23 November 2015 by Employment Alert

What happens when an employer’s offer alternative to retrenchment is not accepted timeously?

May an employer retrench its workers, after making an offer alternative to retrenchment, where the offer was not accepted by a certain date? This was the issue in DB Contracting North CC v National Union of Mineworkers and Sipho Nkabinde and 105 Others (Case No. JA 113/13).

The appellant (DB) was a subcontractor of JJ Cables Jointing CC (JJ). JJ lost a large contract with Eskom, which led to DB being unable to pay its wage bill. This was made worse by the stipulated industry increase in wages. On 30 July 2009, DB commenced a formal retrenchment process. At the third meeting between DB and the employee’s union, National Union of Mineworkers NUM, the parties agreed to change the termination date to 4 December 2009. However, DB offered to retain the workers if they agreed to being paid at the lower hourly rate, if the offer was accepted by 4 December 2009. The parties agreed that this was a reasonable alternative to retrenchment. DB alleged that the offer was not accepted by 4 December 2009 and thus proceeded to retrench the workers. NUM disputed this.

The majority judgment found that the offer had been rejected for the following reasons:

  1. The court reasoned that if a meeting with workers had taken place between 13 November and 4 December 2009, and Bengequla (NUM’s Negotiator) was given a mandate to accept the offer, there was no reason for him to wait until the meeting on 4 December to notify DB.
  2. NUM’s Negotiator testified that, en route to the meeting, he was phoned by a worker who accused him of selling them out as they were receiving dismissal notices, which indicated that he had agreed to retrenchment instead of notifying DB of the workers’ acceptance.
  3. At the meeting, NUM’s Negotiator did not protest the retrenchment and merely discussed other aspects of implementing the retrenchment.
  4. In a letter to DB dated 7 December 2009, he accused DB of sending out dismissal notices after the meeting, which contradicted his evidence that dismissal notices were distributed before the meeting took place.

At no stage did NUM’s Negotiator oppose the retrenchment. Based on this evidence, the resolutive condition of acceptance that would’ve prevented retrenchment was never met.

The parties had to adduce evidence, upon which they could rely, from the facts. NUM alleged that it had accepted the offer before 4 December 2009 but failed to provide evidence that it did so. DB was therefore entitled to believe that there was no such timeous acceptance.

This judgment strengthens the employer’s position in retrenchment proceedings. Where an employer makes a reasonable alternative offer to retrenchment, the other consulting party must provide clear acceptance of the offer to prevent retrenchment from occurring. It is also worthwhile noting that an offer of wage payments below the minimum prescribed industry rates may be a valid alternative to retrenchment, where the parties agree to it.

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