With retrenchments becoming more frequent across the private sector due to structural challenges, the labour market normalising after the COVID-19 pandemic and South Africa edging into a recession, employers need to be aware of what they are obliged to do – and not do.
Sections 189 and 189A of the Labour Relations Act, 1995 ("LRA") set out the legal framework for terminating employment based on an employer's operational requirements. Here, "operational requirements" are defined as being those based on the economic, technological, structural or similar needs of an employer.
According to section 189 of the LRA when an employer considers dismissing an employee based on its operational requirements, it must consult with the employee or the employee's representative. In addition, it must disclose in writing all relevant information that will allow the employee or the employee's representative to engage effectively in the consultation process that must precede the termination of employment.
Section 16 of the LRA, which provides a process for compelling an employer to disclose relevant information, also applies to the section 189 consultation process. The process involves referring a dispute to the CCMA which will first attempt to settle the dispute by conciliation. If this fails, the dispute can be referred to arbitration.
Case Study: Andrew McDonic and Tourvest Holdings (Pty) Ltd
In this matter, the employer issued a notice in terms of section 189(3) informing the employee that it was contemplating his retrenchment in light of its decision to restructure its Executive Committee.
During the consultation process, the employee requested the disclosure of certain information by the employer. Unsatisfied with the information and documents received from the employer, the employee referred a section 16 dispute to the CCMA dealing with the employer's alleged failure to disclose the requested information. The section 16 dispute remained unresolved at conciliation and the employee referred the dispute to arbitration.
The consultation process continued and the parties could not reach consensus on the alternatives to the employee's dismissal. The employer subsequently retrenched the employee prior to the arbitration of the section 16 dispute. The employee then referred an unfair dismissal dispute to the CCMA. The employee did not withdraw the section 16 dispute once he was dismissed.
At the arbitration of the section 16 dispute, the employer questioned the CCMA's jurisdiction to entertain the disclosure of information dispute on the basis that the consultation process between the employer and the employee had already been concluded and the employee was retrenched prior to the finalisation of the section 16 dispute. Furthermore, the CCMA does not have the power to force the parties to re-open the consultation process.
The employee argued that he was entitled to the information requested because section 32 of the Constitution of the Republic of South Africa, 1996 provides that everyone has the right of access to any information that is held by another person and that is required for the exercise or protection of any rights.
Further, the employee argued that the employer cannot circumvent a dispute concerning the disclosure of information by dismissing the employee. Neither will the dispute disappear because the employee was dismissed.
The commissioner rejected the employee's arguments and stated that sections 16 and 189 of the LRA do not provide for the disclosure of information for any purpose other than consultation or collective bargaining. The employer must disclose relevant information to the consulting party. The employee, at the stage of the arbitration, was no longer a consulting party but a dismissed employee.
The matter was determined to be moot as the employee failed to demonstrate that he was a consulting party and that the information requested would have any practical effect.
As a result, the Commissioner found that the CCMA did not enjoy the necessary jurisdiction to determine the dispute and dismissed the matter.
Key takeaways from the case
This outcome demonstrates that an employer is entitled to proceed with a section 189 consultation process, even if a section 16 dispute is pending at the CCMA. If the information dispute is arbitrated after the section 189 consultation process has been finalised, the CCMA does not have jurisdiction to determine the matter.
However, the employer's refusal to provide requested information could become relevant later if the employee refers an unfair dismissal dispute to the CCMA or the Labour Court. Whether the failure to provide the information made it impossible for the employee to make proper and informed representations during the consultation process is an issue that the CCMA or the Labour Court would have to determine.
It is also important to note that in so called "large scale retrenchments" where a facilitation in terms of section 189A takes place, the facilitator can, in terms of the regulations governing the facilitation process, order the employer to produce documents. In addition, it may be possible for employees to refer a dispute on an urgent basis to the Labour Court in terms of section 189A(13) and argue that the failure to provide the requested information has the result that a proper consultation process is not taking place. In this regard, the employee may request an order to the effect that the employer embark on a consultation process that complies with the requirements of the LRA.
*ENSafrica acted for the employer in this matter.
Reviewed by Peter le Roux, an Executive Consultant in ENSafrica's Employment practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
