Hogan Lovells Publications | March 2019
Is a decision taken by the board that a restructure is to occur manifestly unfair?
This question arises frequently in practice. In October 2018 the Labour Appeal Court had occasion to consider the issue in the matter of South Africa Commercial Catering and Allied Workers Union (SACCAWU) obo Members v JDG Trading (Pty) Ltd. JDG Trading is a large SA corporation that, like others in a filing local economy, found itself caught in the tough financial headwinds
Its board passed a resolution providing that the number of stores and staff numbers “must be reduced”. Following this resolution, a notice under section 189(3) of the Labour Relations Act was issued to trade union SACCAWU as its members were impacted. The union claimed that because the company was bound by the resolution to reduce the number of stores and staff, the consultations would be “superficial” and would unfold against the background of a decision already taken.
The company’s subsequent conduct made it clear that management did not regard the resolution as an instruction to retrench. The dismissals were rendered fair.
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