To Conciliate Or Not To Conciliate

In a recent decision in National Union of Metalworkers of South Africa and Others v Industrial Oleo Chemical Products the Constitutional Court confirmed that, where a large-scale retrenchment has been subject to facilitation, it is not necessary for the retrenched employees, or their registered trade union, to first refer an unfair dismissal dispute to conciliation at the CCMA or Bargaining Council before approaching the Labour Court for adjudication. The Court reached that conclusion after analysing Section 189A(7)(b)(ii) and Section 191(11) of the Labour Relations Act 66 of 1995 (“LRA”).

Section 189A of the LRA regulates large scale retrenchments. Consultation, in the context of retrenchments, may be facilitated by the CCMA or proceed on a non-facilitated basis, depending on the election of the consulting parties. Where facilitation is opted for, at the end of that process, section 189A(7) of the LRA provides employees (or a registered trade union) with the option of resorting to strike action or to refer an unfair dismissal dispute to the Labour Court.

In this case, The National Union of Metalworkers of South Africa (“NUMSA”), on behalf of its members, contended that an unfair dismissal dispute, concerning a large-scale retrenchment can be referred directly to the Labour Court once facilitation has failed. The Respondent, Industrial Oleo Chemical Products, took a different view and argued that section 189A(7)(b)(ii), read with section 191(11), only triggers the Labour Court’s jurisdiction “after prior referral to conciliation” has occurred.

The case came before the Labour Court which agreed with NUMSA’s argument that conciliation was not peremptory. On appeal, the Labour Appeal Court reversed this finding, holding that conciliation was necessary before the unfair dismissal dispute could be adjudicated by the Labour Court.

In determining the matter, the Constitutional Court drew a distinction between facilitation and conciliation. The Constitutional Court accepted that facilitation occurs during the retrenchment consultation stage, “before dismissal (a forward- looking process), whilst conciliation, if it is necessary, would occur after a dismissal has taken place (a backward-looking process).” The fundamental difference, the Court found, is that facilitation is consultative and pre-emptive, whilst conciliation is remedial and reactive.

This notwithstanding, the Constitutional Court found that, when considering the differences between facilitation and conciliation in the context of section 189A(7)(b)(ii), these differences appear to be academic as there is no benefit to post-facilitation conciliation in respect of the substantive fairness of ensuing dismissals. In essence, the issues addressed in a subsequent conciliation concerning the fairness of retrenchment dismissals would essentially mirror those already canvassed during the facilitation process. The crisp focus, in both instances, is the retrenchment and the aim is to reach consensus about the fairness of the retrenchment process, and severance packages. Accordingly, the Constitutional Court found that requiring parties to refer the dismissal dispute to the CCMA for conciliation prior to adjudication would be unnecessary and “duplicative.”

The Constitutional Court also considered whether it would be appropriate to treat employees who opt to resort to strike action differently from those who elect to refer the dismissal dispute to the Labour Court for adjudication. Section 189A(7)(b)(i) provides that where facilitation has taken place, employees may immediately give notice to strike in terms of section 64(1)(b) or (d). The Court found that it would be illogical for employees, who choose to strike to be entitled to do so immediately upon receiving their dismissal letters, whilst requiring those who choose adjudication to first refer the dispute to conciliation before approaching the Labour Court. Given that the right to strike following facilitation is immediate, the Court reasoned that the right to refer a dispute to the Labour Court for adjudication must likewise be immediate. The Court reasoned that, had the legislature intended conciliation follow a failed facilitation in respect of retrenchment dismissals, it would have expressly provided for this requirement.

A core aspect of the Respondent’s case was its contention that section 189A(7)(b) of the LRA does not independently confer jurisdiction on the Labour Court but rather requires that a referral to conciliation be made in terms of section 191(11). It argued that section 191(11), read with section 191(5)(b), provides that the Labour Court only has jurisdiction once a bargaining council or CCMA commissioner has issued a certificate confirming that the dispute remains unresolved after conciliation. On this basis, the Respondent submitted that the statutory language contemplates that a referral to the Labour Court would only follow after conciliation. In support of this argument, the Respondent relied on National Union of Metalworkers of SA v Intervalve (Pty) Ltd (“Intervalve”), in which the Constitutional Court held that conciliation is a prerequisite to the Labour Court’s jurisdiction being engaged.

The Constitutional Court rejected this argument and distinguished the Intervalve decision on the basis that it dealt with dismissals arising from strike action; dismissals within a fundamentally different context. The Court emphasised that Intervalve did not concern dismissals resulting from large-scale retrenchments, which fall under section 189A(7)(b)(ii) and not section 191 of the LRA. The legislature deliberately created a separate regime for disputes arising from mass retrenchments, the Court found.

Importantly, the Constitutional Court confirmed that the wording of section 189A(7)(b)(ii) unambiguously permits a direct referral to the Labour Court without requiring parties to overcome any additional procedural prerequisites.

In the Court’s assessment, requiring litigants to pass through two separate jurisdictional requirements before accessing the Labour Court would be inconsistent with the LRA, that provides for the expeditious resolution of disputes. Requiring consultation would unjustifiably limit the right of access to courts enshrined in section 34 of the Constitution. Accordingly, the Court found that conciliation is not a prerequisite under section 189A(7)(b)(ii), and whilst section 191(11) is referenced, it does not activate the conciliation requirement contained in section 191(5)(b).

The Constitutional Court further clarified that the 90-day period within which to refer a dispute to the Labour Court for adjudication commences on the date that the employee or registered trade union receives the dismissal notices, provided that at least 60 days have lapsed since the original section 189(3) notice was issued.

The Constitutional Court’s decision provides welcome clarity on the procedural requirements applicable to large-scale retrenchment disputes.

This decision recognises the practical reality that facilitation and conciliation serve substantially similar purposes in the context of retrenchment disputes. Requiring parties to engage in a duplicative conciliation process after facilitation would serve no meaningful purpose and would only delay the resolution of disputes.

From a practical perspective, employers and employees involved in large-scale retrenchments should take note that, once facilitation has concluded unsuccessfully, the 90-day period for referring unfair dismissal disputes to the Labour Court begins to run from the date of receipt of the dismissal notices.

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