Dismissal for operational requirements in the context of collective bargaining

The highly competitive environment in which companies functions prompts the need to review their operations which may include reconsideration of the manning levels, and or changing terms and conditions of employment in order to be able to survive and prosper economically. The difficulty arises when the employers have to respond to the challenges. By law the employers are legally prohibited from unilaterally effecting the changes to the terms and conditions of employment. Furthermore, changing terms and conditions of employment is dealt with through collective bargaining and as such, the dismissal is outlawed as a legitimate instrument to coerce the employees to concede to the proposals. So the employers have to obtain an agreement or consent with the affected employees. In terms of the 1956 LRA the employer could justifiably terminate the contract of employment within the context of collective bargaining. For the employer to avoid offending the lock out provisions in terms of the 1956 LRA, the lock-out dismissal had to be effected in order to achieve a specific purpose, and it had to be conditional. Unlike its predecessor, the 1995 Labour Relations Act introduced section 187(1)(c) which renders the so-called lock-out dismissal by an employer, within the context of collective bargaining, automatically unfair. Section 187(1)(c) categorises a dismissal as automatically unfair, if the reason is a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer. The employers are however permitted in terms of the 1995 LRA, to dismiss the employees based on operational grounds, as long as the requisite process has been adhered to. The employers need to restructure their operations in order to ensure that terms and conditions of employment are responsive to operational needs. Where the employees’ terms and conditions of employment are not in line with the company operational requirements, the need to terminate the employment contracts of the employees may arise. The employers are within their right to terminate the service of the employees who refuse to accept changes to their conditions of service based on the employers’ operational requirements. The court in Schoeman v Samsung Electronics confirmed that employer’s right to run its business in a successful manner, which includes affecting changes to the existing terms and conditions of employment to be aligned with the market demand. The dismissal is outlawed as a mechanism to coerce the employees to acceptance the employer’s demand relating to matters of mutual interest. At the same time, the employers are within their rights terminate the service of the employees who refuse to accept changes to their conditions of service based on the employers operational requirements. There is a clear tension between sections 187(1) (c), 188(1) (ii) and 189 of LRA. When the employers seek to review the terms and conditions of employment, the tension between these sections becomes more common, as it involves the matters of mutual interest which are dealt with through the collective bargaining arena and the dispute of right through arbitration. In Fry’s Metals v Numsa the court rejected the notion that there is tension between section 187(1) (c) and section 188(1) (a) (ii) of the LRA. Instead the court was of the view that, there is a historical context to section 187(1) (c) which is the now repealed 1956 Labour Relations Act. The 1956 LRA included in its definition of a lock-out the termination by the employer. Secondly, the court interpreted section 187(1)(C) to only give protection to employees who are dismissed in order to compel them to accept a demand on a matter of mutual interest, and only where the dismissal was of a temporary nature. The court interpretation in Fry’s metals implied that, section 187(1)(c) will only come to the defence of employees if they are dismissed for the purpose compelling them to accept a demand on a matter of mutual interest, and if the dismissal was of a temporary nature. Where a permanent dismissal is effected because employees would not accept its demands, section 187(1) (c) could not come to the employees’ protection. Considering that the lock out provided for in terms of the 1995 LRA is not a preferred option by most of the employers, they will rather resort to use the loophole created by the narrow interpretation of section 187(1)(c) to circumvent having to secure consensus from the affected employees and rather dismissed them based on operational requirements. This study seeks to deal with the questions relating to the relationship between collective bargaining related dismissals in particular the automatically unfair dismissal in terms of section 187(1) (c) and business restructuring related dismissal. As such the relationship between sections 187(1) (c) and dismissals based on operational requirements will be central to this study