In Padayachee v Serere and Others (JR1162/21) [2024] ZALCJHB 254 (20 June 2024) the court held that a written notice was not strictly required because the employer had substantially complied with section 189(3) through communication with the union, which was involved in the consultation process and did not demand the formal written notice. Some commentators suggest that this case is authority for the view that you may do so provided certain facts are present. Despite the outcome of this case, it is strongly advised that you issue the section 189(3) written notice before embarking on a retrenchment process. This is the cautious approach.
In a retrenchment process, a section 189(3) notice is often regarded as the vital first step. An employer must issue a written notice to the employee or their representative inviting them to consult and disclose all relevant information regarding the contemplated retrenchment. Historically, the Labour Court has viewed this notice as the formal start of the retrenchment process, emphasising strict adherence to these requirements. In SASBO The Finance Union obo Fourie v Nedbank Limited (2020) 41 ILJ 500 (LC), the court indicated that the “requirement to issue a notice in terms of s 189(3) is peremptory” and “it is a significant statutory trigger for several events and options.” It serves as an invitation to consult on proposed retrenchments and provides the consulting parties with all relevant information including, among other things, the reasons for the proposed retrenchments, alternatives to retrenchment that have been considered, the proposed selection criteria, severance pay and timing of dismissals. Usually, these topics form the agenda at the consultation meetings. Not only is the information contained in the notice necessary for the parties to engage in meaningful consultations; but the notice itself serves an important evidentiary function when it comes to proving the fairness of retrenchments. It is also the marker that commences the periods for consultations in large-scale retrenchments.
In Padayachee v Serere and Others, the employee was ultimately dismissed based on the employer’s operational requirements. She referred an unfair dismissal dispute to the South African Local Government Bargaining Council (Bargaining Council), which found her dismissal to be procedurally and substantively fair.
Aggrieved by the outcome at the Bargaining Council, the employee instituted review proceedings in the Labour Court, alleging, among others, that the employer did not comply with section 189 of the Labour Relations Act, 1995 (LRA) in that the employer had failed to issue a section 189(3) notice.
The employer failed to issue a section 189(3) notice on the basis that (1) the employee’s trade union was involved in the consultation process and was aware of the details of the proposed restructuring, and (2) the employee did not challenge employer’s failure to issue a section 189(3) notice.
The court found that the arbitrator’s determination was reasonable, in that the employer substantially complied with sections 189(1), 189(2) and 189(3)(a) of the LRA despite not issuing a section 189(3) notice. This conclusion was supported by the court’s finding that there was a genuine consensus-seeking process and the employer’s failure to issue an 189(3) notice was acceded to by the trade union. Furthermore, the court found that the employer substantially complied with section 189 of the LRA and accordingly there was adequate compliance, and a mechanical process or tick box exercise is not required.
The court was careful to state that its decision to permit a departure from the mandatory issuing of a section 189(3) notice was specific to the context of this case and did not set a general precedent. Each case must be evaluated on its facts to determine whether there has been substantial compliance with section 189 and section 189(3) in particular.
The prevailing view is that an employer is obliged to issue an 189(3) notice to potentially affected employees as soon as it contemplates retrenchments, and we recommend that employers comply with this procedural step.
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