Consideration by the courts
Selection Criteria:
In CEPPWAWU obo Gumede v Republican Press [2005] ZALC 21; [2006] 6 BLLR 537 (LC) the respondent company had retrenched numerous employees.
The court said the requirement of fairness and objectivity applied both to the criteria and to the way in which they were applied.
Applying LIFO per department and within a department, as the company had done, was open to abuse and was manifestly unfair because an employee with years of service with the company could be selected for retrenchment from a department where he or she had worked for only a few months if there were other employees who had longer service in that department.
In the case of General Food Industries Ltd t/a Blue Ribbon Bakeries v Food & Allied Workers Union & others (2004) 25 ILJ 1655 (LAC) the company retrenched employees at one branch while recruiting new employees at another branch. The court found that the retrenched employees could have filled those vacancies by applying LIFO and “bumping” and that their dismissal for operational requirements would have been avoided.
Moreover, it had been established that through “bumping” the employees could have been transferred to other bakeries to take jobs done by employees who had shorter service periods than them but were performing work that the employees could perform. The dismissal was found to be unfair.
In Van Rooyen & others v Blue Financial Services (SA) (Pty) Ltd [2010] 10 BLLR 1119 (LC) 13 applicants, all regional managers, were retrenched after the respondent restructured.
The restructuring involved a reduction of the number of regional managers’ posts and incumbents were told that the outcome of assessments would determine their eligibility for the remaining posts.
The court noted that employees must be selected according to fair criteria, and after proper consultation.
The procedure in terms of which employees are required to apply for posts within a restructured operation has been accepted as legitimate.
However, that strategy is not without risk for the employer – the selection criterion then effectively becomes the employees’ failure to be appointed to a new job, or to apply for one.
Where selection for posts is made on vague or subjective criteria, the dismissal crosses the line from a “no fault” dismissal to one based on performance.
In Screenex Wire Weaving Manufacturing (Pty) Ltd v Ngema & others [2010] 1 BLLR 39 (LAC) the appellant proposed inter alia using the principle of “First in, first out” (“FIFO”) as a criterion to select the first 30 employees to be retrenched in a particular department.
The court noted that FIFO is the polar opposite of LIFO, which is generally agreed to be the most fair and objective criterion. Even if cost-effective because longer-serving employees may be earning more, FIFO cannot be accepted as a fair and objective criterion because it is open to abuse – an employer wishing to get rid of long-serving employees could simply recruit new employees and then, after a few months, retrench its longest-serving employees. Moreover, FIFO was a strange way to reward long-serving employees for their loyalty.
In Super Group Supply Chain Partners v Dlamini & another (2013) 34 ILJ 108 (LAC) the appellant company had been compelled to retrench 600 of its 700-strong workforce when two of its clients cancelled their contracts for warehousing and distribution services with it.
The selection criterion the employer used was the open competition method. They could not use LIFO as a selection method since most employees started together when they obtained the two contracts, respectively, and as such there would have been about 300 to 400 employees eligible for the 100 positions.
LIFO was then disqualified as it was not practical to use it. The appellant stated that the best way out was to retain skills by means of an “open competition process”.
This entailed employees to apply for positions to avoid retrenchments. By that process, the appellant was of the opinion this would ensure that only the best skills were retained.
The respondents were among the people that were invited to apply for these particular positions at that point in time as part of the open competition process.
The reason this was found to be unfair is that they were neither consulted on selection criteria nor informed of reasons why they had been selected for retrenchment.
In Gijima AST (Pty) Ltd v Hopley (2014) 35 ILJ 2115 (LAC) the employer commenced a restructuring exercise and created a new structure for the unit, as a result of which the employee’s position became redundant. The employees were consulted about the change and invited to apply for positions on the new structure.
The selection criteria to be applied were skills and knowledge; and/or relevant qualifications and experience; and/or years of service.
The employee applied for the positions of availability service manager and customer service manager in the financial sector. He was shortlisted and interviewed for the posts but was not successful.
The employer’s witnesses indicated that the employee did not fare well during the interview process. Although the candidates were not formally scored, the panel concluded that other candidates had fared better than the employee.
His years of service were only considered at the shortlisting stage and the employer agreed that it did not apply LIFO or “bumping”. It could not dispute that if those criteria had been applied, the employee would not have been dismissed.
The court confirmed that the dismissal was substantively unfair.
In SA Breweries (Pty) Ltd v Louw (2018) 39 ILJ 189 (LAC) the court held that when an employer contemplates retrenchment due to redundancy and when only some of a number of existing posts are to be retained, a selection method that is fair must be chosen to decide who is to stay and who is to go.
However, the redundancy of a particular post, which is one of a kind, does not trigger the need for “selection criteria” in any meaningful sense as no selection for redundancy takes place when only one post is made redundant.