Constitutional Court finds no fault with s189(1) of the LRA.
We recently wrote about the difficulties inherent in identifying the correct parties to consult with in terms of section 189(1) of the Labour Relations Act 66 of 1995, as amended (“the LRA”). In that article, we explored whether it was fair to consult only in accordance with the hierarchy established by section 189(1) which may inevitably result in employees being retrenched without even being advised or consulted about their retrenchment.
The uncertainty raised in our article has finally been answered by the Constitutional Court in Association of Mineworkers and Construction Union and Others v Royal Bafokeng Platinum Limited and Others  ZACC 1.
The Court was once again split narrowly (5-4) on the issue.
The facts of the matter were briefly as follows:- the National Union of Mineworkers (“NUM”) represented approximately 75% of the employees in the workplace of the employer, with the Association of Mineworkers and Construction Union (“AMCU”) and the United Association of South Africa (“UASA”) representing a minority of the employees. The employer and NUM had concluded a recognition agreement, which was amended in March 2015 to require the employer to consult exclusively with NUM and UASA in respect of any possible retrenchments in terms of section 189(1) of the LRA.
During August 2015 the employer commenced consultations with NUM and UASA in terms of section 189 of the LRA. Following the consultations, the employer, NUM and UASA concluded a retrenchment agreement in September 2015 in terms of which some 103 employees were to be retrenched. That agreement provided, inter alia, that its terms were extended in terms of section 23(1)(d) of the LRA to employees who were neither members of NUM nor UASA, as well as a clause in ‘full and final settlement’ which stipulated that all parties to the agreement waived the rights to challenge the lawfulness or fairness of their retrenchment.
Shortly after the conclusion of the retrenchment agreement, various employees who were members of AMCU arrived at the workplace to commence work. To their surprise their attempts to clock in were unsuccessful and were unaware that they had been retrenched. The employees were only then issued with the notices of retrenchment.
AMCU, acting on behalf of its members who had been retrenched, approached the Labour Court in terms of section 189A(13) of the LRA. This application was withdrawn when the employer, in its answering affidavit, showed that a valid collective agreement had been concluded between it and NUM. Instead AMCU mounted a constitutional challenge to section 189(1)(a) – (c) and section 23(1)(d) of the LRA, seeking to have those sections declared unconstitutional. AMCU also sought the setting aside of the collective agreement and/or the extension of the agreement to its members. After slugging it out in the Labour Court and Labour Appeal Court, the matter came before the Constitutional Court.
The majority of the Constitutional Court, per Froneman J, found that section 23 of the Constitution does not expressly or impliedly guarantee a right to be individually consulted in a retrenchment process. The Court found that the requirements to ensure procedural fairness in retrenchments are codified in section 189 of the LRA. The Court found, with reference to Sikhosana v Sasol Synthetic Fuels (2000) 21 ILJ 649 (LC), that section 189 specifically renounced a system of ‘dual consultation’.
In this regard an employer is only obliged to consult with the parties as required in terms of section 189 of the LRA. This is in line with the principle that both the collective bargaining process and the consultation process should be collective rather than individual in nature. The Court was alive to the reality that an employee could, in terms of the provisions of section 189(1), be retrenched without ever being consulted directly or even advised that their employment is in jeopardy. This was, however, not unfair since it was expressly permitted by section 189(1) of the LRA and requiring an employer to engage in a parallel process of consultation would undermine the very purpose of that section.
The Constitutional Court found that the procedure in section 189 of the LRA passed the requirement of rationality. In this regard the Court found that even if an individual employee was afforded the right to consult with the employer in terms of section 189, the representations provided by these employees would merely be brushed aside. It is the majority union’s bargaining power and clout in the form of threatened industrial action that acts as a coercive force for the employer to comply with these demands. Accordingly, the principle of audi alteram partem is not offended in that the principle only operates where the right to be heard may influence the outcome of the matter. In the retrenchment consultation context, an individual’s participation in that process is unlikely to influence the employer’s decision.
Notwithstanding the procedural fairness of section 189 of the LRA, the Court found that the retrenchment of employees may nevertheless be found to be substantively unfair. Furthermore, the Constitutional Court found that the extension of collective agreements in terms of section 23(1)(d) of the LRA is fair as these agreements can still be tested in terms of the principle of legality, lawfulness and non-arbitrariness. Therefore, the Court found that an individual employee who is of the view that their retrenchment was substantively unfair is left with various remedies in the circumstances. The majority thus dismissed AMCU’s appeal.
It is concerning that the principle of majoritarianism was upheld only on the basis of 5 to 4, particularly as it may suggest that the concept of majoritarianism does not resonate with certain quarters in the Court. It is clear, however, that employers are only required to consult with those parties that are identified in section 189(1) of the LRA. Where possible, and as a matter of good industrial relations, employers should nevertheless seek to consult with all affected employees. Doing so reflects a humane approach to the issue and will not impede the ability to conclude a retrenchment agreement with any Unions representing the majority of employees and extending it in terms of section 23(1)(d) of the LRA.
By Neil Coetzer, Partner and Courtney Wingfield, Associate Designate, Cowan-Harper-Madikizela Attorneys