In terms of the Labour Relations Act (LRA), every employee has the right not to be unfairly dismissed. The LRA distinguishes between what is known as “automatically unfair dismissals” – in other words, if a person is dismissed for reasons included under this category of dismissals, it will be automatically unfair – and dismissals based on reasons of conduct, operational requirements (retrenchments), and capacity.

Section 186 (1) of the LRA gives the following meaning to the term “dismissal” –

• An employer has terminated employment with or without notice;
• An employee employed in terms of a fixed term contract of employment reasonably expected the employer –
• To renew a fixed term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it, or
• To retain the employee on an indefinite basis, but otherwise on the same or similar terms as the fixed term contract, but the employer offered to retain the employee on less favourable terms, or did not offer to retain the employee.
• An employer refused to allow an employee to resume work after she took maternity leave in terms of any law, collective agreement or her contract of employment.
• An employer who dismissed a number of employees for the same or similar reasons has offered to re-employ one or more of them but has refused to re-employ another.
• An employee terminated employment with or without notice because the employer made continued employment intolerable for the employee.
• An employee terminated employment with or without notice because the new employer, after a transfer in terms of section 197 or section 197A, provided the employee with conditions or circumstances at work that are substantially less favourable to the employee than those provided by the old employer.

Section 198A(4) of the LRA has created a new type of dismissal known as “deemed dismissal”. This is a dismissal by the temporary service provider to avoid the employee being deemed to be the employee of the client of a temporary service provider and to be employed on an indefinite basis by the client.

Section 187 of the LRA lists the following reasons for dismissal that would make a dismissal automatically unfair –

• For participating or supporting a protected strike;
• For refusing to do work normally done by an employee who is on a protected strike; or is locked-out, unless that work is necessary to prevent an actual danger to life, personal safety or health;
• A refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer;
• For any reason seeking to prevent an employee from exercising their rights under the LRA e.g. freedom of association;
• For any reason relating to an employee’s pregnancy or intended pregnancy;
• For any reason amounting to grounds for unfair discrimination, unless the dismissal is based on the inherent requirements of the job or if the dismissal is based on age and the employee has reached the normal or agreed retirement age for persons employed in that capacity;
• For any reason seeking to avoid the protection from dismissal given to employees in terms of section 197 (transfer of a business by one employer to another employer as a going concern) or 197A of the LRA (transfer of an insolvent business to a new employer to avoid the ending-up or sequestration of the business of the old employer); or
• For any reason seeking to prevent an employee from exercising his/her rights under the Protected Disclosures Act 4 of 2000.

Retrenchment relates to the dismissal of employees on the grounds of an employer’s operational requirements. The Labour Relations Act defines “operational requirements” as meaning –

“Requirements based on the economic, technological, structural or similar needs of the employer.”

The LRA distinguishes between small scale and large-scale retrenchments. Large-scale retrenchments apply to employers employing more than 50 employees and subject to other criteria which are discussed below.

Small-scale retrenchments

When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult (in this order of priority) –

• any person whom the employer is required to consult in terms of a collective agreement;
• If there is no collective agreement that requires consultation, with a workplace forum, if there is one, and any registered trade union with members who are likely to be affected;
• if there is no workplace forum, with a registered trade union whose members are likely to be affected; or
• if there is no trade union involved, with the employee/s likely to be affected by the proposed dismissals or their representatives nominated for that purpose.

The employer and the other consulting parties must engage in a meaningful joint consensus-seeking process in an attempt to each consensus on –

appropriate measures –

• to avoid the dismissals (examples could include adjusting working hours, eliminating temporary labour, eliminating overtime, reducing wages, offering early retirement);
• to minimise the number of dismissals;
• to change the timing of the dismissals; and
• to mitigate (or lessen) the adverse effects of the dismissals; and
• the method for selecting the employees to be dismissed; and
• the severance pay for dismissed employees (the BCEA states that severance pay should be at least one week for every completed year of service).

S189(3) written notice for consultation

The employer must issue a written notification inviting the other consulting party to consult with it and disclose in writing all relevant information, including, but not limited to —

• reasons for proposed dismissals;
• alternatives to dismissal considered and why each of those alternatives were rejected;
• number of employees likely to be affected and the job categories in which they are employed;
• proposed method of selecting which employees are likely to be dismissed;
• the time when, or the period during which, the dismissals are likely to take effect;
• the severance pay proposed;
• any assistance that the employer proposes to offer to the employees likely to be dismissed (examples could include offering employees time off to attend interviews, early release should a new job be found, issuing letters of reference, psychological counselling);
• the possibility of future re-employment of those employees likely to be dismissed;
• 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.

Opportunity for the consulting party to respond to the section 189(3) letter

The employer must give the other consulting party an opportunity to make representations relating to any of the above issues. Any representations made must be considered and be responded to. If the employer does not agree with the representations made, it must give reasons for its disagreement. If representations are made in writing, the employer must respond in writing

Criteria for selection

If no agreement is reached on the criteria for selection, the criteria used by the employer must be fair and objective.

Payments

The following payments need to be made –

• Severance pay
  Employees should be paid at least one week’s remuneration for each completed year of continuous service. Service is regarded as continuous if any break in service is less than one year. (‘Remuneration’ includes basic salary, employee benefits such as medical aid and provident fund contributions by the employer, payment in kind and discretionary payments related to working hours or performance). Should an employee unreasonably refuse an offer of alternative employment he/she will not be entitled to receive severance pay.
• Outstanding leave to be paid out in line with the requirements of the BCEA.
• Notice pay
  If employed for less than six months – one week’s notice; if employed for more than six months but not more than one year – two weeks’ notice and if employed for more than a year – four weeks’ notice. Domestic and farm workers, who have been employed for more than six months, must receive at least four weeks’ notice. If the contract of employment or a collective agreement provides for a longer notice period, those provisions must be complied with. The employer may require employees to work/not to work during the notice period.
• Other
  Depending on the employment contract, the following may be relevant — pro rata payment of bonus, pension and/or provident fund. Employers must ensure that retrenched employees are issued with the relevant documentation enabling them to claim from the Unemployment Insurance Fund (UI 19 form). Employers are also required to issue a certificate of service as per section 42 of the BCEA.

Large-scale Retrenchments

This section (Labour Relations Act, s189A) applies to employers employing more than 50 employees if the employer intends retrenching:

• 10 or more employees, if the employer employs 51 – 200 employees;
• 20 or more employees, if the employer employees 201 – 300 employees;
• 30 or more employees, if the employer employs 301 – 400 employees;
• 40 or more employees, if the employer employs 401 – 500 employees; and
• 50 or more employees, if the employer employs 501 or more employees.

The number of employees that the employer intends retrenching must be added to the number of employees retrenched by the employer during the preceding 12 months for the purpose of calculating whether the proposed retrenchment constitutes a large-scale retrenchment.

Identity of the employer

For the purposes of calculating the ratio of proposed retrenchees and previous retrenchees in the past 12 months as against the total number of employees employed, the legal identity of the employer must be established. Large national chain stores or banks with numerous branches all form part of one corporate structure or juristic person.

The total workforce across all stores or branches must be calculated together to assess whether the ratio will trigger s189A. Conversely, where a national chain store consists of numerous independent franchises across the country, each franchise will be a separate corporate entity or employer. Equally, if a holding company contemplates a retrenchment exercise, the employees employed by subsidiaries of the holding company (which constitute separate legal entities) are not included in the calculation of the ratio of retrenchees to the total workforce and vice versa.

Choosing the option of Facilitation of large-scale retrenchments

The employer may request facilitation in its notice commencing the retrenchment process. Alternatively, the consulting parties may agree on the process of facilitation. In either case the CCMA must be notified in writing by completing the LRA 7.20 form within fifteen (15) days of the issuing of the notice. The CCMA will appoint a facilitator to assist the parties in the consultation process.

The CCMA will inform the parties in writing within seven (7) days of receiving the request of the following:

• The name of the facilitator; and
• after consulting the parties, the date of the first facilitation meeting.

The first facilitation meeting

The facilitator must, at the first meeting seek to facilitate an agreement between the parties on the following:

• The procedure to be followed during the facilitation;
• The date and time of additional facilitation meetings; and
• The information the employer is required to disclose.

A facilitator may conduct up to four (4) facilitation meetings with the parties; however, the Director of the CCMA may give permission for additional meetings to be held.

Powers and duties of the facilitator

• To chair the meetings between the parties;
• To decide on any issue of procedure that arises in the course of meetings between the parties; and
• To arrange further facilitation meetings, with or without the facilitator being present.

The facilitator’s decisions regarding the procedure for conducting facilitation, including the date and time, is binding on the parties.

If there is a dispute about the disclosure of information, the facilitator may make an order directing an employer to make such disclosure.

Status of the facilitator

Parties can agree in writing that parts of the facilitation be done on a without prejudice basis. This means that any proposals made by the parties are not binding on them until such time as a final agreement is reached. Without prejudice proceedings cannot be disclosed in any court proceedings, nor can the facilitator be called to give evidence of the facilitation proceedings (unless by order of Court).

Note: If a facilitator is appointed, the employer is not allowed to retrench for a period of sixty (60) days after issuing the notice of proposed retrenchment. After the 60 days has lapsed, the employer may give notice of retrenchment to employees affected or the union can give notice to strike or the union may decide to refer a dispute concerning the fairness of the reason for retrenchment to the Labour Court.

If the employees or representative trade union decide to strike on the issue, the union or employees will need to follow the strike procedures in terms of s64 of the Labour Relations Act.

NB: Once the matter has been referred to the Labour Court, the right to strike on the issue will be lost. The opposite will apply once the union or employees give notice to strike, in that the right to refer the matter to the Labour Court will be lost.

Conciliation in the event that facilitation is not requested

If the parties do not request facilitation and no facilitator is appointed, the dispute may not be referred to conciliation until thirty (30) days have lapsed since the notice of intention to retrench was issued. The parties thus have the period of 30 days in which to attempt to reach an amicable agreement. If the matter is referred to conciliation and is not resolved or the 30-day conciliation period expires and the matter still remains unresolved, the employer can give notice to dismiss the employees in terms of the Basic Conditions of Employment Act. The union can:

• give notice to strike; or
• refer a substantive fairness dispute to the Labour Court.

General points relating to facilitation

• The consulting parties may agree to vary the time periods for consultation or facilitation;
• A consulting party may not unreasonably refuse to extend the period for consultation if such extension is required in order to ensure meaningful consultation;
• Within 30 days of the employer giving notice of dismissal (or of dismissal if no notice is given), a consulting party can apply to the Labour Court to:
  1. Interdict the employer from dismissing employees prior to complying with a fair procedure;
  2. Direct the employer to reinstate the employee/s who have been dismissed until there is compliance with a fair procedure; and
  3. Make an award of compensation.

Where to refer the dispute

The CCMA or a Bargaining Council have jurisdiction to conciliate unfair dismissal disputes as set out in the LRA.  These organisations also have jurisdiction to arbitrate all, but automatically unfair dismissal disputes (unless the parties consent to arbitration in writing).  The Labour Court has jurisdiction to adjudicate the automatically unfair dismissal disputes.

When to refer the dispute:

An employee who wishes to lodge a dispute of unfair dismissal must do so within 30-days of the date of dismissal, or where an internal appeal procedure is followed, within 30-days of the outcome of that appeal procedure.  Should an employee be dismissed for a reason that, in terms of the LRA, is automatically unfair, that employee may refer a dispute to the CCMA or a Bargaining Council that has jurisdiction, within 30-days.

To work out when the “date of dismissal” is, please take note that, in terms of section 190(1) of the LRA, the date of dismissal is the earlier of-

• The date on which the contract of employment terminated, or
• The date on which the employee left the service of the employer.

However, section 190(2) reads that despite subsection (1) –

• If an employer has offered to renew on less favourable terms, or has failed to renew, a fixed term contract of employment, the date of dismissal is the date on which the employer offered the less favourable terms or the date the employer notifies the employee of the intention not to review the contract.
• If the employer refused to allow an employee to resume work, the date of dismissal is the date on which the employer first refused to allow the employee to resume work.
• If an employer refused to reinstate or re-employ the employee, the date of dismissal is the date on which the employer first refused to reinstate or re-employ that employee.
• If an employer terminates an employee’s employment on notice, the date of dismissal is the date on which notice expires or, if it is an earlier date, the date on which the employee is paid all outstanding salary.

A referral for arbitration (or adjudication by the Labour Court in the case of automatically unfair dismissal disputes) must be made within 90 days of the issuing of the certificate of outcome by the CCMA or Bargaining Council, or where no certificate was issued, within 90 days of the expiry of the 30-day conciliation period.

If the referral is made outside of these time periods, the employee will need to apply for condonation.

Small-scale retrenchments

The CCMA or a Bargaining Council have jurisdiction to conciliate dismissals based on operational requirements.  Should the matter remain unresolved, the following applies-

An employee who is dismissed by reason of the employer’s operational requirements, may elect to refer the dispute to either arbitration or to the Labour Court if –

• the employer followed a consultation procedure that applied to that employee only, irrespective of whether that procedure complied with s189;
• the employer’s operational requirements lead to the dismissal of that employee only; or
• the employee employs less than ten employees, irrespective of the number of employees who are dismissed.

Large-scale retrenchments

S189A provides the parties with the option of whether or not the consultative process is facilitated by an independent third party.

S189A (3) reads –

“The Commission must appoint a facilitator … to assist the parties engaged in consultations if –

• The employer has in its notice in terms of section 189 (3) requested facilitation; or
• Consulting parties representing the majority of employees whom the employer contemplates dismissing have requested facilitation and have notified the Commission within 15 days of the notice.”

If a facilitator is appointed … and 60 days have elapsed from the date notice was given in terms of s189 (3) –

• The employer may give notice to terminate the contracts of employment in accordance with section 37 (1) of the Basic Conditions of Employment Act, and
• A registered trade union or the employees who have received notice of termination may

either –

1. Give notice of a strike …, or
2. Refer a dispute … to the Labour Court ….”

S189A (8) deals with circumstances where a facilitator is not appointed, and provides for a 30-day period from the issuing of a notice in terms of section 189 (3) for the purpose of consultation before referring a dispute to a council or the Commission for conciliation in terms of section 64 (1) – “Right to strike and recourse to lock-out.”  Once the 30-day period in terms of section 64 (1) has lapsed the parties have the same rights as those given to parties following the 60-day facilitation period.

S189A (13) states –

“If an employer does not follow a fair procedure, a consulting party may approach the Labour Court by way of an application for an order –

• Compelling the employer to comply with a fair procedure;
• Interdicting or restraining the employer from, dismissing an employee prior to complying with a fair procedure;
• Directing the employer to reinstate an employee until it has complied with a fair procedure;
• Make an award of compensation, if an order in terms of paragraphs (a) to (c) is not appropriate.”

Relevant legislation

Labour Relations Act 66 of 1995 (s189, s189A, s190 and s191)

Basic Conditions of Employment Act 75 of 1997 (s35, s37, s41, s42 and s84)

Unemployment Insurance Act 63 of 2001.

Section 185 of the LRA states that “every employee has the right not to be subjected to an unfair labour practice.”

An unfair labour practice in terms of the provisions of the LRA, refers to an act or omission by an employer towards an employee that may have specific negative consequences for that employee. Unlike section 23 of the Constitution which provides that “Everyone has the right to fair labour practices”, section 185 of the LRA narrows its focus on the right of employees only and in particular, provides protection on the grounds listed below:

LRA grounds for unfair labour practice disputes

An unfair labour practice means any unfair act or omission that arises between an employer and an employee, involving:

• The unfair conduct of the employer relating to the promotion, demotion or training of an employee or relating to the provision of benefits to an employee
• The unfair suspension of an employee or any other disciplinary action short of dismissal in respect of an employee
• The failure or refusal of an employer to reinstate or re-employ a former employee in terms of any agreement
• An occupational detriment, other than dismissal, in contravention of the Protected Disclosures Act, 2000, on account of an employee having made a protected disclosure as defined in that Act.

Promotion

A promotion consists of an employer moving or elevating an employee to a higher position or post. It is usually accompanied by an increase in status, salary, possibly an increased number of subordinates etc. A transfer (at the same level) from one department to another is not a promotion. Nor are job-grading disputes or disputes about notch increases. However, where the incumbent employee is permitted to continue to occupy the regraded post and is afforded the appropriate higher salary, the employee is promoted The employee may succeed with a claim of unfair labour practice relating to promotion if he or she can prove that:

He or she was unfairly denied an opportunity to compete for the post.

The decision was so grossly unreasonable that the court infers malice or bad faith or improper motive.

Demotion

In law, a demotion could also mean a reduction or diminution of dignity, importance, responsibility, power or status even if salary, attendant benefits and rank are retained. employer to demote an employee, provided only that this is done fairly. Employees who complain of unfair demotion must prove that they have actually been demoted. A demotion does not occur merely because the employee is placed in a post involving slightly different work, especially when that work falls within the scope of the employee’s duties. The mere fact that an employee’s title is changed, is not necessarily proof of a demotion; something more is required. The change in the employee’s position in the organisation must also entail a loss of benefits or a lowering of the employee’s status.

A demotion may be fair if it is used as an alternative to a dismissal for misconduct – even in this case, however, the demotion requires a valid reason. Demotions may also be used in avoiding retrenchments. Consultation with the employee before demoting him or her will always be necessary.

Training

Most commonly the disputes about training will concern a lack of training opportunities which have been provided to other employees. The Labour Court has held that a dispute relating to training will only be covered by the unfair labour practice provision if it relates to inconsistency, arbitrariness or lack of due process which infringes the rights of the employees. Furthermore, if an employee has a contractual right to training and such training is not provided, the affected employee(s) may challenge this internally, and if not resolved, may refer the matter to the CCMA or a Bargaining Council.

Benefits

A benefit includes existing advantages or privileges to which an employee is entitled as a right or granted in terms of a policy or practice. For example, a contract of employment or a collective agreement may provide that an employee be paid a travel allowance for personal usage (a travel allowance for work purposes is a form of remuneration and is not seen as a benefit). If the employer were to decide unilaterally to no longer pay that allowance, the employee could declare an unfair labour practice dispute. Other examples of benefits that the Labour Courts have ruled on include discretionary performance bonuses; motor vehicle allowances; and the practice of giving employees a full day’s paid leave in exchange for overtime for a lesser period in the preceding week.  In each case, an arbitrator would need to consider if what the employee is referring to constitutes a benefit, and then whether the act or omission on the part of the employee in regard to that benefit consists an unfair labour practice. 

The most common grounds for suspension in labour law relate to pre- or post- disciplinary inquiries.  However, the Labour Court has held that there is nothing in the LRA that states that the definition is limited to the extent that any suspension that takes place outside the realm of disciplinary action, is to fall outside the ambit of the LRA. So, for example, there may be instances where an employee may be refused entry to a workplace based on occupational health and safety risks or the like. In all instances, fairness must prevail.

Suspension as a precautionary measure pending a disciplinary inquiry is usually a risk-related measure where, for example, the employer may need to ensure that the employee does not tamper with evidence or interfere with witnesses. It is now established law that an employee is not entitled to some form of hearing before being placed on a precautionary suspension, unless of course such right has been negotiated and forms part of a collective agreement or an individual contract of employment provides for such a right.    An employee must be remunerated while on precautionary suspension.

Where the suspension itself is a sanction that is applied instead of dismissal, the decision to suspend should follow a proper consideration of the facts during a disciplinary inquiry and should be reserved for circumstances where the alleged transgression was such that it could warrant dismissal in the alternative.  The employer must consult the employee before issuing the sanction of suspension without pay as it could constitute a breach of contract if the employee did not agree to same.  Agreement by the employee does not mean that that employee does not have the right to challenge the fairness of the sanction.  She or he may still lodge a claim of unfair labour practice with either the CCMA or a Bargaining Council.

Suspension as a sanction is also an example of disciplinary action short of dismissal. Other examples include, but are not limited to, warnings and imposing short time on an employee as a disciplinary measure and not based on operational requirements.

This type of unfair labour practice requires an agreement between the affected employee and the employer to have been in existence (verbal, written, individual or collective). An example will be when there was an agreement between the employer and a retrenched employee to the effect that the employee will be re-employed when a vacancy becomes available and the employer does not comply with that agreement. The affected employee may challenge that decision through the unfair labour practice provisions of the LRA.

If an employee makes a protected disclosure as set out in the Protected Disclosures Act, e.g. a disclosure regarding the conduct of an employer as he/she has reason to believe that the information shows that the employer is committing a criminal offence, and is thereafter prejudiced by the employer for making such disclosure, he or she may lodge an unfair labour practice dispute. Examples of occupational detriment include, but are not limited to, being demoted, issued with unsubstantiated warnings, being stripped of benefits, and being purposely blocked from training or access to promotion. 

Where to refer an unfair labour practice dispute

The CCMA or a Bargaining Council have jurisdiction to conciliate unfair labour practice disputes as set out in the LRA.  These organisations also have jurisdiction to arbitrate all, but a claim of occupational detriment linked to a protected disclosure.  The Labour Court has jurisdiction to adjudicate the latter unfair labour practice dispute.

When to refer an unfair labour practice dispute

Section 191 states that the employee has 90 days from the date of the act or omission which allegedly constitutes an unfair labour practice or, if it is a later date, within 90 days of the date which the employee became aware of the act occurrence.

Relevant legislation

Labour Relations Act, section 185; 186