The dismissal of employees for operational reasons, commonly known as retrenchment, is covered by s189 of the Labour Relations Act. Section 189(2)(a) “requires the employer and other consulting parties to engage in a meaningful joint consensus-seeking process and attempt to reach consensus on appropriate measures to . . . avoid or minimise . . . the number of dismissals.”
The Act does not suggest what those measures might be.
One such measure, frequently overlooked and particularly so by small and medium enterprises or those without union representation, is that of “bumping”. Commonly found in Last In First Out (“LIFO”) selection criteria, bumping is an integral part of LIFO and means the dismissal of one employee instead of another. Bumping is a potentially messy approach and for that reason alone is often ignored.
There are two forms of bumping:
“horizontal bumping is a transfer to a position of similar status, conditions of employment and remuneration, whereas vertical bumping is contemplated as a transfer to a position with less favourable status, conditions of employment, remuneration.”[1] In essence, bumping entails “longer serving employees being moved to take up positions of employees with less service and who were not necessarily targeted for retrenchment”.[2]
In Fischer Tube[3] the Court dealt with the obligation of an employer applying LIFO to bumping, stating, “While there is no absolute obligation on an employer applying LIFO to bump, it is a matter that ought properly to be canvassed during the consultation process when LIFO is agreed. Indeed, it is not open to an employer to contend that employees cannot raise the issue of bumping only because they failed to do so during the consultation process.”
In other words, the onus is upon the employer to raise the reasons for or against bumping as a part of the “meaningful joint consensus-seeking process and attempt to reach consensus on appropriate measures to . . . avoid or minimise . . . the number of dismissals.”[4] Failure to do so at the consultation stage could result in the matter being dealt with at the Labour Court. After all, “the ultimate responsibility for fairness remains with the employer.”[5]
If an employee is offered, in terms of vertical bumping, a position of less favourable status, remuneration, and declines such offer, is the employer entitled to retrench such employee? Fischer Tube dealt with that very question and stated, “While an employee no doubt remains perfectly entitled to refuse any offer of vertical bumping (not least on account of the inevitably lower salary that would attach to the lower position) it does not necessarily follow that any dismissal consequent on that refusal is, without more, unfair.”
In conclusion, as succinctly put by Justice van Niekerk, “What the applicable authorities require[6] is that an employer applying LIFO must raise and discuss the question of bumping with consulting parties during the consultation process. In the absence of any agreement on the issue, the employer must be in a position to justify its decision not to bump, or to bump either horizontally or vertically, within the selection pool that it has defined. Ultimately, any requirement to bump is a matter of fairness.”[7]
This article is simply a guide and does not constitute legal advice. As always, the merits of each case needs determination and one should seek advice accordingly.
Graham Nicholls has been guiding companies in labour law issues for over two decades. He holds an MBA (Wales), a Post Graduate diploma in Labour Law (UJ), a Post Graduate Diploma in Contracts (Drafting and Interpretation) (UJ).
He has been an official with (SA)UEO since 2013.
[1] Fischer Tube Technik SA v Bayene and Another (JA100/23) [2024] ZALAC 25; (2024) 45 ILJ 1804 (LAC) (21 May 2024)
[2] Mtshali v Bell Equipment (DA16/12) [2014] ZALAC 37 (22 July 2014)
[3] Fischer Tube – Supra
[4] s189(2)(a) Labour Relations Act (66/95)
[5] R le Roux, ‘Retrenchment Law in South Africa’ (LexisNexis) at p 132.
[6] Mtshali supra; Blue Ribbon supra; National Construction Building and Allied Workers Union & others v Natural Stone Processors (Pty) Ltd [2000] ZALC 2; (2000) 21 ILJ 1405 (LC); Amalgamated Workers Union of SA v Fedics Food Services (1999) 20 ILJ 602 (LC).
[7] Fischer Tube – Supra