Steenkamp and Others v Edcon Ltd

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Moseneke DCJ, Cameron J, Jafta J, Khampepe J, Madlanga J, Matojane AJ, Nkabinde J, Van Der Westhuizen J, Wallis AJ and Zondo J
• Judgment Date: 22 January 2016
• Citation: 2016 (3) SA 251 (CC)
• Docket Number: CCT 46/15 [2016] ZACC 1
• Hearing Date: 08 September 2015
• Counsel: A Redding SC (with ESJ van Graan SC) for the first, second and further applicants. JG van der Riet SC (with H Barnes) for the intervening party. A Myburgh SC (with F Boda) for the appellant.
• Court: Constitutional Court

Cameron J (Van der Westhuizen J concurring):

Introduction H

[1] The Labour Relations Act [1] (LRA) provides that an employer undertaking large-scale retrenchments may give notice to terminate the contract of employment only once 60 days have elapsed after extending an invitation to consult on an impending retrenchment. [2] The statute further provides that, in these retrenchments, notice of termination of employment 'must' be given in accordance with its provisions. If an I employer dismisses in violation of this injunction, are the dismissals invalid? The applicants (employee applicants), joined by the National

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Union of Metalworkers of South Africa (Numsa), say Yes. The respondent, Edcon Ltd (Edcon), says No. Contradictory decisions of the Labour Appeal Court point in opposite directions. [3] These proceedings seek an answer from this court.

Background B

[2] Edcon employed almost 40 000 sales, administrative and other staff in 1300 retail outlets across nine countries in southern Africa. But its business began to falter. During April 2013 it started restructuring for operational requirements. [4] By mid-2014 the process had resulted in the C retrenchment of about 3000 employees.

[3] During the retrenchment process Edcon first issued written notices in terms of s 189(3) of the LRA. [5] These informed its workforce in general terms that it was contemplating dismissal for operational requirements and invited consultation. Because of the size of the workforce, and the D scale of the proposed retrenchments, s 189A applied. [6] This requires

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that, in respect of any dismissal it covers, 'an employer must give notice A of termination of employment in accordance with the provisions of this

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section; . . .'. [7] The effect of non-compliance with this provision is at A issue.

[4] For large-scale retrenchments s 189A provides the option of facilitation. [8] This meant Edcon reached a critical point in the process. Under the statute the parties may agree on facilitation, [9] or, if not, either the employer or a representative trade union may request that the matter be B facilitated. This entails a joint consensus-seeking process to mitigate adverse consequences. [10]

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A [5] But if a facilitator is not appointed s 189A(8) imposes a minimum 30-day time bar. [11] The period is calculated from the date on which the employer issues notices in terms of s 189(3). During that period employees and employers are barred from taking further steps. Neither party may refer a dispute about the impending retrenchments to the B applicable bargaining council or to the Commission for Conciliation, Mediation and Arbitration (CCMA). It follows that employers, in particular, are not entitled to invoke the power the provision confers on them after the periods have elapsed, namely to give notice to terminate contracts of employment in accordance with s 37(1) of the Basic Conditions of Employment Act [12] (BCEA).

C [6] The dispute arose because Edcon issued notices of termination before this 30-day period had elapsed. In consequence, the employee applicants made 51 referrals, involving 1331 employees, to the Labour Court. These challenged the validity of the dismissals. The first, second and further applicants are employees involved in four of these referrals.

D [7] The time between Edcon's s 189(3) notices and the notices of termination varied. In the case of Ms Karin Steenkamp, the first applicant, it was six days. In other cases, it was more than 60 days. [13] Neither Edcon nor the applicants referred a dispute to the CCMA in terms of s 189A(8). None of the employees sought to embark on a retaliatory E strike and none approached the Labour Court to compel Edcon to comply with a fair procedure or to interdict or restrain it from dismissing them before complying with a fair procedure. [14] Nor did the applicants refer an unfair dismissal dispute to the CCMA in terms of s 191(1)(a) of the LRA.

F [8] More importantly, none of the employee applicants contest any aspect of the procedural or substantive fairness of the dismissals. They have not sought to impugn the fairness of Edcon's unauthorised conduct. Nor have they tendered to return the severance packages Edcon paid them. Their sole ground of complaint is formal. It is that G Edcon gave short notice under ss 189A(2)(a) and (8). And so the single issue before us is the effect of not complying with those provisions.

Labour Appeal Court

[9] Confronted with its non-compliance with the notice periods, Edcon H initiated these proceedings with the specific object of challenging

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De Beers No 2 and Revan, the Labour Appeal Court decisions holding A s 189A dismissals on short notice invalid. [15] The Judge President specially constituted the Labour Appeal Court, sitting as a court of first instance, to hear the case. [16] Edcon invited the court to reinterpret s 189A(2)(a) read with s 189A(8) so as to conclude that dismissals in violation of those provisions' time periods were not invalid. The court B accepted the challenge, and upheld it. It found in favour of Edcon. It found the approach in that court's two earlier decisions 'obviously wrong'. [17]

[10] At the base of the court's judgment lies the distinction between a C failure by an employer to give proper and valid notice of termination in terms of the contract, on the one hand, and failure to give valid notice in breach of a statutory provision. The former, the court said, can be construed as a breach of contract. If that breach is material, it may result in a wrongful or unfair termination of employment. This in turn entitles the employee to seek specific performance or damages for wrongful D termination, but also reinstatement or compensation for unfair dismissal under s 193 of the LRA. [18]

[11] By contrast, breach of a statutory notice requirement violates the principle of legality. This allows the employee to challenge the lawfulness E of the action by means of review proceedings to obtain an order of invalidity and reinstatement. In essence, the court held that the latter breach, with its consequences, is not found in the LRA. Instead, it found, the statute contemplates and provides remedies for one kind of dismissal only: unfair dismissal, as defined in the statute. This takes place when an employer unfairly terminates a contract of employment. And a dismissal F so defined is an unfair dismissal, whether or not the termination also violates ss 189A(2)(a) and (8).

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A [12] The court located this approach in the LRA's definition of 'dismissal'. This, the statute provides, means amongst others that 'an employer has terminated employment with or without notice'. [19] The court reasoned that the word 'terminated' must be given its ordinary meaning. This is 'bringing to an end' — regardless whether the action is lawful, fair B or otherwise. A termination by an employer without giving proper or valid notice still constitutes a 'dismissal' under the LRA. [20] The statute provides remedies to address any wrongfulness or unfairness. But this does not alter the factual consequence of the termination. The employee is dismissed, fairly or unfairly, lawfully or unlawfully.

C [13] The court evoked the history of employment law jurisprudence in South Africa. It explained that the concept of an employment relationship is broader than the concept of a contract of employment. So a 'dismissal' under the statute is not the equivalent of a lawful cancellation of a contract of employment. It is much broader:

'The statutory concept of dismissal is therefore not restricted to the D contractual notion of lawful cancellation and recognises that contract law is an insufficient instrument to regulate the modern employment relationship.' [21]

The court found an 'implicit acceptance' in Schierhout [22] that a wrongful or 'invalid' termination can nevertheless in fact bring a contract of E employment to an end. This belief, it said, has persisted in our law.

[14] The purpose of the LRA's wide definition of 'dismissal' is to extend the statute's scope to protect dismissed employees. The important practical result is that a wrongful termination without notice that does not constitute a lawful cancellation or rescission of an employment F contract may still constitute an effective dismissal under the LRA. [23]

[15] By contrast, the court held, where dismissals contravene provisions in statutes other than the LRA, a fundamental principle comes into play; that they are void and of no effect, even though, the court noted, this doctrine has softened somewhat because the remedies available are G discretionary.

[16] Accordingly, the general principle that something done in contravention of a statute is void and of no effect, which Schierhout applied in the employment context, no longer applies in all cases. It depends on the H proper construction of the particular legislation. [24] And the consequence

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of the contravention depends on the nature of the discretionary remedies A available. The enquiry is thus contextual. The court held that it involves consideration of: the right sought to be enforced and the wrong sought to be rectified; the subject-matter of the prohibition; its purpose in the context of the legislation; the nature of the mischief the prohibition was designed to remedy or avoid; and any cognisable impropriety that may flow from invalidity. B

[17] Here, the court found, it was important that s 189A already...