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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article on the right to severance pay when an employee declines offers of alternative employment. We also look at three new cases: The first looks at what constitutes a 'meaningful joint consensus seeking process' for retrenchments under section 189 of the LRA. The second deals with the requirements for a fair ultimatum during an unprotected strike. The third case relates to during an unprotected strike. The third case relates to, and also has some interesting observations on the test for constructive dismissal.

This public newsletter is a free edited version of the subscriber newsletter.


What constitutes a 'meaningful joint consensus seeking process' in a retrenchment under section 189 of the LRA?

The employer in National Union of Metal Workers of South Africa (NUMSA) and Others v Feltex Automotive Trim (Pty) Ltd (JS413/09) [2013] ZALCJHB 107 (5 June 2013) manufactures boot trimmers for supply to motor companies. Around 2008, the motor industry suffered heavy losses as a result of the global economic recession, resulting in the company's main customers reducing their motor vehicle production. The company then also reduced production. Evidence at trial was that sales of the company's car components to car manufacturers were so badly affected by the recession, that it had no alternative but to embark on a cost cutting exercise to survive.

The company initiated retrenchment consultations with the union. The union submitted that the posts in question were not redundant. The union demanded that the employees be retained and in the event that the company proceeds to retrench them, it should be on the following terms:

  • They should be redeployed to the positions occupied by labour broker employees, retaining the same rates of pay;
  • If they were retrenched, they must be given first preference when vacancies arise within 36 months on no less favourable terms; and
  • each employee should be paid an ex-gratia amount of R350,000 over and above their severance package.

The Company submitted that its financial woes meant that retaining the retrenched employees' rates of pay and the R350,000 ex-gratia payment were unaffordable. The Company counter-proposed to employ the dismissed employees in the positions occupied by the labour broker employees, at the rates paid to those employees. The union rejected this offer and the employer rejected the union's suggestions. After 3 meetings and an impasse having been reached, the employer retrenched the employees. They were paid severance pay of 2 weeks' pay for each year of service.

After conciliation at the bargaining council failed, the matter was referred to court for determination. The Labour Court found on evidence presented that the company did engage in a genuine joint consensus seeking process on all the issues required under the section. The employees' application for reinstatement was dismissed. The LC said that the test for whether there has been genuine consultation prior to retrenchment, is whether the employees and the union have been given a fair opportunity to suggest ways in which job losses might be avoided or the effects of retrenchment ameliorated. The employer is not bound to accept suggestions; they must merely be seriously considered. Consultation will not necessarily be held to be a mere pretence if the employer approaches the matter with a pre-disposition to a particular solution: the test is whether management retained a sufficiently open mind to be persuaded by practical and rational alternatives.

The requirements for a fair ultimatum during an unprotected strike

The company in Pule and Others v Mvelatrans (Pty) Ltd t/a Bojanala Bus Services (JS 535/2010) [2013] ZALCJHB 84 (23 May 2013) provided a commuter bus service in the North West Province in terms of an agreement with the North West Government. This included penalties for failure to provide the scheduled services. The employees' were dismissed after failing to comply with an ultimatum issued following three days of unprotected industrial action in November 2009. The employees contended that their dismissal was both procedurally and substantively unfair, and sought reinstatement.

The strike followed a meeting about wages and working conditions, including dissatisfaction with a company share pay out. The company had recently been sold, and the sale agreement provided for 15% of shares to be held in trust for employees. Employees had complained that the share arrangement did not benefit them, and the company had then purchased these shares and paid out their values to employees. Employee dissatisfaction arose from rumours that the payment was not in full value for the shares.

Bus drivers and other employees went on strike, demanding feedback on their complaints. They also submitted further demands, including wage increases, allowances, refund on leave days and a demand for new management. Management would not discuss their demands until employees returned to work. Employees refused and continued blocking the entrances to depots. Although the employees had recently resigned from SATAWU and TAWUSA, management met with the unions but were advised that employees were not willing to listen to them.

The company obtained an urgent interdict in the Labour Court against the unions, which they did not oppose, instead sending an email to the company indicating that they distanced themselves from the industrial action. The Court order interdicted employees from participating in the unprotected strike, and an ultimatum were read out to employees by SAPS present. In terms of the ultimatum, employees would be dismissed if they did not return to work. A collective disciplinary enquiry was held, at which employees attempted to be represented by their attorney. When the chairperson would not allow this, employees refused to participate and the hearing was held in their absence. They were dismissed following the hearing.

In the Labour Court, the employees challenged the substantive fairness of their dismissal on various grounds, including that some employees were not aware of the ultimatum whilst others complied it, they did not have sufficient time to reflect on it, and not all employees were dismissed for not complying with it. On procedural grounds, the employees submitted that they were not allowed to be represented at the hearing by their attorney, despite the notice to attend stating they were allowed "a representative of their choice".

Regarding the ultimatum, the LC confirmed that the purpose of an ultimatum should be an endeavour in good faith to induce strikers to return to work. It should provide employees with sufficient time to reflect on the matter and seek advice on whether or not to return to work and what the consequences would be if they did not. In this case the timing of the ultimatum was disputed, but employees had at most 2 hours to reflect before being dismissed. In fact, for some employees the notice period for returning to work may have already lapsed at the time when the ultimatum was read.

The LC held that the time given for the employees to consider compliance with the ultimatum was insufficient and did not afford them a proper opportunity to consider whether or not they should return work. They should have been have afforded the opportunity to go back home and discuss with their families the implications of refusing to obey the ultimatum.

The LC found the dismissals to be procedurally fair but substantively unfair. Whilst one employee who had been on sick leave at the time of the strike was reinstated retrospective to her dismissal, other employees were only reinstated 7 months retrospectively despite being dismissed nearly 4 years ago. This was due to their conduct in not attending the disciplinary hearing and in causing delays.

The LC accepted that the question of allowing legal representation at disciplinary hearings lies within the discretion of the chairperson of the hearing, and concluded that there was no evidence challenging the reasonableness of this discretion exercised by the chairperson.

Can an employer compel an employee to work in an 'acting' capacity?

In Majatladi v Metropolitan Health Risk Management and Others (C 798/12) [2013] ZALCCT 15 (5 June 2013) Ms Majatladi, a medical doctor, resigned from Metropolitan Health Risk Management in April 2012 and claimed constructive dismissal. She had been employed by them since 2008. Having lost her case at arbitration, this was taken on review to the Labour Court.

In November 2011 a senior manager in another business unit resigned and Ms Majatladi agreed at short notice to act as head of that department whilst the recruitment process was underway. The parties signed a contract confirming that she would be seconded to this post in an acting capacity from 15 November 2011 to 31 January 2012, and she was paid an additional R10 000 per month as an acting allowance. Shortly before the end of this acting period, she e-mailed management advising them that she would not continue acting beyond this period and would be returning to her previous position. Management attempted to persuade her to continue in the acting position and intimated she would be in danger of losing her job if she did not do so. When she continued to refuse, she was suspended for 'refusing to obey a reasonable instruction' relating to her acting position and subjected to disciplinary proceedings. She then lodged a grievance about her suspension and pending disciplinary proceedings.

At her disciplinary hearing, Ms Majatladi was charged with gross insubordination 'in that she refused to obey a reasonable instruction from the company to continue acting', and conduct unbecoming a person of her status and position. She was found not guilty on the gross insubordination charge due to the acting agreement having a specific timeframe attached to it, but guilty of the 'conduct unbecoming' charge and given a final warning. Nothing came of her grievance.

She unsuccessfully appealed against her final warning and her grievance was escalated to the chief executive officer, who found that management had acted fairly. Despite the outcome of the disciplinary hearing, management continued to instruct her to act as HOD until the position had been filled and the required hand-over period completed. She again refused and was again suspended and subjected to disciplinary proceedings, despite the post by this stage having been filled. Despite writing to the company complaining of continued harassment and victimisation, she received no assistance. She resigned a day before the next disciplinary proceedings were due to commence.

This judgment is important for the test for review on jurisdictional matters. The Labour Court confirmed that when an employee alleges constructive dismissal, that question goes to jurisdiction, and the review test of 'reasonableness' set out in Sidumo does not apply. The court has to decide whether the commissioner was right or wrong in finding that there was no dismissal. And the test for constructive dismissal is to look at the employer's conduct as a whole and determine whether its effect, judged reasonably and sensibly is such that the employee cannot be expected to put up with it. The test does not require that the employee has no choice but to resign, but only that the employer should have made continued employment intolerable.

The court found that the arbitrator was wrong in finding that the employee had not been constructively dismissed. Whilst criticising the employee for resigning before the further disciplinary hearing and not using that opportunity to present her case, the court stated that this was one of those exceptional cases "where the hearing was so obviously unfair that it amounted to the proverbial straw that broke the camel's back". The court found that the situation had become intolerable for the employee. She was again being charged with the very same allegation she had already been found not guilty of. The repeated instruction from management to continue in the acting position amounted to a unilateral change to her employment contract as opposed to a mere change in work practices. This was a breach of contract and illegitimate.

The court awarded Ms Majatladi 6 months remuneration as compensation. The reason it didn't award the maximum compensation of 12 months appears to have been due to her resigning before the disciplinary hearing and not using that opportunity to present her case.


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Bruce Robertson
July 2013
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