Legal updates and opinions
News / News
Employer may fairly dismiss employees for refusing to accept operational changes in the context of restructuring
Refusing to accept operational changes in the context of restructuring
Explanatory Note
Generally, the dismissal of employees to coerce them into accepting a particular employment outcome amounts to an automatically unfair dismissal within the meaning of Section 187 of LRA.
The Constitutional Court, in the matter of NUMSA and Others v Aveng Trident Steel and Another, introduced a new dimension to the dismissal of employees for refusing to accept an employer’s proposed operational changes in the context of restructuring. The Court’s central focus, in this case, was to determine the true reason for dismissal. However, this explanatory note does not deal with this aspect.
Aveng was in financial distress, and it took a decision to implement an organizational plan (which involved the restructuring of its operations), in an attempt to save its business. The restructuring entailed, amongst others, the redesigning of job descriptions. As a result, the employees were going to earn less. The arrangement was initially interim and agreed to by NUMSA. Surprisingly, when the employer sought to implement the restructured job descriptions NUMSA refused. Consequently, the employees were dismissed.
The Court, having considered that Aveng “faced harsh economic conditions and needed to restructure in order to survive and avoid the wholesale loss of jobs of its entire workforce“, determined that Aveng was justified in dismissing the employees for operational reasons. In other words, the employees were dismissed for refusing to accept the operational changes proposed by the employer (or alternatives to dismissal), and their dismissal was declared by the Court to be fair.
The Court in arriving at the decision has reminded us not to lose sight of one of the primary purposes of the LRA – to advance economic development.
Additional resources on labour law and Employment
Latest News
Exchange control relaxations for Intellectual Property transactions
INTRODUCTION In the recent 2017 Budget Review, the National Treasury proposed the relaxation of the exchange control restrictions surrounding [...]
Merger thresholds in Swaziland and Tanzania – absence of a local Nexus?
It is standard practice for competition regulators, empowered by legislation to monitor and evaluate mergers, to set minimum financial or [...]
.africa domain is here
The long awaited .AFRICA domain name extension will be available as of 3 April 2017 and will be managed by [...]
The National Minimum Wage: a further update
On 8 February 2017, Cyril Ramaphosa, the Deputy President of South Africa, disclosed preliminary details regarding the implementation of a [...]
Mirror, mirror on the wall, who’s the fairest of them all? Most favoured nation clauses from a Competition Law perspective.
Most favoured nation ("MFN") clauses, also known as price parity clauses or most favoured customer clauses, which appear in vertical [...]
Significant changes to government/parastatal procurement regulations promote Broad Based Black Economic Empowerment
New regulations in terms of the Preferential Procurement Policy Framework Act ("PPPFA") have been published and will take effect from [...]
