Kadiaka v Amalgamated Beverage Industries (1999) 20 ILJ 373 (LC)

Principle:

Discrimination may be arbitrary if the reason is not a commercial reason of sufficient magnitude that it outweighs the rights of the job-seeker and is not morally offensive. Where there is a bona fide commercial or operational reason, a refusal to employ ex-employees of a rival company is not unfair.

Facts:

The respondent, ABI, the local bottler of Coca-Cola products, and its competitor, New Age Beverages, the local bottler of Pepsi-Cola products, had been involved in a bitter battle for market supremacy when Pepsi-Cola tried to enter the South African market. ABI won, New Age Beverages ceased production, was liquidated and taken over by ABI. The board of ABI took a decision not to employ any ex-New Age employees for the following reasons: (1) To maintain the morale of those ABI employees who had remained loyal and had not succumbed to lucrative offers by New Age to entice them away. (2) Ex-New Age employees would not have the 'passion for the Coca-Cola brand' which was integral to the success of ABI. (3) An inspection of New Age books disclosed extensive fraud and theft throughout the organization, and ABI felt it would be unable to distinguish between honest and dishonest employees. It also did not wish to use the services of an employee of 'a poor performing competitor'.

The applicant, a sales representative employed by New Age, applied for employment in a similar capacity with ABI. ABI refused to employ him. The applicant complained to the Labour Court that ABI had committed a residual unfair labour practice as envisaged by item 2(1)(a) read with item 2(2) of schedule 7 to the LRA 1995.

The court stated that generally an employer is at liberty to employ any person it may wish to. This flows from the management prerogative. This prerogative has been limited, in our society, to undo the injustice of the past and to provide equal opportunities for all persons without distinction, particularly but not exclusively as regards immutable characteristics such as race and gender. Interim provision has been made to address unfair discrimination through the residual unfair labour practice contained in item 2 of schedule 7 to the LRA 1995.

The court explored all the elements of the residual unfair labour practice concept as set out in item 2(1)(a) read with item 2(2)(a) to determine whether ABI's refusal to consider the applicant for a position because he was a former employee of New Age constituted discrimination on arbitrary grounds.

Unfair discrimination on an arbitrary ground takes place when the discrimination is for no reason or is purposeless. Even if there is a reason, the discrimination may be arbitrary if the reason is not a commercial reason of sufficient magnitude that it outweighs the rights of the job-seeker and is not morally offensive. The discrimination must be balanced against societal values, particularly the dignity of the complainant and a society based on equality and the absence of discrimination.

The court was satisfied, on the facts, that ABI had made out a case that the refusal to hire ex-New Age employees made commercial sense. This was so because the ban was not vindictive. It was done to preserve the morale of ABI's workforce, to discourage turncoats, to reward loyalty, to ensure commitment to the brand, to assure customers that ABI employees believed in Coke and all that it stood for and to avoid the taint of corruption. It was also for a limited period.

The court therefore found that the refusal by ABI to employ former New Age employees for a limited duration did not constitute an unfair labour practice as contemplated by item 2(1)(a). It was not an arbitrary refusal, for there was a bona fide commercial or operational reason for its being in place. It did not perpetuate any of the historical grounds of discrimination; it was not unfair or inimical to the values of our society as expressed in the Constitution; it did not infringe the dignity of the applicant to be told that his services were not required on account of his being an active member of a former rival. The labour practice, although contrary to the interests of the applicant, was not grossly unfair towards him. He was a casualty of the commercial war.

The court accordingly dismissed the application with costs.

Extract from the judgment:

Landman J:

[43]   In my view, without attempting to be exhaustive, unfair discrimination on an arbitrary ground takes place where the discrimination is for no reason or is purposeless. But even if there is a reason, the discrimination may be arbitrary if the reason is not a commercial reason of sufficient magnitude that it outweighs the rights of the job-seeker and is not morally offensive. The discrimination must be balanced against societal values, particularly (as emphasized repeatedly by the Constitutional Court) the dignity of the complainant and a society based on equality and the absence of discrimination. I leave affirmative action aside. See the comments on this in George v Liberty Life Africa Ltd (1996) 17 ILJ 571 (IC).

[44]   I think I can safely say, on the facts of this case, that ABI makes out a case that the refusal to hire ex-New Age employees makes commercial sense. This is so because the ban is not vindicative. It is done to preserve the morale of ABI's workforce, to discourage turncoats, to reward loyalty, to ensure commitment to the brand, to assure customers that ABI employees believe in Coke and all that it stands for and to avoid the taint of corruption. It is also for a limited period.

[45]   Now it might be said that former enemies can work together. However, that is not the issue. The issue is whether ABI has committed an unfair labour practice by refusing to consider (for the time being) an application for employment by the applicant on the grounds of his having worked for New Age.

[46]   Unfortunately I do not know how many persons comprise the group to which the applicant belongs. I do not know how many former Pepsi employees are concerned. Mr Moshoana submitted that there were 2 400. I do not know whether this is the case. There were about 240 employees affected by the liquidation who might have wanted to rely on s 197 of the Act and be regarded as ABI's employees. It was incumbent on the applicant to place these facts before me. It makes my task more difficult than it already is not knowing the size of the group in question. I do not know the composition of the New Age workforce. For instance, how many sales representatives are there?

[47]   It was not clear that the war had ended on 15 July 1995. Mr Parker attested that until February 1998 there was speculation that New Age would be revived by a Middle East consortium or that the Pepsi-Cola company would itself enter the market. It cannot be saidthat ABI was unfair at this stage in placing the bar on employing ex-New Age employees. The real possibility existed that their incorporation could damage morale, and doubly so if Pepsi was revived.

[48]   The interest of the applicant, being a member of the group, must be factored into the consideration whether an unfair labour practice has been committed. The applicant enjoys very little bargaining power. He is unemployed. He is denied access to one of the largest bottlers of soft drinks. He has other skills than those of a sales representative. He has had a career in public relations; although peripheral this may not be ignored. He is prejudiced to a degree by the decision not to consider him even though without the ban he did not measure up to ABI's criteria for the job. I do not think that this ban constitutes an unfair labour practice especially where there are other opportunities for sales representatives, although I am mindful of the biting effect of the current economic climate.

[49]   I am of the view that the refusal by ABI (Coke) to employ former New Age (Pepsi) employees for a limited duration does not constitute an unfair labour practice as contemplated by item 2(1)(a) of the Act. It is not an arbitrary refusal, for there is a bona fide commercial or operational reason for its being put in place. It does not perpetuate any of the historical grounds of discrimination which cry out for a remedy. I do not regard it as unfair or inimical to the values of our society as expressed in the Constitution. It does not infringe the dignity of the applicant to be told that his services are not required on account of his being an active member of a former rival, a rival which, I might add, had not been decisively vanquished at the stage the ban was imposed. The labour practice, although contrary to the interest of the applicant, is not grossly unfair towards him; he is a casualty of the commercial war. It is fair to the employer. It is not unfair to society at large.