The method used to select employees for retrenchment was that affected employees would be placed into vacant positions (following the restructure) using placement criteria, being “(a) qualifications and experience (best fit for the job); (b) qualification and potential (c) LIFO where more than one employee qualifies for appointment to the same position; and (d) employment equity retention”. Those employees not appointed during the placement process “will be retrenched”. Essentially, it was the fact of not having been placed into an alternative position that placed an employee at risk of selection for retrenchment. Non-placement was therefore what was proposed as the criterion for retrenchment.

The Labour Appeal Court (LAC) was tasked with deciding whether these selection criteria were fair and fairly applied. The LAC held that where a legitimate operational justification for restructuring exists, there is nothing innately unfair in requiring an employee whose position is affected to apply for placement into an alternative position.

In assessing the fairness of the selection criteria, the LAC found the following:

1. The placement process had been subject to extensive consultation and had been applied consistently to all affected employees.
2. While the placement process did not allow for interviews, it did permit employees to submit extensive written motivations in support of their placement and retention, and to object and appeal against an unfavourable decision taken against them. In addition, placement decisions were taken by a panel and then referred to two individual committees for verification and approval. Employees who were not placed were then permitted to be considered against substantially relaxed criteria for placement in a second phase of the placement process.
3. Employees did not exhaust the internal remedies available to them, as only four objections were raised, of which one was withdrawn and only one appeal was lodged. Such mechanisms provided the opportunity to rectify scores, reasons to be given for decisions taken, or any errors or irregularities corrected where they may have arisen. The result was that, having failed to exhaust such internal remedies available, nine of the employees were unable to show that by the end of the first phase of the placement process, the selection criteria had been applied unfairly against them. Telkom was able to objectively justify the non-selection of the remaining employee who had lodged an appeal.
4. There was no evidence that the employees’ non-placements were made on an unreasonable, arbitrary, subjective or inconsistent basis and accordingly there was nothing unfair about the selection criteria or its application.

The LAC has thus confirmed that the non-placement of an employee pursuant to a placement process is a valid selection criterion for retrenchment, provided the placement process itself is fair and objective. It is advisable that, when adopting this method of selecting employees for retrenchment, employees are provided with internal remedies such as internal objection and appeal mechanisms which are designed to provide immediate and cost-effective relief and allow any irregularities to be rectified speedily.