Recent labour law decisions (August 2006)

Talita Laubscher of Bowman Gilfillan Attorneys published these case commentaries in De Rebus, the South African Attorney’s journal.

Recent labour law decisions

Talita Laubscher of Bowman Gilfillan Attorneys published these case commentaries in De Rebus, the South African Attorney’s journal.


Employer entitled to retrench all staff and use labour brokers instead.

In the very recent case of Forecourt Express (Pty) Ltd v Abram Monyelo & 54 Others case no JA52/03 (LAC) (still to be reported), Forecourt Express (a subsidiary of the Imperial Group) bought a business as a going concern, in circumstances regulated by Section 197 of the LRA. Its main objective in acquiring the business was to secure a particular commercial contract with a key customer of the business. Its intentions, expressed from the outset and even prior to the effective date of the sale, were to restructure the business, retrench all staff, and service the relevant customer by applying its own distinct business methodology using labour brokers and outsourcing contractors.

In a majority judgment of the Labour Appeal Court, written by the Judge President (Zondo JP) the Labour Appeal Court found that Forecourt Express was entitled to apply its own business methodology to servicing the relevant customer, even if this meant retrenching all staff and using labour brokers instead. The Court was, perhaps, influenced by the fact that detailed consultations were held with the trade union representing the workers concerned, and a number of jobs were saved when the employer modified its proposals during the consultation process. It is too early to suggest that as a general proposition an employer may fairly retrench its employees to replace them with labour brokers. That proposition would certainly be very strongly resisted by trade unions. The Forecourt Express judgment, however, appears to represent a significant shift in thinking in the Labour Appeal Court. Because of its significance it may yet find its way to the Supreme Court of Appeal.

Employer obliged to consult with trade union before retrenchment

The appeal in United National Breweries (SA) Ltd v Khanyesa & Others [2006] 4 BLLR 321 (LAC) concerns the interpretation of s189(1) of the Labour Relations Act (LRA). The first respondent, Khanyesa, was employed by United National Breweries as a sales representative. He was a member of the Food & Allied Workers Union (FAWU) with which United National Breweries had a collective agreement. On 3 March 2001 Khanyesa was retrenched by United National Breweries. United National Breweries consulted with Khanyesa but did not consult with FAWU in relation to Khanyesa’s retrenchment. Subsequent to the retrenchment a dispute arose on whether the retrenchment was procedurally fair in light of the fact that United National Breweries had not consulted with FAWU. It was common cause that the retrenchment was substantively fair.

In terms of s141(1) of the LRA, the dispute was referred to arbitration under the auspices of the CCMA. The commissioner held that United National Breweries was under an obligation to consult with FAWU before Khanyesa’s retrenchment and because United National Breweries had failed to do so, held that the retrenchment was procedurally unfair. United National Breweries took the matter on review to the Labour Court, but Ndlovu AJ dismissed the application. United National Breweries thereupon appealed to the Labour Appeal Court.

The Labour Appeal Court explained that s189(1) provides for a hierarchy of consulting parties: Firstly, in terms of s189(1)(a), the employer should consult with “any person whom the employer is required to consult in terms of a collective agreement”. If there is no such collective agreement, the employer should consult with a workplace forum and a registered trade union whose members are likely to be affected. If there is no such workplace forum, in terms of s189(1)(c), the employer must consult with “any registered trade union” whose members are likely to be affected by the proposed retrenchments. Lastly, if there is no such trade union, the employer should consult with the employees that are likely to be affected.

United National Breweries and FAWU had a collective agreement which required United National Breweries to consult with it when it sought to retrench “members” of FAWU. The agreement did not define “members” but it defined “employees” as “all permanent employees engaged in Production, Distribution, Packaging and Engineering with the exclusion of management”. Khanyesa, as a sales representative, did not fall within this definition. For this reason, the court held that s189(1)(a) did not apply and that United National Breweries was not, by virtue of this section, required to have consulted with FAWU. However, the fact that Khanyesa was not entitled to union representation in terms of the collective agreement did not mean that FAWU should not have been consulted. It had to in terms of s189(1)(c).

In the circumstances, the court dismissed the appeal and confirmed that Khanyesa’s retrenchment was procedurally unfair. Khanyesa was awarded 12 months’ remuneration in compensation.


Complaint by a passenger that one of its employees solicited a bribe from his party at the airport.

In Swiss South Africa (Pty) Ltd v Louw NO & Others [2006] 4 BLLR 343 (LC) the court considered the review of an arbitration award that the dismissal of the third respondent-employee was unfair. In this case, Swiss South Africa had received a complaint by a passenger that one of its employees solicited a bribe from his party. The passenger alleged that their party’s luggage was overweight but that the employee agreed to waive the necessary charges. However, when the departing party arrived at the boarding gate, the employee asked whether they “had anything” for her. The passenger thereupon gave her $120.

The employee was charged with “extortion or bribery or dishonesty”. Her version was markedly different: she said that the records showed that the luggage was not over the weight limit and that, at the boarding gate, one of the group gave her $100, which she refused to accept. When she asked them what it was for, they told her it was for “friendly service”. She thereupon told them that she was only doing her job for which she would be paid, and that they then pushed another $20 into her hand. The employee tried to call them back, but they had already rushed away. The employee said that she did not want to make a scene by running after them and returning the money. The employee accepted that Swiss South Africa had a policy in place in terms of which they are not allowed to accept tips from passengers. It was her intention to declare the money to her supervisor, but she forgot to so.

The passenger that complained about the incident was not called as a witness, either at the disciplinary inquiry or at the arbitration, and the commissioner accordingly held that the evidence of the incident contained in the passenger’s e-mail was hearsay and that he could not attach any weight to it. He accordingly held that the employee’s dismissal was both substantively and procedurally unfair.

Swiss South Africa took the matter on review, but the court agreed with the commissioner. The Judge applied s3 of the Law of Evidence Amendment Act, 1998 and held that the circumstances in this case were not such that the hearsay evidence could be admitted. In particular, he held that there was no evidence before the commissioner that Swiss South Africa had tried to ascertain from the passenger whether he would be available to give evidence. There was no evidence that the passenger would not return to South Africa in the near future or that he lived abroad. The prejudice suffered by the employee far outweighed the prejudice to Swiss South Africa.

In the circumstances, the court held that the admission of the hearsay evidence was not in the interest of justice and that the commissioner had not committed a reviewable irregularity in rejecting it. The application for review was dismissed with costs.

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