Ivan Israelstam | Chief Executive | Labour Law Management Consulting | mail me |
To have a chance of winning a case at the Labour Court, a party must present proof to the judge.
In the case of Malekunutu vs Joburg Bolt (Lex Info 17 January 2025. Labour Court case number JR1806/21), the employee faced retrenchment. The employer claimed financial difficulties as the reason for this decision.
The Commission for Conciliation, Mediation and Arbitration (CCMA) ruled that his dismissal was fair. However, the Labour Court, upon review, reached a different conclusion. It found that the CCMA arbitrator had failed to consider crucial evidence. The arbitrator had also not properly assessed whether the employer’s stated reason for retrenchment was genuine.
Substantively fair retrenchment – looking beyond surface explanations
Before the employer mentioned retrenchment or financial trouble, it had already approached the employee. The approach came through his union. The employer stated that it wanted to reduce the employee’s pay by 40%. It justified this by saying his salary was out of line with that of colleagues performing similar work.
Only after the employee refused the pay cut did the employer bring up the topic of retrenchment. The employer’s own correspondence, along with testimony from one of its witnesses, made things clear. They confirmed that the retrenchment process began only because the employee had declined the proposed salary reduction.
The court found this reason for retrenchment illegitimate. It also ruled that the employer’s claim of financial difficulty lacked credibility. As a result, the court deemed the dismissal unfair. It ordered the employer to reinstate the employee. Additionally, the employer had to pay four and a half years of backpay.
Understanding the cost of ignoring legal requirements
This extremely costly dismissal could have been avoided. The employer failed to understand a basic rule. It bears the responsibility of proving a valid reason for retrenching an employee.
Employers must also grasp what qualifies as legally acceptable proof and a substantively fair retrenchment requires valid, provable reasons. This case underscores a critical point. Employers should train their decision-makers in the rigorous demands of labour law. Without such training, mistakes can lead to serious financial and legal consequences.
