Alternatives to dismissals - Labour Court gives view on employer's duty

The issue of when an employer may explore alternatives to retrenchment with its employees has been plaguing employers, trade unions, employees and South African courts for decades.

At the heart of the matter is the employer's statutory duty to consult with affected parties when it contemplates dismissals for operational requirements (retrenchments or redundancies). Once the employer contemplates such a dismissal, it is obliged to commence consultations. The reason for the legislated duty is simply that the employer should engage the affected employees before making a final decision to retrench them. The employees should still be able to persuade the employer that there are other viable alternatives where these exist. The outcome of the consultations should not be a foregone conclusion, which is bound to be the case if the employer only commences engagement after taking a final decision to dismiss.

But does considering retrenchment as one of the options to steady the financial ship equate to contemplating dismissal? May an employer review and explore various options prior to triggering the obligation to commence consultation with affected parties?

The Labour Court has been guarded at expressing a definitive view on when it will regard an employer as having contemplated such dismissals (and thus were obliged to commence consultations). Judgments on this issue range from a duty to commence once it engages with staff on alternatives to retrenchment (including offering voluntary severance packages) to only being obliged to consult once alternatives have been exhausted. The distinction is critical for employers as it determines the latitude it has in approaching staff with alternatives without having to kick-off the formal consultation process with the employees or trade unions.

The Labour Court recently gave guidance on the state of play on this issue. It had to consider the employees' right to strike about a demand that the employer halts a redeployment process pending further consultation with the trade union. The court interdicted the strike. It held that the trade union could refer the dispute to adjudication after any dismissal and was the statutory prohibition on substantive limitations to the right to strike applies.

While the issues underpinning the threatened strike are of interest in respect of development of the employment law in that regard, our current focus is on the court's reasoning remarks in relation to the employer's duty to consider alternatives prior to issuing the statutory notice inviting parties to consult. The court held that the employer acts in breach of its duties to consider alternatives and, where possible, implement these options.

We are in respectful agreement with the court and welcome the judgment. Employers should be at liberty to explore all alternatives permitted in law and equity prior to engaging employees in the death rattle discussions that are retrenchment consultations. Indeed, employers should be able to show, as the court stated, that all alternatives were explored and that valid reason exist why such alternatives were not implemented.

One viable alternative to operational requirements dismissals is to offer financial consideration in return for voluntary termination. Unless such calls are made in breach of other employer obligations, an employer should be permitted to approach staff and request them to consider an agreed termination in return for payment of some form of compensation. Clearly such a step can and should be capable of challenge where such an agreed termination breaches discrimination or other fair labour practice obligations. An employer may not disregard other employee rights under the guise of exploring alternatives to retrenchment. However, where the employer can avoid the negativity and insecurity induced by mass consultations about proposed redundancies, it should be permitted to explore reasonable lawful alternatives.

In the judgment handed down on 14 March 2017 in ArcelorMittal v NUMSA & others, the court confirmed in the employer's duty to explore and, where practicable, implement viable alternatives. Employers are encouraged to minimise the adverse effect of not only eventual dismissals but also the process leading up to such terminations.

Businesses should explore creative solutions that will avoid or mitigate the terminations. If there had been any doubt about the dire need for this approach previously, a quick glance at our country's official unemployment rate of 26.5% confirms that all creative alternatives to further job loss should be encouraged. Where reductions are unavoidable, humane ways of parting ways can and should be explored.

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