The Pandemic has left some employers with no other choice but to retrench due to the negative economic impact. Consultations must take place as soon as the employer contemplates retrenchment, as per Section 189 of the Labour Relations Act, during these consultation alternatives will be discussed. But, can an employer dismiss employees because they refuse to agree to a change to their terms and conditions of employment as an alternative to retrenchment?

In the matter of National Union of Metal Workers of South Africa and Others v Aveng Trident Steel (a division of Aveng Africa (Pty) Ltd) and Another (CCT178/19) [2020] ZACC 23; [2021] 1 BLLR 1 (CC); (2021) 42 ILJ 67 (CC) (27 October 2020) due to the economic distress Aveng found itself in, it was necessary to restructure its operations because of the decline in its profitability and sales volume.  Evidence was submitted on the consultative process between Aveng and NUMSA. Aveng proposed to alter the terms and condition of employment in order to survive the economic strain, the employees rejected such alternatives, their services were then terminated due to operational requirements. NUMSA argued that the dismissal of the applicants was automatically unfair in terms of section 187(1)(c) of the LRA. 

The Labour Court held that the employees were not dismissed for refusing to accept any demand, but for operational requirements after rejecting the alternative to dismissal proposed by Aveng during the retrenchment consultation. The Labour Appeal Court agreed with the Labour Court. Aveng did not make a demand in terms of section 187(1)(c).

Still persistent, NUMSA approached the Constitutional Court. However, the Court agreed that the dismissal was not automatically unfair. Restructuring entails a number of possibilities, including changes to shift systems, adjusted remuneration, and merging of jobs or duties provided that the dominant cause is based on the business operational requirements and provided that proper procedure is followed.

Conclusion: It is clear from the judgements that it is fair to retrench employees who rejected an offer to alter their terms and conditions of employment as alternative, provided of course that the employer can demonstrate that there is a genuine operational need to change such terms and conditions of employment; that there is no reasonable alternative to dismissal; and that a fair consultation process has been followed.