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Case  CCT 102/21
[2022] ZACC 15

Hearing Date: 11 November 2021

Judgement Date: 06 May 2022

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Friday, 6 May 2022 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment of the Labour Court that dismissed an application brought in terms of section 189A(13) of the Labour Relations Act (LRA). That application was brought on the basis that the first respondent had dismissed certain employees after engaging in retrenchment consultations, pursuant to section 189 and 189A of the LRA, which were allegedly flawed. The application for leave to appeal against the order of the Labour Court was dismissed by both the Labour Court and the Labour Appeal Court, and the applicant consequently approached the Constitutional Court for relief on the basis that the Labour Court erred in its interpretation of the relevant law.

In the proceedings before this Court, the applicant is Solidarity, a trade union acting on behalf of its members who are the former employees of the first respondent, Barloworld Equipment Southern Africa (“Barloworld”). The fifth respondent, National Union of Metalworkers of South Africa (NUMSA), was the second applicant in the proceedings in the Labour Court, but has not participated in the appeals process.

On 27 April 2020, Barloworld sent a notice to Solidarity’s members relating to the restructuring of its operations as a result of the impact of Covid-19. Shortly thereafter, Barloworld lodged a request with the CCMA for it to facilitate a joint consensus-seeking process between the affected parties and Barloworld. The goal of that process was to find alternative solutions to restructuring, with dismissal being the last resort. The parties embarked on the consultation process, during which a number of disagreements arose in relation to Barloworld’s proposed restructuring plan. In these proceedings, the most controversial issue pertained to the selection criteria that was proposed, and ultimately adopted, by Barloworld. Notwithstanding Solidarity’s objections to the inclusion of transformation as a component of the selection criteria and its complaint that proper consultation had not taken place in relation to this criterion, Barloworld proceeded to terminate the employment of Solidarity’s members after the consultation period had expired.

Approximately a month after Barloworld began issuing termination notices, Solidarity and NUMSA approached the Labour Court in separate applications alleging procedural irregularities in relation to the consultation process. The two applications were consolidated and the Labour Court dealt with them in one judgment. Solidarity based its application on the ground that Barloworld failed to consult over its selection criteria, which included transformation. Further, Solidarity argued that transformation was an unlawful and unfair selection criterion, and it accordingly sought an order compelling the parties to return to the consultation process.

The Labour Court reasoned that in terms of section 189A(18) of the LRA, the Labour Court “is precluded from adjudicating disputes about the procedural fairness of a dismissal based on the employer’s operational requirements”. The Court noted that there is a misconceived view that the Labour Court does have jurisdiction in such matters pursuant to section 189A(13) of the LRA. The Court held that this view is plainly incorrect because section 189A(13) specifically and narrowly provides for a party to approach the Court where an employer does not comply with a fair procedure. It accordingly held that the Labour Court’s jurisdiction is ousted in matters where it is called upon to adjudicate the procedural fairness of a dismissal based on the employer’s operational requirements. The Labour Court further held that the LRA does not leave the consulting parties without a remedy or permit the employer to do whatever it wishes during the consultation process. Rather, it permits a facilitator to be appointed in order to facilitate a joint consensus-seeking process. In addition, employees retain their constitutional right to strike over issues arising from procedural fairness throughout the consultation process.

The Labour Court concluded that the issues raised did not pertain to Barloworld’s failure to comply with a fair procedure, but rather general issues relating to procedural fairness and, to a large extent, substantive fairness. In dealing with Solidarity’s complaints about the selection criteria, the Labour Court held that the evidence revealed that these complaints related to substance and not form, because they were predicated upon Solidarity’s dissatisfaction with the manner in which the parties consulted on the selection criteria. The Labour Court accordingly held that it was inappropriate for Solidarity to frame this issue as a dispute under section 189A(13), and thus declined to grant the relief sought by Solidarity. The Court further held that the remedy envisaged by section 189A(13) was no longer available since the consultation process had been concluded and the proverbial horse had bolted.

The Labour Court also held that the requirements of law and fairness dictated that an award of costs against Solidarity and NUMSA was apposite in the circumstances, because their applications amounted to an abuse of court process.

Solidarity’s application for leave to appeal to the Labour Appeal Court was dismissed by both the Labour Court and the Labour Appeal Court, on the basis that the application lacked reasonable prospects of success.

Solidarity accordingly sought leave to appeal to the Constitutional Court, and submitted that this matter engages the Court’s jurisdiction as it concerns the proper interpretation of section 189A(13) of the LRA, which implicates the constitutional right to fair labour practices. Further, Solidarity submitted that these issues are not confined to the parties involved, but are relevant to the whole labour force and other future employment relationships. It submitted that a pronouncement by the Constitutional Court that will provide certainty and finality on the interpretation of section 189A(13) is in the public interest and warrants a determination by this Court.

On the merits, Solidarity argued that the distinction drawn by the Labour Court between a “fair procedure” and “procedural fairness” is superficial and unsupported by judicial precedent and the plain wording of the LRA. Furthermore, Solidarity submitted that there was no meaningful consultation on the selection criteria and the criterion of transformation. In argued that the issues it raised fell squarely within the ambit of section 189A(13).

Solidarity also challenged the reasons given by the Labour Court in justifying a costs order. It argued that trade unions are non-profit organisations, now mulcted in costs in a matter where constitutional issues arose and, furthermore, where general unfairness in the process existed and where there was patently no malice or vexatious conduct in bringing the application. Solidarity accordingly sought an order upholding its application for leave to appeal against the Labour Court’s order, and that costs in this matter be costs in the appeal.

Barloworld opposed Solidarity’s application and submitted that this matter does not raise a constitutional issue nor does it raise an arguable point of law of general public importance that ought to be considered by the Constitutional Court. Furthermore, it submitted that the application has no reasonable prospects of success and is, in any event, moot by virtue of the fact that it has been brought too late to obtain the relief envisaged by section 189A(13), which is aimed at restoring the consultation process. It submitted that the application for leave to appeal should be refused.

On the merits, Barloworld argued that Solidarity does not deny that it was consulted on the selection criteria and that the use of transformation as a selection criterion in a retrenchment exercise is not completely outlawed. Barloworld therefore submitted that whether the selection criteria were fair, or were fairly applied, is a matter for determination at a trial on the substantive fairness of the dismissals, and not through the mechanism created by section 189A(13). It further submitted that other arguments raised by Solidarity concern factual issues that do not engage the Constitutional Court’s jurisdiction.

Barloworld argued that the Labour Court’s costs order is unassailable, because that Court provided sufficient reasons for exercising its discretion to award costs in a labour matter.

In a unanimous judgment penned by Tshiqi J, the Court held that this Court’s jurisdiction is engaged because the matter concerns interpretative issues flowing from the application of sections 189 and 189A of the LRA, which issues will undoubtedly impact the labour rights of many South Africans. The Court held that the Labour Court was correct in holding that there was adequate consultation between the parties because Solidarity’s primary complaint relates to the inclusion of transformation as part of the selection criteria matrix and to the fact that there was no agreement between the parties.

The Court held that on the evidence before it, Barloworld genuinely and meaningfully considered the representations made by Solidarity. The Court further held that Solidarity persistently rejected the inclusion of transformation, with the effect that the parties dead-locked. There is no requirement in our jurisprudence requiring that there should be an agreement in consultations. The Court further held that Solidarity could approach the Labour Court to adjudicate on the substantive fairness of its inclusion in the criteria.

The Court further held that the Labour Court erred in drawing a distinction between disputes about procedural fairness and those relating to compliance with a fair procedure.

The Court held that the Labour Court’s costs order was unwarranted and had no basis as the issues raised in the applications before were indeed arguable and did not amount to an abuse of court process.

Accordingly, the Court granted leave to appeal, dismissed the appeal on its merits and set aside the Labour Court’s costs order..

 

The Full judgment  here