Public Newsletter
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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 which asks the question- "Can an employer counter-claim for damages in defending an unfair dismissal claim??" - in light of a recent Labour Court decision to award over R22 million in damages against an organisation's ex CEO. We also discuss three other new judgments: In the first case the LAC rules on selection criteria which are not based on LIFO. The second case looks at the appropriate way in which disproportionate income differentials can be challenged. The third case rules on the correct procedure for 'deemed' employees to challenge terms of employment.
This public newsletter is a free edited version of the subscriber newsletter.
RECENT CASES
"Fair and objective" selection criteria
In Umicore Catalyst South Africa (Pty) Ltd v National Union of Metalworkers of South Africa and Others (PA3/23) [2024] ZALAC 37 (29 August 2024) the employer departed from the LIFO (Last in First Out) criterion for retrenchment and tried to defend the use of the results of a behavioural assessment and a questionnaire as the criteria, which it hoped would identify the employees who could best work independently and without supervision. The Labour Appeal Court was tasked with deciding whether these criteria were fair.
Umicore, a manufacturer of catalytic converters, acquired the business of Delphi (Pty) Ltd as part of a global acquisition. It operated from premises in Gqeberha leased by Delphi as well as at its own premises. Umicore subsequently restructured and relocated the Delphi operations to its own premises, which resulted in a duplication of functions that affected 52 positions.
Umicore embarked upon a lengthy pre-retrenchment process in accordance with s 189A of the LRA, which included various meetings facilitated by a CCMA commissioner. The 52 employees that were retrenched worked in various departments. In the case of laboratory employees, Umicore departed from the 'last in, first out' (LIFO) selection criteria that it adopted in other departments, and introduced what was termed a 'laboratory assessment'. A panel comprising the laboratory manager and two senior managers from other departments was appointed to conduct behavioural assessments.
Laboratory employees were invited to participate in the assessments, but the four employees who challenged the fairness of their retrenchment before the Labour Court refused to do so. The panel conducted the assessment in their absence and, based on the outcome, included them in the employees to be retrenched. For the employees who refused to complete the assessment, management's evidence was that the panel "had to use as best as possible our knowledge or prior knowledge, our experience, based on what we observed about each incumbent ... and put in our answer down for the incumbents .."
CEPPWAWU, who represented the employees at the time, objected to the assessment during the consultation process. In response, Umicore decided to include three additional considerations in the form of individual performance appraisals, disciplinary records, and attendance records for the previous two years, each to be afforded the same weight as the results of the assessment. Ultimately, however, there was no agreement on selection criteria and Umicore proceeded with the assessments unilaterally.
NUMSA, who represented the employees in the court proceedings, accepted that the relocation of operations resulted in a duplication of functions and presented a fair economic rationale for retrenchments, but complained that Umicore had acted opportunistically by deliberately selecting employees who had historically earned higher salaries for retrenchment, which Umicore denied. NUMSA also contended that the assessments were unfair, based on their subjectivity and because they were linked to Umicore's ulterior motive.
Umicore's justification for using the assessments was that the employees to be retained would be required to work independently and, on occasion, without supervision. The behavioural assessment questionnaire afforded employees the opportunity to highlight aspects that might enhance their prospects of retention, and had posed the questions covering the importance of (1) a strong analytical mind in the laboratory; (2) multi-tasking/coordination of own work; (3) good communication skills and handling 'difficult' colleagues; (4) initiative / innovation; (5) enthusiasm and determination to achieve objectives; and (6) attendance and unexpected absences.
The Labour Court found the dismissals to be substantively unfair and ordered the reinstatement of the employees. The matter was referred on appeal to the Labour Appeal Court.
Read more (Worklaw subscriber access only)
Disproportionate income differentials
In Association of Mineworkers & Construction Union v Chamber of Mines of SA & others (2024) 45 ILJ 1954 (LAC) the union brought an unfair discrimination case on the basis of disproportionate income differentials in a collective agreement. The LAC had to balance the remedy provided in s 27 of the EEA to deal with income disparities against the remedies in an unfair discrimination claim.
Following the conclusion of the 2015-2018 collective agreement between majority unions and employers in the gold mining sector and the subsequent extension of the agreement to non-parties, AMCU referred a discrimination dispute to the CCMA. The Union claimed the collective agreement failed to address the severe income disparity between different categories of employees in breach of s 27 of the Employment Equity Act, which amounted to unfair discrimination, and it continued to perpetuate income inequality over the three-year period.
This is a complex case involving appeals and counter appeals on a number of technical issues which we have chosen not to deal with, and we have focused on the Labour Appeal Court's comments on the remedy to be used in addressing a claim of income differentials.
On appeal the LAC held that section 27 of the EEA is distinct from a claim for discrimination under s 6(1), in that it is aimed at addressing income disparities across the workplace and provides for a clear process by which to do so.
Read more (Worklaw subscriber access only)
Choosing which procedure to use
In Bata SA (Pty) Limited and Another v SACTWU obo Members and Others (DA4/2022) [2024] ZALAC 15; (2024) 45 ILJ 1541 (LAC); [2024] 8 BLLR 866 (LAC) (23 April 2024) the Labour Appeal Court was required to determine whether a TES employee "deemed" to be an employee of the TES client, could bring a claim for being treated less favourably than the client's other employees and claim backpay under section 198D of the LRA.
Scribante Labour Consultants operates as a temporary employment service (TES) and Bata SA (Pty) Ltd was its client. A number of employees were procured by Scribante to provide services to Bata, including members of SACTWU. SACTWU referred a dispute to the CCMA in terms of section 198D of the LRA regarding the interpretation and application of s 198A(5), which says a TES employee deemed to be an employee of the client must be treated "on the whole not less favourably" than a client's employee doing similar work, unless there is a justifiable reason for different treatment.
The Union contended that its members had been placed with Bata for a period exceeding three months and thus were 'deemed' to be employees of Bata under section 198A(3)(b). It further contended that its members were being treated less favourably than the other employees of Bata in respect of their wages and conditions of employment, and argued that, to the extent that a monetary value could be determined in respect of the disparity in treatment, the commissioner was empowered in terms of s 198D to quantify such monetary amount and to make a monetary award to such an effect.
Bata, on the other hand argued that s 198D, which provides for a dispute arising from the "interpretation or application" of sections 198A, 198B and 198C, did not grant the commissioner the power to quantify the financial effect of alleged disparate treatment or to make a monetary award as contended by SACTWU.
Read more (Worklaw subscriber access only)
ARTICLE: : Can an employer counter-claim for damages in defending an unfair dismissal claim?
by Prof Alan Rycroft
Case law is littered with examples of employers suffering significant damages as a result of employees' wrongdoing, and not being able to recover those losses. Section 34(1) of the BCEA effectively provides that an employer may not make any deduction from an employee's remuneration except when the employee agrees in writing, or unless permitted in terms of a law, a collective agreement, a court order or an arbitration award. There are further restrictions in section 34(2):But can the employer counter-claim for damages resulting from wrongdoing, in the process of defending an unfair dismissal dispute? This is what happened in the case of Mogale and Another v National Health Laboratory Services (JS958/2019) [2024] ZALCJHB 362 (13 September 2024), with the employer suing the employee for R236 million for breach of contract.
The facts were that Ms Mogale was appointed as Chief Executive Officer (CEO) of the NHLS on a 5-year fixed term contract. Ms Mogale was suspended from her services at the NHLS, found guilty on various charges and was summarily dismissed. She subsequently referred an unfair dismissal dispute to the CCMA and, after conciliation failed, requested that the dispute proceed to arbitration.
Before arbitration could happen, the NHLS brought an application to the Director of the CCMA under section 191(6) of the LRA, consolidating two disputes and referring them to the Labour Court. The NHLS counter-claimed for damages of R236 million it said it suffered as a result of Ms Mogale's wrongdoing.
Read more (note - only available to Worklaw subscribers)
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Bruce Robertson
October 2024
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