Changing Terms & Conditions of Employment

Employers are wary of dismissing employees who refuse to accept a change to terms and conditions of employment for fear of the dismissals being automatically unfair as the dismissals would be in contravention of Section 187(1)(c) of the Labour Relations Act (“the LRA”) and as amended by the Labour Relations Amendment Act of 2004 (“the LRAA”).

Section 187(1)(c) provides that a dismissal is automatically unfair if the reason for the dismissal is “a refusal by employees to accept the demand in respect of any matter of mutual interest between them and their employer”.

However, a recent Labour Appeal Court judgment has confirmed that while employees cannot be dismissed for refusing to accept a demand, they can be dismissed if the refusal causes an operational necessity for the employer.

The employer, Avenge, operates in the steel industry which has been in decline since 2010.   Avenge needed to restructure its business to remain viable and began a consultation in which it explained that it needed to realign its business to ensure sustainability. Avenge proposed, amongst other things, a review of organisation structures and a redefinition of some of the job descriptions of its employees.

During the process it was agreed that for an interim period, employees would perform the revised job descriptions, but no final agreement could be reached. As result, Avenge advised NUMSA  that that jobs that existed prior to the consultation process were redundant and that their members faced retrenchment.  Unfortunately, all employees refused to accept the new terms and conditions of employment and were dismissed on the 24th April 2015.

The Labour Court agreed with Avenge and held that the redesigned job descriptions were an appropriate measure required to avoid retrenchments and thus the dismissal was for a fair reason.

On appeal NUMSA argued that the plain meaning of the words used in Section 187(1)(c) only required a demand, a refusal and a dismissal for the dismissal to be automatically unfair and that this also applied in circumstances where the demand was motivated by the genuine operational requirements of the employer to change the terms and conditions of employment.

The Labour Appeal Court held that it must determine whether the dismissal would have occurred if the employees had not refused the demand.  If this is so, then the dismissal is not automatically unfair.  If the answer is no, then this does not immediately cause the dismissals to be automatically unfair and the next enquiry is whether the refusal was the main, dominant or proximate or most likely cause of the dismissal.

The court accepted that Avenge’s viability was at stake and that participating in a power play and locking out employees to compel acceptance of the changes was not realistic.  The court accepted that the primary purpose was to restructure the business to ensure Avenge’s long- term survival and that proposals were negotiated to impasse. The failure by employees to accept the proposals created on “insurmountable operational requirements problem, that constituted a fair reason for dismissal”.

Employers are advised to take advice before embarking on a similar path.