National Union of Metalworkers of South Africa v Fry's Metals (Pty) Ltd (judgment given by SCA 20 April 2005)
Where an employer retrenches employees because they refuse to work under amended terms and conditions this will not be an automatically unfair dismissal in terms of s 187(1)(c) of the LRA if the employee intended the dismissals to be final. Only where the employer intends to reverse the dismissals once the employees have agreed to the changes in terms of employment will this amount to an automatically unfair dismissal.
The employer, on the advice of consultants, wished to introduce changes in production methods to enhance productivity at the company. When the workers refused to accept the changes, the company gave them notice that they would be retrenched. NUMSA obtained an interdict against the retrenchments in the Labour Court in October 2000, on the basis that they concerned a 'matter of mutual interest' which had to be bargained between employer and employee and for which the employer could not take recourse to dismissal. The company argued that the proposed dismissals were justified for 'operational reasons' relating to its productivity and viability.
The Labour Court granted the interdict, but the LAC set it aside, holding that dismissals concerning terms and conditions of employment were specially protected only where the employer used dismissal as a tool to compel employees to agree to changes. Where the dismissal was final, and intended to be final, the employer was empowered to dismiss provided it could show justification for 'operational reasons'. The LAC judgment in effect enhanced employers' power of dismissal in disputes about terms and conditions of employment.
The Supreme Court of Appeal upheld the LAC finding.
Extract from judgement
[at para 56] ... there is a distinction between a dismissal for a reason based on operational requirements and a dismissal the purpose of which is to compel an employee or employees to accept a demand in respect of a matter of mutual interest between employer and employee. The distinction relates to whether the dismissal is effected in order to compel the employees to agree to the employer's demand which would result in the dismissal being withdrawn and the employees being retained if they accept the demand or whether it is effected finally so that... the employee may replace the employees permanently with employees who are prepared to work under the terms and conditions to meet the employer's requirements.
 ...Dismissals intended to be and operating as final - not, in other words, reversible on acceptance of the demand - can thus never have as their reason 'to compel the employee to accept' that demand. They will therefore not be automatically unfair. In such cases, the only factual enquiry confronting a court is the employer's reason for effecting the dismissal: once compulsion to accept the disputed demand (with ensuing reversal of the dismissal) is excluded, no further enquiry into the nature or categorisation of the demand is required.