Steenkamp and Others v Edcon Limited CCT 46/15 and 47/15 (22 January 2016)

The long awaited ruling by the Constitutional Court on the proper interpretation of Section 189A was delivered on 22 January 2016.

In the matter of Steenkamp and Others v Edcon Limited CCT 46/15 and 47/15 (22 January 2016) (“Edcon decision”) the Constitutional Court upheld the decision of the Labour Appeal Court (“LAC”) regarding the interpretation of section 189A of the Labour Relations Act 66 of 1995, as amended (“LRA”), which deals with so-called ‘large-scale retrenchments’.

The LAC had departed from the approach adopted in De Beers Group Services (Pty) Ltd v NUM [2011] 4 BLLR 318 (LAC) (“De Beers decision”) and ruled that dismissals which failed to comply with the specific time periods within section 189A were not rendered null and void and of no force and effect. The Edcon decision upheld the LAC’s decision and held that the LRA does not contemplate the concept of an invalid dismissal.

THE FACTS

During April 2013 the Respondent (“Edcon”) commenced with a process of restructuring for operational requirements. This process resulted in the retrenchment of approximately 3000 of its 40 000 employees. Since the retrenchments involved more than 50 employees, the provisions of section 189A of the LRA became applicable.

The dismissed employees challenged the validity of their dismissals.

The LAC was tasked with determining whether non-compliance with the peremptory provisions contained within section 189A of the LRA rendered any subsequent dismissals null and void. The basis of the view that such a failure could lead to the invalidity of a dismissal was rooted in, among others, the De Beers decision.

Given the importance of the case, the Judge President directed that the matter be heard by the LAC as a court of first instance. The employees relied on a single cause of action – that their dismissals were ‘invalid’ within the meaning of that term as understood by the LAC in the De Beers decision (they did not seek to dispute the substantive and procedural fairness of their dismissals per se). Edcon, in turn, sought an order from the LAC holding, among others, that such decisions were, for a number of reasons, incorrectly decided and should not be applicable.

In the De Beers decision the court held that where an employer issues notices of termination prematurely (by not complying with the necessary prescribed time periods) the ensuing dismissals would be invalid and would be of no force and effect (“De Beers principle”). The dispute that arose between the parties in the LAC related to, among others, whether the De Beers principle was the correct interpretation of section 189A.

The employees were issued with section 189(3) notices. Neither Edcon nor the employees referred the matter to the CCMA for conciliation before Edcon gave notice to terminate the contracts of employment. In addition neither party asked for the appointment of a facilitator. The time period between the issuing of the section 189(3) notices and the notices of termination in terms of section 189A(8) of the LRA varied from 6 days to in excess of 60 days.  It was therefore clear that there had not been compliance with the time periods set in sections 189A(8)(a) and (b) of the LRA. Therefore, the employees asserted, their dismissals were invalid and they should be reinstated with full back pay.

The LAC agreed with the Edcon’s submissions that it was not the intention of the legislature that such non-compliance would result in the dismissals being invalid. Consequently, the LAC held that the De Beers decision was wrongly decided.

The matter was the taken on appeal to the Constitutional Court.  There, the applicants argued that the LAC erred in holding that the De Beers decision was wrongly decided. They argued further that the procedural provisions of section 189A were peremptory and non-compliance with such provisions rendered any subsequent dismissals null and void. They also argued that there is a distinction between unfair dismissals in terms of the LRA and common law terminations of employment. Accordingly, a valid notice period prior to termination is required for a dismissal to be effective under the LRA and a defective or premature notice cannot result in dismissal.

CONSTITUTIONAL COURT RULING

The majority in the Edcon decision held that a breach of section 189A(8) does not result in the subsequent dismissals being rendered invalid. Zondo J, writing for the majority, held that the LRA does not contemplate the concept of an “invalid dismissal”. Edcon had failed to comply with certain procedural aspects of the LRA which may result in the dismissals being unfair, but not invalid. As such, the employees should have made use of the mechanisms in the LRA if they felt their dismissal was unfair rather than seeking to have the dismissals declared invalid.

Sections 189A(8), (9) and (13) of the LRA provide for remedies when a dismissal in breach of section 189A(8) occurs. These remedies include embarking on a strike and applying to the Labour Court for an order of reinstatement pending compliance with the procedural requirements of section 189A. None of these remedies contemplate an order declaring the dismissals invalid, which is a concept alien to the LRA.

Zondo J held further that the LRA provides for the right not to be unfairly dismissed. There is no right not to be unlawfully dismissed. The employees were claiming that Edcon breached the LRA, consequently they must seek a remedy in terms of the provisions of the LRA and not the common law.

This decision will bring certainty to an area of law which has material and significant consequences for employers and employees – large scale retrenchments.  It is now clear that the mere failure of an employer to comply with time periods prescribed by section 189A of the LRA does not result in the subsequent dismissals being rendered invalid. Such a dismissal, while not invalid, may nonetheless result in the dismissal being declared unfair.