The Labour Court's decision in Watson Kelemogile Lekalake v EOH Mthombo (Pty) Ltd is a textbook warning: a Section 189 process will collapse if the business case is unclear or inconsistently presented. EOH closed its Public Sector Division after corruption allegations against senior executives damaged the group's reputation, and Mr Lekalake, an SAP specialist redeployed into that division's finance team, was told his job no longer existed. Because EOH offered shifting explanations for the dismissal and produced scant evidence of a genuine downturn, the Court found the retrenchment substantively unfair, ordered full reinstatement with back-pay, and imposed a punitive costs award.
The facts in brief
Between 2018 and 2019 serious corruption allegations surfaced against certain EOH executives, prompting the company to wind down its Public Sector Division. Mr Lekalake – first hired as a SAP ABAP programmer and later integrated into finance – was earmarked for a performance hearing that never materialised. EOH then removed him from a client site, instructed him to stay at home, and, when he protested at the CCMA, recalled him only to start a Section 189 consultation. By December 2019 he was dismissed for operational requirements, even though the evidence later showed the real trigger was reputational fallout rather than a genuine loss of work.
The judgment turned on credibility and proof. The company's rationale drifted from alleged poor performance to a client complaint, to the division's closure, signalling that it was searching for any reason that might stick. Worse, it produced no hard data – no revenue figures, order book trends, or board papers – showing that the corruption scandal translated into an unavoidable redundancy. The Court concluded that the dismissal was a knee-jerk response to reputational damage, not a bona fide operational necessity, and that the employer had failed to explore alternatives before cutting a highly qualified employee.
Practical guidance for employers
Before issuing a Section 189 notice, test your case on five fronts. First, gather documents that prove the commercial trigger – management accounts, pipeline reports, strategic minutes. Second, confirm that you have settled on one clear rationale and that every manager will articulate it consistently. Third, record why options such as redeployment, short-time, or voluntary packages won't solve the problem. Fourth, separate any performance concerns and, if necessary, run a proper incapacity process. Finally, keep meticulous consultation records in a single file so that, if challenged, you can demonstrate a transparent, good faith exercise.
A reputational crisis – even one grounded in executive misconduct – will not justify job cuts unless you can trace a straight line from the scandal to measurable commercial harm. The decision also underlines how senior, specialised staff amplify legal and financial risk: reinstating such employees years later can be more disruptive and costly than grappling with a robust consultation process at the outset.
Steps to Remember
- Audit your rationale: Secure the financial evidence that underpins the proposed restructuring.
- Document the process: Store all Section 189 notices, minutes, and correspondence in one file.
- Brief line managers: Ensure every communication mirrors the single, well-evidenced reason for change.
- Engage counsel early: A short pre-consultation review often prevents years of litigation.
Retrenchment cannot be a shortcut for sidestepping reputational headaches or unresolved performance issues. Anchor the process to a single, well-documented operational requirement, or prepare for reinstatement, back pay, and a costs order that stings more than the problem you hoped to solve.
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.
