Abrahams v Drake & Scull Facilities Management (SA) (Pty) Ltd (LC1105/10 dated 11 November 2011)
An employer may not unilaterally implement a change to terms and conditions of employment. To lawfully make changes, the employer must either negotiate an agreement, failing which it can use the lock out or retrenchment mechanisms in the LRA.
Facts:
The employer realized that a number of employees who were doing the 'same work' were being paid considerably less than an employee with more than 30 years' service. For that reason the employer decided that it was necessary to 'bring the employee into line'.
The employer, after consulting with an employee, unilaterally reduced the employee's monthly salary by about 75%. The employee refused to accept the change but continued to tender her services and was allowed to continue working despite only being paid the reduced amount. The employee referred a dispute to the CCMA claiming a unilateral change of conditions (section 64(4) of the LRA) but the dispute was not resolved at the conciliation stage.
The employee applied to the Labour Court for interim relief pending a final order ordering the employer to restore and comply with the terms and conditions of her employment contract and pay her the income she had lost.
The Labour Court granted an order in those terms after deciding that it was unlawful, impermissible and unfair for the employer to have unilaterally changed her contract of employment. The judgment says that the employer "could have embarked on a process in terms of s 189 of the LRA; but it elected not to do so, and nor did it follow the lock-out route in terms of section 64".
Extract from the judgment:
[39] Jafta AJA succinctly and with respect correctly set out the relevant legal principles as follows:
'An employer who is desirous of effecting changes to terms and conditions applicable to his employees is obliged to negotiate with the employees and obtain their consent. A unilateral change by the employer of the terms and conditions of employment is not permissible. It may so happen, as it was the position in the case, that the employees refuse to enter into any agreement relating to the alteration of their terms and conditions because the new terms are less attractive or beneficial to them. While it is impermissible for such employer to dismiss his employees in order to compel them to accept his demand relating to the new terms and conditions, it does not mean that the employer can never effect the desired changes. If the employees reject the proposed changes and the employer wants to pursue their implementation, he has the right to invoke the provisions of s 189 and dismiss the employees provided the necessary requirements of that section are met.[40] This dictum restates the principle that an employer may not unilaterally implement a change to terms and conditions of employment which is exactly what the respondent did in this case.
The fact that the dismissal came about after the employees' rejection of the proposed changes cannot affect the fairness of the dismissal if the employer established that it was effected for a fair reason relating to his operational requirements and not in order to compel the employees to accept the proposed changes. The prohibition in s 187(1)(c) cannot apply to it as long as it was effected for a purpose other than to compel the employees to accept the employer's demand. In Chemical Workers Industrial Union v Algorax (Pty) Ltd (2003) 24 ILJ 1917 (LAC) Zondo JP emphasized that what is most important is to determine the purpose of the dismissal. The learned judge president stated at para 37:
'Such an employer may then dismiss the employees for operational requirements in order to get rid of them permanently and employ a new workforce that will be prepared to work in accordance with the needs of his business. In such a case the employer will be dismissing the old workforce because the contracts of employment he has with them can no longer properly serve his operational requirements. That was the nature of the dismissal that the employer effected in TAWU & others v Natal Co-operative (Pty) Ltd (1992) 13 ILJ 1154 (D) as well as in Fry's Metals (Pty) Ltd v NUMSA & others (2003) 24 ILJ 133 (LAC). However, in a case where it requires the working of short-time, such as has been referred to above, the employer could take the attitude that for certain reasons such as their experience and skills he does not want to get rid of his workforce permanently but wishes to retain them and for that reason dismiss them not for the purpose of employing others in their position permanently but for the purpose of compelling them to agree to work short-time. If he did that, he would be hoping that the implications and consequences of dismissal would be such that the employees would feel they should rather agree to the employer's demand and face such consequences. Under the repealed Labour Relations Act 28 of 1956 (the old Act), such a dismissal was permitted. Under the current Act it is not permitted and it is automatically unfair. From this it must be abundantly clear that the existence of valid operational requirements does not prevent a dismissal being effected for the purpose contemplated by s 187(1)(c) . What is most important is to determine what the purpose of the dismissal is.'
[41] The Supreme Court of Appeals again restated these principles in Fry's Metals. Following the judgment in Fry's Metals, of course, the respondent could have embarked on a process in terms of s 189 of the LRA; but it elected not to do so, and nor did it follow the lock-out route in terms of section 64. The unilateral change was unlawful. It was also unfair. I can see no reason why I should exercise my discretion not to award specific performance.