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The Edcon Judgment – Is s189A any clearer?

neil Coetzer

One of the provisions in the LRA that has proven problematic in practice has been section 189A which deals with large-scale retrenchments. The section contains no less than 20 subsections which, in some instances, are far from clear. The difficulty in interpreting this provision was exacerbated by the judgment of the Labour Appeal Court (“LAC”) in De Beers Group Services (Pty) Ltd v NUM & Others (2012) 33 ILJ 1846 (LAC).

The De Beers judgment was controversial in at least two respects. Firstly, it required one of the parties to refer a dispute to the CCMA upon expiry of the 30 day period contained in section 189A(8) because, in its view, a dispute between the parties arose upon the delivery of the section 189(3) notice. Secondly, any dismissals which did not comply with the time periods or provisions of section 189A(8) were held to be ‘invalid’ i.e. of no force and effect. The consequence of this was to treat such dismissals as if they had not taken place and to reinstate the employees.

In the recent case of Edcon v Steenkamp & Others [2015] ZALAC 2 (3 March 2015) the employer approached the LAC seeking a declaration that the approach adopted in De Beers was incorrect. The employer argued that the intention of the LRA was never to render such dismissals ‘invalid’ since the LRA dealt with such terminations as ‘dismissals for operational requirements’. The LRA, it was argued, had provided a framework for dealing with such situations by providing remedies for both substantively and procedurally unfair dismissals.

The LAC found that the case in De Beers was ‘wrongly decided’. The Court found that section 189A(8) was ‘badly drafted’ and that it contained no express provision requiring any of the parties to refer a dispute to the CCMA in the absence of consensus being reached during the consultation process. The section only states that no dispute may be referred to the CCMA before the 30 day consultation period has elapsed. Accordingly it was not a requirement that a dispute must be referred to the CCMA after expiry of the 30 day period. Furthermore, the Court found that the concept of ‘invalidity’ was inconsistent with the LRA, since a termination by an employer without complying with the provisions and time periods set out in section 189A(8) still constituted a ‘dismissal’ in terms of the LRA and should be dealt with in that context.  Accordingly, a dismissal in contravention of section 189A(8) may be still be an unfair dismissal, but it could not render the dismissal ‘invalid’.

While the judgment has the effect of removing the requirement of having to refer a dispute to the CCMA upon expiry of the 30 day period, this does not necessarily mean that employers will be entitled to issue notices of termination at the end of the 30 day period set out in section 189A(8). In circumstances where a party has referred a dispute after the 30 day period, an employer will not be permitted, in accordance with section 189A(8)(b), to issue notices of termination until the dispute referred has been dealt with in terms of the LRA’s dispute resolution provisions. An anomaly still seems to exist in circumstances where the employer, upon expiry of the 30 day period, issues a notice of termination and the union subsequently refers a dispute to the CCMA. It is unclear whether an employer should in those circumstances withdraw the notice of termination, despite the fact that it was issued lawfully and in accordance with section 189A(8).

Neil Coetzer is a Partner in the Employment Law, Benefits and Industrial Relations Department of Cowan-Harper Attorneys. Neil advises clients on employment law and industrial relations issues across various industries including civil engineering, construction, metals, pharmaceuticals, logistics and banking. He has been involved in several reported Court cases which have helped to shape and clarify several aspects of employment law in South Africa.

Neil regularly publishes articles on employment law issues in news media, websites and academic journals.