Retrenchments: With whom must an employer consult?

When an employer contemplates retrenching one or more of its employees it is obliged in terms of s189(1) of the Labour Relations Act, 66 of 1995 (LRA) to consult with:

• any person whom the employer is required to consult in terms of a collective agreement;
• if there is no collective agreement that requires consultation -
• a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and
• any registered trade union whose members are likely to be affected by the proposed dismissals.
• if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or
• if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.

In the recent decision of Ketse v Telkom SA SOC Limited (P400/14) [2014] ZALCPE 38 (5 December 2014) the Labour Court was called upon to interpret s189(1) of the LRA and determine the extent of the employer's obligation to consult with an individual employee affected by a retrenchment in circumstances in which the employer had concluded a collective agreement with four trade unions dictating that the employer consult with the four trade unions prior to retrenching employees.

In 2014 Telkom embarked on a restructuring exercise. At the time, Mr Ketse (Ketse) was employed as a senior manager of the call centres. During the restructuring exercise, Telkom consulted with the four trade unions which it was required to do in terms of the collective agreement. Telkom did not consult with Ketse. Ketse was issued with notice of his retrenchment. Following his dismissal, Ketse approached the Labour Court on an urgent basis seeking inter alia an order requiring Telkom to comply with s189 of the LRA and consult with him. In support of his application Ketse argued that in terms of s189(1) of the LRA, Telkom was obliged to consult with him as an affected employee who was not a member of a trade union, and not only the trade unions.

Telkom argued that Ketse was not a 'consulting party' as prescribed in s189(1) of the LRA and accordingly, it was not required to consult with him.

The Court distinguished the cases which Ketse relied upon in support of his argument and inter alia held that these cases involved instances in which the employer had elected, of its own accord, to consult with the individual non-unionised employees. As a result, the employer was bound by its election and had to conduct and complete a consultation process with the individual employees. This obligation was of the employers own making, and not a legal obligation in terms of s189(1).

In light of the above, Ketse was unsuccessful in his application. In dismissing Ketse's application, the Labour Court held that s189(1) has always been interpreted strictly by acknowledging the hierarchy governing the consultation process prior to retrenchment. Where the employer has concluded a collective agreement with a trade union which requires the employer to consult with that trade union prior to retrenchment, the employer has no obligation in law to consult with an individual employee who is not a trade union member.

Having regard to this judgment, an employer embarking on a retrenchment process involving employees who are members of a trade union (with which the employer has concluded a collective agreement as contemplated above) and employees who are not members of trade union, is not obliged to and should not, consult with, for example, senior employees who are not unionised. The employer has a legal obligation to consult with the trade union only, even if non-unionised employees may be affected by the retrenchment. If an employer elects to consult with a non-unionised individual in such circumstances then, despite having no legal obligation to do so in terms of s189(1), the employer would be obliged to see its decision through by holding proper consultation with that employee.

This judgment highlights the possible advantage to an employer of concluding a collective agreement with a trade union which requires the employer to consult with the trade union only, to the extent that it reduces the number of parties with which the employer is legally obliged to consult.