It is well known in South African Law that dismissals regarding operational requirements or retrenchments should be carried out as a last resort. Employers should always try to seek alternative measures in order to avoid retrenchments. In the case of Reeflords Property Development PTY LTD v Lauren Almeida (2022) 6 BLLR 530(LAC), the Labour Appeal Court had to consider the fairness of the retrenchment.

The employee had returned from maternity leave. Upon her return, she was advised that she would be given a week to consider the company’s proposal to move her from the sales to the development department. The employee was also advised that certain job functions of hers would be transferred to the head of the sales department. The employee refused the company’s proposal to work in the development department. At a further meeting, the company advised the employee that she would be moved to the marketing department despite her lack of marketing expertise. The employee lodged a grievance advising that this, in essence, amounted to a demotion. This grievance was not resolved.

The employee was then issued with a notice of her possible retrenchment based on the restructuring of the business and the redundancy of her position. The notice also stated that the retrenchment could be avoided if the employee accepted the marketing executive position. After several consultations, the employee advised that she would accept the new position on the condition that:
1) She receives training and guidance in the new position.
2) A travel allowance be paid to the employee.

The above was agreed to by the company, however, when the contract of employment for the new position was issued to the employee, it made no provision for the training or travel allowance. The employee advised the company she would not accept the new contract as the new position was not reasonable as she did not have the necessary experience and skill to perform in the new position. The company then advised the employee that she would be retrenched because of failing to accept the new position.

Shortly after being retrenched, the employee referred a dispute to the CCMA for conciliation on the grounds that her dismissal was unfair, the matter could not be conciliated, and the dispute was then referred to the Labour Court. The Labour Court found that the dismissal was both procedurally and substantively unfair, and the matter was then taken on appeal to the Labour Appeal Court by the company. The Labour Appeal Court held that by refusing to adhere to the terms of the agreement, which were previously reached on alternative employment, the company had acted in bad faith and unfairly. Further, the offer of the alternative position without training was not reasonable as the employee had clearly stated that she lacked the necessary skills. Thus, the dismissal of the employee was unfair. The company was ordered to pay the employee 6 (six) months’ salary as compensation.

The above case shows that employers should be mindful when considering alternative employment prior to retrenching employees and ensure that such employment is reasonable. Further that employers should not renege on any conditions which have been agreed upon in regard to alternative employment. It is always advisable that companies consult with a labour consultancy prior to undergoing retrenchment processes. Should you have any further questions in relation to this article, kindly contact your nearest CEO office for assistance.
For a full copy of the judgment, kindly click on the link below:
Full judgement.pdf

Article by: Krian Rathinam
Dispute Resolution Official – CEO Durban