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
Time to amend the Business Rescue Act?
Business rescue was introduced into our law in May 2011. But is it time for an overhaul? The business rescue [...]
REITS – some clarification of the taxation of investment vehicles in real estate in the form of REITS and controlled companies
A traffic standstill is rarely the result of retail specials; however, on 28 April 2016 the greater Johannesburg area had [...]
The Uber price-fixing ride: what are the anti-trust co-ordinates?
During December 2015, Spencer Meyer instituted a class action lawsuit against Uber Technologies, Inc’s CEO, Travis Kalanick, in the United [...]
Far reaching judgment of the recent silicosis class action case
INTRODUCTION The scope and magnitude of the proposed class actions envisaged in Nkala v Harmony Gold Mining Company Limited (Treatment [...]
What happens to confidential information exchanged between the Competition Commission and sector regulators as the number of co-operation
The protection of confidential information has always been a feather in the cap of the Competition Commission (“Commission”). The Competition [...]
Special voluntary disclosure and exchange control relief
By: The Werksmans Tax Team INTRODUCTION Following the announcement of the Special Voluntary Disclosure Programme (SVDP) in [...]
