a number of former applicants are now in his employ. Phethula on the other hand was evasive and hesitant and contradicted the version of every other witness. Mkhize was also a very hesitant and evasive witness, and his demeanour changed from one of being confident while giving his evidence in chief to being hesitant and evasive in cross examination.    Mkhize and Phethula had been present in court throughout the proceedings. Mhlongo was an impressive witness, although there is a direct contradiction in relation to his involvement on 14 or 15 March between the applicant and the respondent, and in my view the respondent’s version in this regard is more probable. If Phethula had been present at work, as he insisted, there is no reason why he would not have intervened since the paint division was so small and he would have known that there was a crisis. Ms Mamabolo submitted that the testimony of the two employees who are currently employed by Honeycorp that they earn more than they did at the respondent is not relevant in that the offers of employment were made to them after the retrenchments, and Human had done this deliberately to save training costs. This submission is not justified by the evidence and is without merit. On the contrary, in my view , Human’s bona fides are reinforced by the evidence of Mkhize and Mhlongo, despite Mhlongo’s view (which he failed to justify) that Human was a liar.  

[85]	However, apart from the credibilities there are internal inconsistencies in the evidence of the applicants, which led me to reject their version.  I do not intend to cite all the areas of inconsistency, but the following are relevant : 
(a)	Shezi stated he had only received the section 189 (3) notices of the retrenchment dated 31 January on 20 February 2006 while Phethula testified that he had sent his son to Shezi on the morning of 1 February 2006 and had met with Shezi that afternoon to discuss the notices.
(b)	The applicants’ witnesses testified that they were only aware after 10 March that the spray paint division will be closed, despite it being common cause that this was communicated by the respondent in the notices issued on 31 January 2006.
(c)	The version of the applicant is that as at 13 March 2006 they were unable to make a decision about the alternative employment because they were waiting to meet with the new employer. However the respondent's witnesses and also Phethula and Mhlongo testified that they were aware prior to 13 March that the new owner was Honeycorp and that their employment with the new owner was secure. 

[86]	I am satisfied that the respondent has discharged the onus of proving that it consulted with the applicants in compliance with its obligations under section 189 of the LRA and the contention that the dismissal of the individual applicants was procedurally unfair cannot be sustained. 

[87]	In the premises, I make the following order:

The application is dismissed, with costs.

_________________________
Bhoola AJ

Date of hearing : 17-19 November 2008, 15-17 April 2009
Date of judgment : 8 July 2009

Appearance:
For the applicants : Ms O Mamobolo, Maserumule Inc
For the respondent : Adv N Lalla instructed by Selzer Attorneys