Court reserves judgment in union’s bid to halt SAA retrenchments

The business rescue practitioners at South African Airways (SAA) have accused the airline’s two biggest unions of trying to use the courts to slow down the retrenchment process in the hope that the concurrent parallel discussions between government and labour will provide a better outcome.

Labour Court Judge André van Niekerk on Thursday reserved judgment in the case brought by the National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca).

In asking the court to stop the retrenchments at the airline, the unions said the process that commenced on March 9 should be declared unlawful and unfair because the business rescue practitioners (BRPs) had not presented labour with a business rescue plan, as required by the Companies Act.

The unions also want employees to be considered for a training lay-off scheme instead of being retrenched, a contractual right given to labour in the November 2019 wage agreement.

While BRPs Les Matuson and Siviwe Dongwana gave unions until Friday (May 8) to accept the mass retrenchment agreement, this deadline has been suspended pending the court’s ruling, which Matuson and Dongwana have told employees is expected in the next few days.

‘Socio-political agenda’

In the BRPs’ heads of arguments, Advocate Andrew Redding SC said the court has no jurisdiction to declare whether the process embarked upon by Matuson and Dongwana is unfair based on the Companies Act.

In addition, Redding said the relief sought by Numsa and Sacca has already been dealt with by Judge Andre le Grange in a similar matter where the union made the same arguments about procedural unfairness. In that judgment, Le Grange said he was not convinced that the Act effectively outlaws retrenchments in the absence of a rescue plan. Numsa and Sacca have not appealed this ruling.

“It is submitted that, put charitably, the present application is misguided,” said Redding.

“It might be uncharitable to suggest that the purpose of the application lies not in ensuring that the business rescue practitioners operate fairly in the course of the proposed retrenchments, but is aimed at preventing the business rescue practitioners from proceeding further in the hope that the outside discussions which resulted in the ‘compact’ between stakeholders are fruitful.”

In this context, the BRPs argued that the court “cannot make itself party to a socio-political agenda”.

Redding further argued that the lay-off scheme was linked to the November 2019 retrenchment process that was abandoned. A new retrenchment process was started in March 2020, and therefore the basis to provide for a lay-off scheme disappeared.

In addition, Redding stated that the court also does not have jurisdiction in this instance because the Labour Relations Act (LRA) provides for disputes on the application and interpretation of collective agreements to be referred to the Commission for Conciliation, Mediation and Arbitration (CCMA). Furthermore, the collective wage agreement itself mentions the same approach in a dispute.

“Accordingly, it is submitted that this court cannot grant the applicants the relief they seek in respect of this dispute. Even if they have established a basis for it.

“It is submitted, however, that there is no basis for the relief.”

Contractual protections 

In their heads of argument, Numsa and Sacca, represented by Advocate Tembeka Ngcukaitobi SC, said the BRPs’ arguments on jurisdiction are “wholly meritless”.

Ngcukaitobi explained that the reference to Section 136 of the Companies Act, which protects the contractual rights of workers in a business rescue process, was not to create jurisdiction but rather to establish unlawfulness.

“It is so that the substantive right – clear right – is based on non-compliance with the Companies Act,” he said.

“But the non-compliance also means that the BRPs have breached the LRA if the consequences are that the applicants will be dismissed without a business plan,” he added.

Redding said that when the BRPs embarked on retrenchments in March the intention was clearly to devise a business plan for a restructured SAA. However, now that government has indicated that it will not fund the restructuring of the company this left the BRPs with the option of either an orderly wind-down, dependent on workers taking mass voluntary severance packages, or an immediate liquidation.

Compact

Ngcukaitobi said the proposals by the BRPs are absurd, particularly because they are aware of the leadership compact signed by Public Enterprises Minister Pravin Gordhan and the unions, which commits the parties to cooperating in the preservation of SAA.

“The BRPs refuse to sign to this compact, even though its primary focus is the preservation of the business of SAA – and by extension of jobs,” said Ngcukaitobi.

Ngcukaitobi said “for all we know” retrenchments could be avoided if the compact is fulfilled.

“If one of the purposes of the business rescue proceedings was to return the company to solvency, it will be defeated by a retrenchment now, instead of waiting for the development of the plan.”

Presenting to a joint committee meeting on public enterprises in Parliament on Wednesday, Gordhan said he would be meeting with the BRPs to discuss the future of the rescue process, and was clear that there would be no “fire-sale” of assets in movement towards liquidation.

Regarding the lay-off programme, he argued that linking the scheme to the November 2019 retrenchment process is “opportunistic and without substance”, saying the clause in the wage agreement refers to any and all lay-off processes.

On jurisdiction, he said the court is not precluded from interpreting “the relevant collective agreement as a matter incidental to exercising its powers in respect of the current issues serving before it”.

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