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Conveyancing & Property Update, Act ‘to hit landlords’ reported in the Sunday Tribune



 

SOME real estate specialists say the new Consumer Protection Act (CPA), which comes into effect on April 1, could cripple the residential letting industry, but others say it will be business as usual. Sandy Day of Lew Geffen Sotheby International Realty warned landlords and potential buy-to-let investors to get to know the Act. "In its current format, the CPA could prove disastrous for the rentals market because it is so restrictive of the rights of landlords that it could scare off droves of property owners from renting out their properties. It goes to unjustifiable and unheard of lengths to protect tenants." Geffen said if there is a conflict between the act and any other piece of statutory legislation, legal contract or rule (body corporate/ management or conduct), that which affords the most protection to the consumer will apply. The CPA will affect when a tenant and landlord terminate a lease and the option-to-renew clauses. "With the act in place, landlords are assured of being dealt a poor hand while tenants get to call the shots. The act offers landlords little recourse against tenants and virtually no way out of leases. The act will make it very difficult for landlords to get rid of undesirable tenants, said Geffen.Richard Day of Pam Golding Properties said some aspects of the act will "materially affect the rights of landlords and tenants, but, broadly speaking, it seeks to redress imbalances between landlord and tenant". The act could still be amended, though, he added. Pat Acutt of Acutts said: "We used to say let the buyer beware', but now we will say 'let the seller beware' as the main purpose of the act is to protect consumers." Acutt said a lot of negativity had been voiced over the effect of the CPA. With regard to the voetstoots clause, Acutt advised sellers to give buyers a fair opportunity to inspect a property and its fixtures and fittings and, after that, agree that no representations were made on the property condition that are not contained in a contract of sale. This should be reduced to writing and signed. Acutt said agents could not be legally liable for the condition of a property which should be clearly stipulated in a contract of sale. Claire McGee of law firm Shepstone & Wylie said the property rental industry might be hard hit by the act. A natural person will be able to cancel a fixed-term lease at any time on 20 business days' notice to the landlord, but this right to cancel has not been given to tenants that are juristic entities, such as companies, CCs, partnerships, associations or trusts.

Consolation

As a consolation, the draft regulations allow a landlord to charge the tenant a cancellation penalty of up to 10 percent of the amount the tenant would have had to pay for the remainder of the period of the lease.

A landlord will only be able to cancel a fixed-term lease if the tenant commits a material breach of the lease and does not remedy it Within 20 business days after being asked to do so. A landlord need only be concerned with these provisions of the act that relate to a lease currently in place if that lease expires at least two years after the date on which the act comes into effect.
 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment & Pension Law Update, Employers’ dismissals on the grounds of HIV status, seen as discrimination



 

THE LABOUR Court, in the case of Gary Allpass v MooiKloof Estates has recently confirmed the rights of employees living with HIV and has condemned the manner in which employers continue to discriminate against employees. During a job interview for the position of stable yard manager and horse riding instructor, Allpass, the Applicant, was asked about his state of health, in response he confirmed that he was in "good health" without making any mention of his HIV status. Shortly after the Applicant's employment commenced, the employer issued him with a form requesting him to disclose any medication he was on. The Applicant honestly disclosed the medication that he was administered in order to manage his HIV status. Upon receipt of the form, the employer immediately, without following any procedure, dismissed the Applicant on the grounds that he had failed, during his interview to disclose that he was HIV positive. In other words, that he had been dishonest in not disclosing this information. Expert medical evidence led during the trial proceedings revealed that the Applicant was in fact in good health and that he had not misrepresented himself in this regard. The judgment reveals that the employer acted in haste, there was no evidence to indicate that the Applicant was or would be unable to perform the duties for which he was hired. It was clear that the underlying reason for the dismissal was that he was HIV positive, not because he had failed to disclose such information. The Judge went on further to say that the Applicant was under no legal obligation to disclose his HIV status to his prospective employer and the expectation that he should have violated his right to dignity and privacy. The Applicant's dismissal was declared automatically unfair and he was awarded 12 months' compensation. Employers are warned, dismissing employees because of their HIV status is widely acknowledged as discrimination unless an employer can show that being free of HIV is an inherent requirement of the job which will only be allowed in very limited circumstances.

Siobhan Viljoen, Associate Partner

Contact: 011 290 2540 and viljoen@wylie.co.za

Litigation Update, Debt & Divorce, reported in City Press



 

Debt and divorce

Terminating a marriage can leave you with unexpected costs. Know your rights and duties

Nhlanhla bought a house with his wife. Their marriage hit the rocks, along with their finances, and they had to sell their home on auction and were left with an outstanding mortgage bond of R350 000. They subsequently got divorced through the Family Court. "When we decided to get the divorce, we could not afford lawyers so a lot of things might have been missed. We did the divorce ourselves through the courts. As we had no assets, we did not have an order on the debts we had," says Nhlanhla. Nhlanhla is concerned about what will happen to the debts and who will be responsible for paying them. "Will the bank be prepared to split the debt in two? I know my ex-wife will not pay a cent of it," says Nhlanhla. Another reader, Fox, is currently in a legal battle with his ex-wife over the sale of their property. When they divorced two years ago, the court ordered him to pay the bond for six months, at which point the property would be sold. His wife originally offered to buy his share of the property. However, she does not have the money to do so now and is refusing to consent to the sale of the property. "This is delaying my plans for the future and I am battling financially," says Fox. The problem is that in both these cases the parties were married in community of property. This is the standard default marriage contract in South Africa and it is the contract under which you will be married if you do not sign a separate contract, such as an antenuptial. Community of property means that all the property belongs to both parties. When you get divorced, the assets will be split in half, but you are both responsible for any debt that you incurred during your marriage and the debtors can approach either spouse to collect the money.

The lawyer's comments

Judy von Klemperer of Shepstone & Wylie Attorneys' litigation department says because Nhlanhla was married in community of property, the debt on the property is a joint debt. They are "jointly and severally liable". What this means is that each partner is not just liable for half the debt now that they are divorced, in fact the bank can seek the full amount from either of them. The one spouse who is held liable by the bank would then have a claim of 50% of the debt against the other, but it would be his or her responsibility to collect that debt (not the bank's). "The bank may agree to accept 50% from one person and release them from the liability, but it does not have to," says Von Klemperer. In Nhlanhla's case, First National Bank (FNB) agreed to accept 50% payment and to release him from liability. "I will be servicing mine and they have confirmed that no interest will be charged on the balance," says Nhlanhla. According to FNB, normally the divorce settlement makes a special mention of the mortgage. But if there is no clause in the divorce, the joint liability principle applies. After a divorce, the husband and wife should present their bank with a copy of the divorce settlement. This will remove any uncertainty about ownership and liability for bond payments. The situation with Fox is more complicated as it requires some legal intervention. Von Klemperer recommends that he tell his ex-wife that either she buys him out within a set period of time or he will sell the property in terms of the order granted."If she will not sell, I would advise that he approach the court for a receiver to be appointed to divide the joint estate. "If they entered into a settlement agreement and one got the property, then they must follow that route," says Von Klemperer, who explains that if parties are married in community and they cannot agree on how to split the assets, then a receiver can be appointed to gather the assets and liquidate them. He will then pay the debts and split the balance.

Fox has taken this recommendation and will approach the courts. He will hopefully be able to sell his property for more than the outstanding debt, otherwise he will need to approach his bank to discuss a settlement.

Candice Eve-Friis, associate partner. Shepstone & Wylie, matrimonial department

One of the most important things to remember is never to leave the matrimonial home. In doing so, you give up your possession of the home and, in effect, the person left behind can change the locks and prevent you from returning if he or she so wishes. This could leave you in a precarious position with no home or income and having to pay substantial costs to secure interim maintenance from your spouse. In respect of your children, never move out and leave them with your spouse because once you have left them behind, it can be difficult to reverse the "status quo". By virtue of being married, you and your spouse have joint parental rights and responsibilities, and both spouses have equal rights in respect of the children. The arrangements for the children will either have to be agreed upon or argued before a court if the parties cannot agree. Whatever arrangements are made will have to be endorsed by the family advocate, who will make sure that the best interests of the children are always prioritised. Before you make any changes to expenses you currently pay, or agree to take on additional expenses, seek advice on the financial obligations of your current marital regime and any maintenance payment you would need to make. There is a common law reciprocal duty of support between spouses and, in the event of divorce, one spouse may be responsible to maintain the other. The sharing of marital debt is based on your marital regime and legal advice must be sought in respect of what debts you are liable to pay. This will be a very emotional time for the parties concerned so the best advice is to consult with a legal practitioner who can advise you fully of your rights, especially if there are minor children involved. You need an objective party to put things in perspective as you may be unable to do that for yourself at this time.

It is always best to take advice from someone who is properly qualified, be it before getting married or during the termination of marriage by divorce. Even if people do not qualify for legal aid and have to pay an attorney or an adviser, it will probably end up costing less to pay for some advice before entering into any form of legal relationship than it will to try to untangle a huge financial or other problem at the end of a legal relationship. Before people enter into a marriage, they should do research or take advice on the various marital property regimes in South Africa and ensure that they understand the legal consequences of the different forms of marriage. There are two forms of marriage contracts:

  • In community of property, which is the default position in South Africa if you do not enter into an antenuptial contract before you get married; and
  • Out of community of property with or without the application of the accrual system. There are resources available online that you can use to educate yourself without having to spend a lot of money, such as the Department of Home Affairs website: www.home-affairs.gov.za

 

 

 

 

Conveyancing & Property Update, An inspired point of view, reported in Leading Architecture & Design



An inspired point of view

Written by LynneYates

The new modern head office of Shepstone & Wylie Attorneys in Umhlanga offers sweeping views of the Indian Ocean and is an exemplary model of environmentally sustainable design.

Few companies are fortunate enough to occupy a building overlooking the ocean, but when given that opportunity, naturally the design needs to make the most of the orientation and uninterrupted views – after all, what better way to entice staff to come to work? Not only does the new head office of Shepstone & Wylie Attorneys in Umhlanga do just that, but it also affords the law firm a high level of visibility and presence in the area, and fulfils many of the requirements of environmentally sustainable design. Situated in the prestigious Ridgeside Office Park, once home to sugar cane fields, but now the address of several blue chip companies, the building was designed by Raewyn Gowar of Evolution Architects (formerly of Archi Angels Architects). Gowar graduated from the University of KwaZulu-Natal in 1994 and over the past 16 years has been involved in the design, documentation and running of several high profile and prestigious projects throughout South Africa. In 2005, after working for an established practice in Durban, she founded the Archi Angels Architects partnership. This partnership was terminated in 2010 and Evolution Architects began. Evolution Architects is a young and dynamic team and their aim is to provide innovative and original design solutions which comply with the client's brief and budget. "Shepstone & Wylie Attorneys, a prominent firm established in 1892, required a building that would reflect its status and image. Our design intent was to provide a high quality corporate office environment in keeping with the overall ethos of the precinct and the corporate identity of the tenant," explains Gowar. "While the land price was at a premium and it was necessary to maximise the bulk developed on the site, we also needed to acknowledge the surrounding sites and the relationship between the buildings within the precinct, therefore ensuring that the landscaping and built form knit together to form a high quality, functional and healthy working environment." The decision was therefore made to position the main office footprint centrally within the site boundaries and to create large areas of hard and soft landscaping, providing for greater distance and space, and ultimately a better relationship, between the surrounding buildings. The landscaping for the site became an integral part of the architectural design and includes beautiful, textured Zen, rooftop gardens viewed from the offices above. The shape, access, orientation and views of the 5 547m2 site, developed and owned by Maponya Developments and Beare Holdings, ultimately determined the building form, which is long and rectangular with predominately east- and west-facing facades. The structure comprises four storeys of office space with a large, naturally ventilated basement parking area and covered parking bays sitting below the rooftop gardens. Each floor consists of an 18m-wide floor plate, which traverses the length of the site, boasting magnificent east-facing sea views. "The clients, Maponya Developments and Beare Holdings, both of whom have been property developers and owners of commercial, retail and industrial property for many years, are committed to a green building philosophy." says Gowar. "The main entrance is announced from the upper parking deck by an elegant high volume, white steel, louvred canopy, which provides a play of light and shadow on the building, contrasting with the solid simplicity of the main structure. This canopy leads into an impressive double volume entrance traversing the width of the building. This double volume is expressed on the facade with the use of full height curtain walling and a roof volume framed with red Hulabond elevated from the cantilevered flat rooftop of the main structure," explains Gowar. The design of the facades was also dictated by the building's orientation and takes cognisance of the interior function and occupants of the building. "Naturally, we have drawn on the natural setting as much as possible and taken full advantage of the views. The intention was to have as much natural light and ventilation within the building as possible to allow for a comfortable and pleasant office environment," reveals Gowar. "In fact, one of the major requirements of our brief was that the building be in keeping with the principle of innovative and environmentally sustainable design. To this end, the building design was submitted to the Green Building Council of South Africa (GBCSA) and obtained a four star design rating – only the third office building in South Africa to achieve this design rating. Passive climatic control elements as well as energy saving designs were implemented where possible in order to respond to the principles of sustainable architecture," maintains Gowar. The GBSCA sets out a point system for various aspects of a building which need to comply with green design principles. "This had an impact not only on the overall building design, but also on many of our design decisions, such as the HVAC system used, electrical specifications, selection of finishes and landscape design. Building management and waste management systems also needed to be implemented. Some of the green star points were easy to achieve as they formed part of the original design thought – for example, the building was designed for a specific end user, which allowed us to achieve points for an integrated fit out-while the maximisation of the site bulk allowed us to achieve points for the building's efficiency," explains Gowar.

"As mentioned, part of our design brief was to maximise on natural lighting and views. The design intent was to allow for every office space to have an element of natural lighting as well as to enable all the occupants to enjoy the sea views at some point in their experience of the building. As the predominant views were east-facing sea views, it was logical that the large glass expanses would be on the east facade, consisting of a series of strip flush glazed windows and elements of curtain walling along this elevation, while the west and north facades feature smaller window openings. Every cellular office along the building's perimeter is provided with an external view window, while the centrally located open plan office spaces gain natural light from internal windows. In addition, the floor to ceiling curtain walling in the double volume main entrance reception area is experienced by all who enter the building and capitalises on the outstanding sea view," she adds. In order to control the effects of the sun on the north, west and east facades, double glazing was implemented throughout the building. This also assisted with internal noise level reduction as per GBSCA requirements. "Achieving points for items such as the selection of internal finishes proved particularly challenging as we needed to comply with the low VOC requirements and provide the necessary back-up paperwork and certified data sheets. Many products are marketed as being green, but suppliers had difficulty providing the back-up paperwork, which proved frustrating,"says Gowar. The materials used were largely dictated by the design guidelines as set out by Tongaat Hulett Developments. Plaster and paint dominate, while sandstone, curtain walling and Hulabond cladding provide complementary accents. Says Gowar, "The proximity of the building to the coast dictated that all building materials be as maintenance free and durable as possible. We therefore avoided excessive amounts of steel work which would corrode, and rough textured finishes which would attract dust and dirt, and rather aimed for a smooth, washable building surface." The landscaping design makes use of the xeriscaping principle, which provides for a selection of plants which do not require additional watering once established. The building also promotes ecology-conscious considerations through waste recycling, efficient use of water, irrigation and energy management. "It was a privilege to be given the opportunity to work on this prestigious building. The green building principles and application thereof was an exciting and challenging learning curve as it was fairly new territory for most of us. I think most architects and consultants have a basic understanding of the green principles for sustainable buildings and do apply many of these principles as part of the design process, however, it is quite demanding when applying the principles to submit to a council and having to follow exact procedures and guidelines in order to achieve a point system rating. There are no half measures and one needs to follow the principles through precisely and completely," she concludes.

Shepstone & Wylie Attorneys, 031 575 7000

 

 

 

 

 

 

Employment & Pension Law Update, Revised ’employee’ definition offers more certainty for newly hired workers, reported in the Mercury



 

THE Labour Appeal Court in the case of Wyeth versus Manqele extended the definition of "employee" to include individuals who have been employed, but who have not yet commenced work. In this case, Manqele signed his contract of employment before the starting date of his employment and before even giving his services, his contract of employment was terminated. In order for Manqele to claim any relief in terms of the Labour Relations Act (LRA), 1995 he needed to prove that he was in fact an employee. Both the CCMA and the Labour Court held that Manqele was an employee. Aggrieved by the outcome, the company approached the Labour Appeal Court for relief.The definition of "employee" as per the LRA means "any person who works for another person, or for the state and who receives or is entitled to receive a remuneration". It was this definition that the Labour Appeal Court was called upon to interpret and apply to Manqele's circumstances.The Labour Appeal Court held that it was not in a position to apply the literal interpretation of the definition because such an interpretation would manifest in an absurdity, inconsistency, or a result that would be contrary to the intention of the legislature. More importantly, the literal interpretation would create uncertainty in the practice of labour law. Manqele had resigned from his previous employment in anticipation of starting his new employment. If he was not regarded as an employee, he would have been in a worse-off position in that he would have been without employment and without relief. The Minister of Labour has recently published proposed amendments to the LRA, these proposals include an amendment to the term "employee" to mean "any person employed by or working for an employer, who receives or is entitled to receive any remuneration, reward or benefit and works under the direction or supervision of an employer".The proposed amendment expressly includes individuals who have been employed but who have not yet started working for their employers. The proposed amendment to the definition of "employee" that refers to persons "employed by" an employer will be welcomed in that it will bring about clarity and certainty for those employees who have been hired, but who have not necessarily started working.

 Written by Yonela Mbana

 

 

 

 

Corporate & Commercial Law Update, The Future of Fixed Term Agreements reported in the Witness



ACCORDING to the draft regulations for the Consumer Protection Act, 2008, from March 31, 2011, suppliers of goods and services will not be permitted to conclude a fixed-term agreement to supply goods and/or services to a consumer for a period exceeding 24 months from the date on which the consumer signs the agreement.

The act also says that a consumer may cancel a fixed-term agreement at any time on 20 business days notice to the supplier. This spells the end of the common practice of locking consumers into one-sided agreements from which they are unable to escape.

However, if the consumer cancels a fixed-term agreement and the supplier has supplied any goods or services or granted the consumer any discounts in contemplation of the agreement enduring for its full term, the draft regulations provide that the supplier may charge the consumer a cancellation penalty of up to 10% of the amount which the consumer would have had to pay for the remainder of the period of the agreement.

Suppliers will have to monitor constantly the expiry dates of their fixed-term agreements as the act provides that, at least 40 business days before the expiry of a fixed-term agreement, the supplier must notify the consumer of the expiry date and the option either to renew or terminate the agreement with effect from such date. The supplier must simultaneously notify the consumer of any material changes to the fixed-term agreement which it proposes should apply on renewal.

If the consumer does not elect to terminate or renew the fixed-term agreement, after the expiry date, the agreement will continue on a month-to-month basis on the terms which the supplier proposed would apply if the consumer had renewed the agreement.

The supplier, on the other hand, may only cancel a fixed-term agreement if the consumer commits a material breach of the agreement and does not remedy the breach within 20 business days after being requested by the supplier to do so.

Businesses will be relieved to know that these provisions of the act do not apply to franchise agreements or fixed-term agreements between juristic persons. In addition, they only apply to transactions which take place in the ordinary course of business in return for payment.


Claire McGee is an associate partner in Shepstone & Wylie Attorneys commercial law department.
 

 

 

 

 

 

 

 

Employment & Pension Law Update, response to a Sunday Times reader’s question on retrenchment



 

SUNDAY TIMES, Business Times Careers & Money 30 Jan 2011, Page: 2


SUNDAY TIMES, Business Times Careers & Money

MY COMPANY has decided to restructure itself to become more profitable and the transformation makes any department effectively superfluous, so we have been told that we will all be retrenched. We got together and worked out how, with some training, we could still be an important part of the new-look business. However, when we approached management, they said they were not interested in hearing what we had to say as the retrenchment process had already begun. Do we really have no say in this or can we force the company to listen to our ideas?
Response from Michael Maeso, head of the employment law department at Shepstone & Wylie Attorneys: Before a company may retrench any of its employees, it is obliged to comply with Section 189 of the Labour Relations Act. This requires an employer to consult with employees that may be affected by the retrenchment as soon as the employer contemplates dismissing one or more of them.
The word "contemplates" confirms that the process of consultation must begin before a final decision is made to retrench. Consultation, in turn, is defined as a meaningful, joint, consensus-seeking process. This suggests a two-way process requiring input from both the employees, and the employer.
What is important is that the purpose of consultation is to "reach consensus".
There must therefore be a process between employer and employees whereby ideas are exchanged on appropriate measures to avoid the dismissal or, at the very least, to minimise the number of dismissals and mitigate the effect of the dismissals.
Clearly this obligation requires the employer to properly consider any suggestions by employees on how to avoid their retrenchment.
Section 189(5) of the Labour Relations Act requires the employer to allow employees an opportunity during consultations to make these representations, as well as any other matter relating to the proposed dismissals.  The employer is in turn obliged to consider and respond to these representations.
There is no obligation upon the employer to agree to the proposals put forward by the employees. However, the employer is bound to consider the representations and if he disagrees with them, to set out in writing why this is so.
While the employer has the right to refuse to accept the employees' suggestions if the suggestions are manifestly fair and can be implemented with the least amount of upheaval to the employer, it would be very risky for the employer to simply reject these proposals out of hand.
The simple answer to the problem posed is therefore that employees are entitled to make representations in regard to their proposed retrenchment and that, if reasonable alternatives to their retrenchments are put forward, the employer must give careful consideration to these proposals before rejecting them in writing.

Michael Maeso, Partner & Head of Employment & Pension Law

Contact: 031 575 7207 and maeso@wylie.co.za

Employment & Pension Law Update, Sunday Times reader’s question – Accidents will happen, so it’s best to be prepared



Accidents will happen, so it's best to be prepared

ACCIDENTS happen in the workplace – and when they do, knowing how to respond can make a big difference.
Davi Hofman, the operations manager of a Johannesburg based voluntary medical rescue service, says this can start with a company deciding which ambulance service to use.
He suggests choosing one that operates in the area and making sure that every employee knows what number to call in the event of an emergency.
Hoffman says often valuable minutes are wasted while people try to decide who and what number to call.
Vuyo Mkwibiso, an associate in the employment law department at Shepstone & Wylie Attorneys, says the general safety regulations applicable to employers regulates workplace first aid, emergency equipment and procedures.
"It gives employers the duty to take reasonable and necessary steps to ensure that persons at work receive prompt first-aid treatment in cases of injury or emergency." Companies may be required by law to train first aiders and a first-aid officer, but despite being sent on courses few get the chance to perfect their skills.
This means that if someone does require assistance, the first aiders may do nothing because they are afraid of making a mistake.
But Hofman's advice is: "Something is better than nothing; try to do something." Hofman said companies could invest in an automated external defibrillator (AED). This machine will give the patient oxygen while defibrillating their heart and can keep a person alive while the ambulance arrives.
Some of the most common emergencies at work are collapses, including heart attacks, epileptic fits and diabetic-related collapses, he said.
Others are burns, which should be treated with cold water rather than ice, and then wrapped In Burn Shield – and trips and falls.
In the case of a bad fall, Hofman said the injured person should not be moved. If there is any chance of a spinal cord injury as this can make the injury worse. "If in doubt, don't move," he says.
For first-aid teams, the law distinguishes between companies employing between six and 10 people and those employing more than 10. "For the first category, the employer only needs to provide a first-aid box or boxes at or near the work place and ensure that those boxes are accessible," Mkwibiso said.
Companies with more than 10 staff must ensure there is at least one person with a valid certificate of first-aid competency for every 50 employees; for a shop or office, there must be one qualified first-aid person for every 100 employees, he said.

 

 

 

 

 

 

 

Employment & Pension Law Update, Steps to consider before retrenching reported in The Witness



Steps to consider before retrenching

RETRENCHMENT for the purpose of increasing the profitability of a business is acceptable and valid, but employers need to follow a thorough consultation process with employees otherwise the dismissals will be considered procedurally unfair. This was confirmed by the Labour Court in the case Van Rooyen & Others v Blue Financial Services SA (Pty) Ltd.
In this case the employer was a profitable business, but wished to restructure to increase profits. The employer could show that the restructuring was vindicated by an increase in sales. The employer could also show that the role of regional manager in the new structure was sufficiently different to justify assessing the incumbents in regard to their suitability for the new posts. Objective criteria were used to identify suitable candidates.
The employer, however, dismissed a detailed memorandum submitted by the applicants without engaging them on the content. Instead, the employer complied with its deadline previously set in the consultation process and ended consultation. The employer also failed to engage the applicants on selection criteria.
The court accepted that there was no need to lead evidence on the "excessive bleeding and imminent death" of the business and accepted the commercial reasons for the employer's new business model.
The court held that the employer's dismissal of the applicant's memorandum breached their obligation to participate in a meaningful joint consensus seeking process as required by the Labour Relations Act. There were no drastic measures necessary to ensure the survival of the enterprise to explain ignoring the memorandum.
There was no consultation on the selection criteria. Although assessments were conducted on candidates to assess their suitability for the restructured position, the court concluded that there was an obligation to engage the applicants on the outcome of the assessment.
The court concluded that an employer's obligation to consult over alternative employment and to take steps to accommodate affected employees in that employment, is much more onerous in circumstances where the rationale for a proposed retrenchment is to improve profitability.
In these circumstances the court held that the employer had failed to consult adequately and that the applicant's dismissal was procedurally unfair. The applicants did not seek reinstatement and were each awarded compensation equivalent to four months pay.
 

Michael Maeso, Partner and Head of Employment & Pension Law