Dismissal based on operational requirements


The employee claimed that his dismissal as senior manager by the employer for "operational reasons" (retrenchment) was procedurally and substantially unfair.

The Labour Court found that in terms of the Code of Good Practice: Dismissal of the Labour Relations Act No. 66 of 1995, the employer had to show that the reason for dismissal was based on the operational requirements of the business.

Substantive fairness in a retrenchment dismissal entailed the employer showing that the dismissal was related to its economic, technological, structural or similar needs.

Procedural and substantive unfairness might, as in this case, be interlinked and is specifically the case in this category of dismissal. Unless employers separate misconduct, incapacity and operational requirements categories they run into problems.

The employee was not given an opportunity to respond to the allegation by the employer that he was rude and aggressive and had poor relations with customers.

While the reason forwarded by the employer for retrenchment was the financial problems the business was experiencing, this alleged rudeness was the underlying reason for his dismissal. This should have been dealt with in a misconduct disciplinary or incapacity hearing and not a retrenchment process.

The wrong categorisation of a dismissal by an employer is fatal and the resulting dismissal will therefore always be unfair. Sometimes both procedurally and substantively unfair.

The meeting to discuss the retrenchment was made only after the decision to "right-size" had been made and the employee's position as senior manager had already been declared to be redundant before the meeting had taken place.

There had been no genuine attempt to consult with the employee. The Act requires joint consensus seeking consultation before a decision is taken.

The selection criteria by which the employee had been chosen for retrenchment over another member of staff was also flawed and unfair.

There was no evidence that the respective strengths of the two employees had properly been measured and balanced, and the employee had not been given an opportunity to show why he, and not the other person, should not be the proper candidate for retrenchment.

The Labour Court correctly found that the dismissal of the employee was procedurally and substantively unfair. Reinstatement was ordered. A mess to say the least.