In Mqikela v Pristo Response Trading, the South African Labour Court found that a supposed retrenchment had masked the real reason for dismissal: the employee had referred an unfair labour practice (ULP) dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA)

The employee’s dismissal was found by the Court to be automatically unfair in terms of section 187(1)(d) of the Labour Relations Act, 1995 (LRA) and the employee was awarded 20 months’ remuneration as compensation, together with costs.

The judgment reveals that the Courts will not tolerate ‘dressed-up’ dismissals designed to circumvent or retaliate against the exercise of employee rights.

Background

Ms Mqikela was employed as a human resources manager at the Pretoria branch of Pristo Response Trading (Pristo). In 2020, Ms Mqikela referred an internal grievance against Mr Mapalakanye, the sole director of Pristo, to her line manager, alleging unfair treatment in respect of salary increases and failures to pay certain bonuses.

This grievance went unresolved for about a year when Ms Mqikela decided to approach Mr Louw, Pristo’s external labour consultant, to discuss her grievance. After Mr Mapalakanye again expressed his unwillingness to handle the grievance, Ms Mqikela indicated that she would seek external assistance, and did so on 31 January 2022, by referring the ULP to the CCMA.

Only one day later, on 1 February 2022, Ms Mqikela was informed by Mr Louw, on behalf of Pristo, that she was at risk of being retrenched because Mr Mapalakanye wanted to outsource the human resources function.

On 14 February 2022, Pristo served Ms Mqikela with a notice in terms of section 189(3) of the LRA (189(3) notice), which recorded the reason for the contemplated retrenchment as financial difficulties due to loss of contracts and a decision to scale down and outsource certain functions and positions. Also stated in the 189(3) notice was the rejection of ‘salary reductions and short time’ as potential alternatives to dismissal, and that only Ms Mqikela was at risk.

Following two consultation meetings, during which Ms Mqikela maintained that the retrenchment consultation process was retaliatory, Ms Mqikela was notified of her dismissal on 1 April 2022. Following an initial referral to the CCMA for conciliation, the matter came before the Labour Court.

Labour Court findings

Before the Labour Court, Ms Mqikela submitted that she was dismissed by Pristo in response to her exercising her rights conferred by the LRA, making such dismissal automatically unfair. Ms Mqikela sought the maximum compensation (24 months’ remuneration) in her opening statement; however, she lowered this to 20 months’ remuneration in her closing arguments.

Pristo disputed that the dismissal was automatically unfair and submitted that the reason for the dismissal was related to its operational requirements, and thus fair. In support of its position, various operational reasons were submitted by Pristo including the outsourcing of the human resources function, the loss of a contract with the Department of Arts and Culture, and that there were, in fact, no human resources duties at the site where Ms Mqikela was based.

These reasons were not only contradictory, but the latter was not part of Pristo’s pleaded case, nor did it appear in the 189(3) notice. In evidence, Mr Mapalakanye also provided various contradictory dates for his contemplation of Ms Mqikela’s retrenchment but eventually settled on what was stated in Pristo’s statement of defence, being 2021. 

With reference to the scope of section 187(1)(d) of the LRA, the Court noted that the exercise of the right referred to by Ms Mqikela was her referral of the ULP to the CCMA, and not the internal grievance. These facts were therefore distinguished from the Labour Appeal Court’s finding in DBT Technologies (Pty) Ltd v Garnevska that an internal grievance relates to an employer’s internal procedures and does not involve the direct exercise of a statutory right against the employer. Therefore, Ms Mqikela’s referral to the CCMA brought her claim squarely within the confines of section 187(1)(d). It was irrelevant whether the ULP dispute had prospects or not, so long as it was not frivolous or vexatious or made mala fide.

The next issue the Court had to determine was the true reason for the dismissal. This test is twofold and involves both factual and legal causation.

The Court scrutinised the operational requirements submitted by Pristo and found that there was no correlation between the 189(3) notice, the evidence led by Mr Louw and Mr Mapalakanye and Pristo’s pleaded case. The Court rejected the evidence that Pristo contemplated the retrenchment in 2021 as improbable, in favour of Ms Mqikela’s submission that the retrenchment was only contemplated after Pristo received the ULP referral on 31 January 2022. Therefore, the Court held that Pristo’s defence and attempted justification were incoherent and not credible.

Applying the established test for determining the true reason for a dismissal, the Court found that Pristo would not have dismissed Ms Mqikela, had she not referred the ULP to the CCMA. Further, the most readily apparent and acceptable inference from the evidence was that Ms Mqikela’s referral of the ULP was the main, dominant, proximate, or most likely cause of her dismissal. Consequently, the dismissal was automatically unfair in terms of section 187(1)(d) of the LRA. The so-called retrenchment was a façade, designed to hide the true reason for the dismissal.

Having found in favour of Ms Mqikela, the Court awarded her the compensation she sought (amounting to ZAR 300 000). In determining the amount of compensation, the Court noted that Pristo had deliberately manufactured a reason to dismiss Ms Mqikela, knowing that the true reason for the dismissal was unlawful, unsustainable, and/or unfair, and the fact that Ms Mqikela was unemployed for more than 36 months following the dismissal.

Further, having received no representations from Pristo in respect of costs, the Court ordered Pristo to pay Ms Mqikela’s costs and expressed its displeasure with litigants who ’come before it with dirty hands’. In the circumstances, the requirements of law and fairness dictated that Ms Mqikela should not be out of pocket for vindicating her rights, while Pristo persisted in its attempts to justify its misrepresentation.

Key takeaways

The misrepresentation of the true reason behind a dismissal has consistently been met with disdain by our courts. Employers who deliberately seek to disguise automatically unfair dismissals should be forewarned that such conduct may attract increased awards of compensation or reinstatement, as well as cost orders.

That said, there may well be circumstances where genuine operational reasons to retrench arise in proximity to an employee exercising a right afforded by the LRA. In that situation, employers should be mindful that this proximity may invite additional scrutiny from the courts.

Employers should be able to justify their operational requirements based on clear, consistent evidence and documentation, which clearly shows that the dismissal was contemplated due to genuine operational requirements and not in response to an employee exercising their rights in terms of the LRA.

Written by Chloë Loubser, Knowledge and Learning Lawyer: Employment & Data Protection, and Grace Crocker, Associate, Bowmans