Delivered: 23 September 2016 Summary: Operational requirements – redundancy of position – meaning of – employee’s position redundant
Operational requirements – alternative position – employee required to apply for available alternatives – employee refusing to apply thus exposing herself to retrenchment
Operational requirements – alternative positions – what constitutes reasonable alternative – alternatives available to employee reasonable
Operational requirements – procedural fairness - principles considered – where employee could avoid her own retrenchment issue of procedural fairness does not arise
Operational requirements – consultation process – joint consensus seeking process – requires proper participation in the process by both parties – employee defeating objectives of process by entering the process with pre-decided agenda
Severance pay – entitlement to – Section 41(4) of BCEA considered – employee unreasonably refused alternative position – not entitled to severance pay
JUDGMENT
SNYMAN, AJ
Introduction
This case is an unfortunate example of all that can go wrong if parties do not genuinely engage one another in a retrenchment consultation process, with a proper open mind as to one another’s respective positions. An intransigent approach to retrenchments consultations more often than not has the consequence of jobs being lost, when this could have been readily avoided. This matter is a case in point.
The applicant has brought a case of unfair dismissal based on operational requirements to this Court. The applicant has brought this case by way of statement of claim filed on 27 May 2015. The applicant contended that her dismissal was both substantively and procedurally unfair. The respondent, on the other hand, contended that it never wanted to retrench the applicant, and that it was the applicant’s own conduct that caused her ultimate retrenchment, which according to the respondent was in all respects fair. The applicant has further claimed that she be paid severance pay, which the respondent refused to pay her.
The matter came before me on trial on 8 to 11 August 2016. I will now decide this matter by first setting out the relevant facts.
The relevant background
The pertinent facts in this matter were mostly common cause. The matter was also well documented, with most of the interaction between the parties being confirmed in correspondence. Also, all the consultations were recorded and transcribed, and the transcripts were accepted by both parties to be a true and correct reflection of what transpired in the consultations. This leaves me in the fortunate position that very little in this matter turns on the credibility of witnesses, or disputed evidence.
The applicant commenced employment with the respondent on 1 August 2008 as a marketing officer / assistant. The applicant was promoted on 1 January 2013 to marketing manager. It was common cause that the applicant’s position of marketing manager made her responsible for the disciplines of both marketing and branding, in the respondent, which was all part of her position. She initially had five subordinates reporting into her, but this was later reduced to three when two analysts that reported to her were moved out to another department in August 2014. Her post grade was at all relevant times classified as H13.
On 1 June 2013, Mpho Ledwaba (‘Ledwaba’) was appointed by the respondent as its Head of Marketing. Ledwaba testified that towards the end of 2013, he was tasked by the respondent to investigate how to grow the respondent’s possible retail market. In simple terms, his mandate was to grow the retail market where it came to individuals investing on the JSE. The research conducted in this regard showed that indeed there was a business opportunity for the respondent, in that it only managed to accumulate some 260 000 investors in the last 15 years, whilst the research showed a potential market of at least 1.2 million such investors. Added to this was the recent taxation changes where certain investments would be tax free and this would also make investment on the JSE palatable for such individual investors.
According to Ledwaba, going after the retail market necessitated a substantial change in the respondent’s marketing focus. Up to that point, marketing had mostly been education based, meaning that the respondent presented lectures and other forms of education as to what the market was, and so attracted investors. It was not very successful. Ledwaba said that the target of new investors in terms of the new marketing focus was 35 000 new investors in the first year.
The current marketing structure up to that point, and as referred to above, had the marketing manager dealing with all issues relating to marketing, and this included branding. Part of the new strategy was to separate marketing and branding, with a particular focus on each discipline.
As to the brand, it was decided that much more emphasis would be placed on the brand than had been the case before. The first step was a rebranding, followed by extensive brand roll out, and then brand maintenance and management. This would also include further development and expansion of the brand if circumstances change (the brand needed to constantly evolve). The brand had to convince the individual investor that the JSE was readily accessible and approachable. Regular brand surveys needed to be conducted on social media and other platforms.
Turning then to marketing going forward, there would be a complete change in focus, from mostly education based marketing to active retail marketing. This necessitated an increase in the marketing budget, from about R600 000 at that point in time to about R6 million. There would be focus on mass media advertising and more effective engagement on channel marketing through brokers and other partners. Campaigns to recruit new retail customers would also be launched. New products were to be designed and launched, especially in the context of the new tax free savings allowances. Of course, several of the existing marketing functions would remain, albeit that it would be done differently and more extensively.
According to Ledwaba, the existing customer database was in a poor state. It was obsolete in several respects, and was basically a list of e-mail addresses. The new focus would be to firstly clean up, and then grow this database. The database had to be an effective tool to use as a platform for direct marketing. It was a much larger and detailed exercise than what had been the case before.
As to the applicant, she started reporting directly to Ledwaba as from 1 January 2014. With the above changes in mind, the applicant was specifically tasked with the rebranding of the respondent. The applicant had in fact started with this rebranding process already in 2013. The applicant was instrumental in effecting this brand change, and as said by Ledwaba, she did an excellent job in this regard. The applicant was then also responsible to roll out this entire brand. The new brand was first introduced on 14 April 2014.
What the evidence showed is that before the above changes testified to by Ledwaba, and in particular in 2013, the applicant would spend about 75% of her time on marketing, and 25% of her time on branding. Because of the rebranding exercise in 2014, to which the applicant was dedicated, this percentage changed to 55% of time spent on branding and 45% on marketing.
With all the above in mind, the respondent’s board decided that a structural change where it came to the marketing department was necessary. It was decided that separate focus and responsibility was needed in respect of branding, on the one hand, and marketing, on the other. In order to achieve the envisaged objectives, the board approved that the former position of marketing manager in essence be split into two positions, being separate marketing manager and brand manager positions. This split in the position would also affect some of the subordinates. Both these new positions would then report to Ledwaba as Head of marketing.
The respondent then proceeded to grade these two new positions. This grading was done by an external contractor certified in Hay grading. The grading exercise confirmed a H13 grade for both the marketing manager position and the brand manager position. The respondent then engaged Deliotte to develop a role profile for each of the positions, which included the actual job profile, the job requirements, and output requirements. And then finally, PWC was engaged to benchmark the positions against other related positions in the market. The salaries attached to both these positions would be the same. After this whole exercise, what existed was two proper new positions that needed to be filled.
In simple terms, what used to be done in one position would now be done in two positions. But that was just part of it. What would further need to be done in the two positions would be a lot more, in each specific positon, as well. Because of the operational change, each discipline of brand and marketing now required its own manager focusing only on that discipline. The operational change justified these two separate positions.
I may at this stage add that the passing of time revealed that this view adopted by the respondent was indeed justified. When the matter came up for trial, the respondent still had separate marketing and brand managers. Not only that, the brand manager position had grown to now having two subordinates reporting to it instead of the one originally envisaged. The marketing manager position still had three subordinates reporting to it. I raise this as confirmation of the fact that there indeed two proper and viable positions created.
According to Ledwaba, the reality of this change would mean that the applicant’s existing position of marketing manager, would be redundant. It would be replaced by these two new positions. As such, she would be affected by this intended restructuring and would need to be consulted in terms of the LRA. There were four other affected employees, along with the applicant, that needed to be consulted.
Ledwaba made it clear that despite this intended restructuring, the primary objective of the respondent was not to lose employees. The idea was to fill all the new positions with the existing employees, and even if there was not a proper fit of an employee in a position, a development program would be applied to the employee to as to train the employee and provide the employee with the necessary skills. But because positions were effected, the respondent felt it necessary to apply a proper process. As far as Ledwaba was concerned, the applicant was competent to fill either of the new marketing manager or branch manager positions.
Pursuant to following due process, the applicant was presented with a notice as contemplated by Section 189(3) as to the intended restructuring, on 14 November 2014. This notice summarized all the objectives referred to above. It was recorded that the process to follow was aimed at avoiding any retrenchments. The applicant was informed of the splitting of the positions, as aforesaid, and that all five positions in the marketing department were affected. It was proposed that selection for placement in the new positions took place on the basis that employees apply for the positions they wanted and then be interviewed by a panel and be placed in a position commensurate to skills and experience.
The Section 189(3) notice was handed over following a detailed presentation on 14 November 2014, conducted by Ledwaba, and as supported by a slide show. In this presentation, the new marketing strategy was fully explained. It was explained why the change was necessary. The strategy on how the change was to be rolled out was explained. The new structure was also explained.
It was undisputed that a number of consultations were held between the applicant and the respondent, the first being on 18 November 2014 and the final being on 9 January 2015. Each consultation will be individually dealt with hereunder. But what must be said, at this stage, is that the applicant approached each consultation on the basis of a specific modus operandae. She went into each consultation with a pre-prepared script, and only engaged in the consultations based on that script, which script was also handed to the respondent in each consultation. The applicant indicated that she was being assisted and advised throughout by what she called her ‘legal team’. In all these consultations, the respondent was represented by Ledwaba, and the human resources manager, Shyless Nkuna (‘Nkuna’).
As stated, the first consultation with the applicant was scheduled for, and then took place on, 18 November 2014. The applicant, from the outset, was asked if she had any questions about the Section 189(3) notice and the presentation made on 14 November 2014, as well as the process going forward. The applicant immediately reverted to her script. Reading from her script, the applicant said she wanted all her questions answered in writing, first, before she was willing to consult. The applicant made submissions in support of a request that she be legally represented in the process. The applicant asked for a ‘detailed description’ of the changes / new functions as between her existing position, and the new positions of marketing manager and brand manager, as well as the job profiles relating to these new positions. The applicant further asked for the job profiles salary ranges of all available positions, and in particular the positions of marketing officer and marketing administrator. And with regard to the selection process proposed, the applicant asked for particulars as to who the members of the panel would be, what criteria would be used, and how would the criteria be scored. She finally asked for the value of the ‘training’ the respondent would provide as part of its proposals in the Section 189(3) letter.
In response to the question about the new roles of marketing and branding, and the positions associated with this, Ledwaba on 18 November 2014 proceeded to offer a detailed explanation as to why this was needed and what was envisaged. The explanation was more or less the same as has been set out above. He asked the applicant if he had answered her question in this respect, and she said that he did. As to all the other information sought by the applicant, and in response to question by Nkuna whether the parties could consult on it in the consultation, the applicant answered that she required the answers in writing first before she would consult.
Ledwaba however did indicate to the applicant that she needed to indicate which positions she was interested in, as well as her order of preference, so this could be dealt with. The parties also proceeded to make arrangements as to when the questions would be answered by the respondent, as well as the date of the next consultation.
The respondent then answered the applicant’s questions, in writing, on 21 November 2014. As to legal representation, it was indicated to the applicant that she was free to consult a lawyer, but the respondent had no obligation to consult with a lawyer on her behalf and declined to do so. The reason for the two new positions as well as the focus of each position was explained. As to the information on the more junior positions the applicant wanted, the respondent stated that this would be consulted on at the appropriate time should the need arise, as it had concerns whether this would even be viable alternatives for the applicant, considering the diminution in level and status.
The applicant’s questions as to the interview panel, the criteria used, and how it would be scored, were also answered. The applicant was informed that it was not possible to provide her with the value of the training at this stage, as it first had to be established of training was even needed, and if so, what training and to what extent.
The next consultation convened on 26 November 2014. Again the applicant came with a script. The applicant confirmed that her questions from the previous consultation had been answered, and then immediately proceeded to state her ‘concerns’ with the process which she then read from her script. Significantly, the applicant confirmed that she ‘fully supported’ the new structure and the dividing of her existing marketing manager positions into two new positions of branch manager and marketing manager. The applicant also took no issue with the rationale for the restructuring.
The concerns the applicant raised, as read from her script, was that she disputed the fact that she needed to apply for one of these two positions. The applicant indicated that she met the requirements of both positions. She stated that she did not understand why she needed to be subjected to an interview. She stated that she did not get the proper salary band for the new positions, which means the respondent can simply alter the positions unilaterally should she apply for it. The applicant then indicated that as far as she was concerned, and based on what she called an ‘industry standard’, the brand manager position was not the same level as marketing manager and brand managers earn less.
The applicant proposed that the respondent forgo the interview process and that the applicant remain in her current role as marketing manager and that this role be amended by way of negotiation with her, coupled with an undertaking not to reduce her salary or benefits. The applicant also said that she would be willing to accept an offer of a voluntary exit should the respondent not want to retain her services. The applicant did not want to consult on any of the issues she raised, but required an answer from the respondent in writing.
The respondent answered in writing on 28 November 2014. The respondent recorded than an actual consultation process with the view to reach consensus, in which there was a free flow of discussion and ideas in the consultation, was far more appropriate that the current written process the applicant was insisting on. Nonetheless, the respondent did answer the issues raised by the applicant, in writing. The respondent explained that because the applicant’s current marketing manager position was not the same as the new position, and her former position was redundant, she could not just stay in her existing position and needed to apply for one of the new positions.
The respondent explained that it never doubted the applicant’s ability, competence and experience, but a proper restructuring process was required by law to be held, and this process had to be fair. According to the respondent, a fair process envisaged the applicant applying for the positions she wanted, and then be interviewed, and matched to a position. The respondent stated that the brand manager position was at the same level as the marketing manager position. The respondent made it clear that it wanted to retain the services of the applicant, that it appreciated her valuable skill and experience, and that the new structure offered her suitable alternative positions. The respondent urged the applicant to participate in the process.
The next consultation took place on 3 December 2014. Once again, the applicant came with a script. The respondent sought to engage with the applicant, asking whether she was interested in the marketing manager position and whether the process could go forward by way of her applying for the position. Nkuna explained to the applicant that it required a psychometric assessment of the applicant for this role as well, which would be ‘helpful’. Instead of engaging with Nkuna on what she said, the applicant then simply read her script again. The applicant remained adamant that she would not participate in a process where she would have to apply for the role of marketing manager, and that her current position must just be ‘amended’ on the basis she earlier demanded. She again raised the issue of a voluntary exit package.
Nkuna answered saying that an exit package was not on the table, as there was a reasonable alternative for the applicant and the respondent did not want to retrench her. Nkuna was at pains to explain that that from a salary, grade and status point of view, the applicant would not be affected should she apply for any of the two positions. Nkuna said there could be no disadvantage to the applicant in simply applying for a position in the process. Ledwaba explained it would be unfair towards other employees to have one process for the applicant, and another process for all the other employees, and reiterated that in order to be fair, the respondent must apply the same process to everyone. Nkuna explained that all other affected employees went through the same process.
The applicant answered that based on legal advice she received, she disagreed with what was being explained to her. The applicant maintained her earlier views. The applicant again wanted a response in writing, and did not want to consult on any of the issues in the consultation itself.
The respondent then answered in writing on 5 December 2014. On this occasion, it sought to place its final position with regard to the alternative positions and the selection process on record. The respondent confirmed the applicant’s existing position was redundant. The respondent stated that its interview process was not unreasonable and not aimed causing the applicant embarrassment. The respondent urged the applicant to apply for one of the alternative positions available. The applicant was warned that if she missed the opportunity to apply for a position, and then be retrenched, she would not receive severance pay. It was made clear that a voluntary retrenchment option was not available to the applicant.
