A question that is now raised more frequently under the current economic circumstances is, whether an employee may be dismissed as a result of them failing to accept a change in terms and conditions of employment as an alternative to avoid inevitable retrenchment?


Section 187(1)(c) of the South African Labour Relations Act, 1995 (the “LRA”) provides that a dismissal will be automatically unfair if the reason for the dismissal is “a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer.”


Prior to the amendment, the legal position was that an employer might be justified in dismissing an employee who rejects such proposed changes (provided, of course, that the requirements of Section 189 of the LRA are met).


The Constitutional Court, confirmed the approach, as had been followed by the labour appeal court in the recent matter of National Union of Metal Workers of South Africa v Aveng Trident Steel and One Other [2020] JOL 48801 (CC). The legal question which begged an answer was whether a dismissal would be considered automatically unfair if employees are dismissed as a result of rejecting a demand that arises as a result of an employer’s operational requirements. The court had to determine the application of the amended provisions of section 187(1)(c).


The Labour Court had to determine the procedural and substantive fairness of the dismissal of employees who were retrenched after their refusal of amended employment conditions pursuant to such. The retrenchment was the only viable solution to ensure the survival of the business and as a last resort during organisational restructuring.


NUMSA had referred the dispute on the basis that the dismissals were automatically unfair as provided for by the applicable amended legislation. The basis of the applicants’ argument was that the dismissal had been automatically unfair due to the fact that the employees refused to accept demands regarding redesigned job descriptions as a matter of mutual interest. The Labour Court ruled that the dismissals were not automatically unfair.


The matter was subsequently referred to the Labour Appeal Court, which took a two-stage approach to the inquiry. The first determination was that of factual causation – would the dismissal have taken place, in any event, had it not been for the refusal of the demand? If yes, the dismissal would not be considered automatically unfair. If not, however, the second part of the inquiry finds application – legal causation.


In determining legal causation, the court held that even where there is evidence suggesting a credible possibility that dismissal occurred because the employees refused to accept a demand, the employer can still show that the dismissal was for a different, more dominant and proximate reason that is fair.


Aveng’s argument was that the basis and dominant cause of the dismissals was the business’ operational needs, which had necessitated the entire process informing the employees of the proposed changes to their employment conditions. As a result, the employees’ dismissals were considered to be permissible as a result of operational requirements and the employer was found not to have contravened the section 187(1)(c) of the LRA.

During proceedings, it had become abundantly clear that the purpose of the proposal was not made in order to gain any benefit or to facilitate wage bargaining, but was rather made in good faith to ensure the survival of the business for the foreseeable future.

This judgement is welcomed by many employers in the wake of the economic crisis caused by the pandemic. What is clear from the judgement is that an employer will be justified in his decision to dismiss an employee for refusing to accept alternative working conditions in order to avoid retrenchment. This view was recently affirmed by the Constitutional Court. Indeed, this decision empowers employers to change working conditions as an alternative to dismissal if the survival of the company necessitates this. If refused, employees may be dismissed and forfeit severance pay.


However, employers are cautioned to comply with the consultation process and requirements set by section 189 of the Labour Relations Act. In addition, they should ensure that they are able to prove at a later stage that there is a genuine, bona fide operational need to change employment conditions at that no other viable alternatives exist other than dismissal.


Article by: Janeske Greeff

Dispute Resolution Official – Cape Town