On 8 July 2020, the Labour Appeal Court dismissed an appeal against a judgment of the Labour Court involving a retrenchment process at SAA. The LAC upheld the Labour Court’s finding that it was procedurally unfair to commence a retrenchment consultation process in terms of section 189 of the Labour Relations Act, in circumstances where the employer company was in business rescue and a business rescue plan was not yet in place. The following passage in the SAA judgment on business rescue proceedings, contains the LAC’s ratio:
“[33] To interpret s 136(1)(b) in the manner contended for by the BRPs would do violence to the language of the section. The argument that it ought to be interpreted as permitting the BRPs to commence with the retrenchment exercise in the absence of the rescue plan is incongruent with the statutory architecture of the corporate rescue process. The business rescue plan is intended to reorganise the business by crafting a roadmap aimed at salvaging an ailing company including preserving jobs. The formulation of a business rescue plan is the central task of the BRP and that it must be developed with the greatest expedition is made clear from a reading of s 150(5) of the Companies Act which provides that the business rescue plan must be published within 25 business days after the date of the appointment of the BRP save where an extension had been granted by the court or the majority of creditors. It is clear from this provision that, as the business rescue plan must be published within a short period, retrenchments would be contained in the plan as opposed to a piecemeal reconstruction of the company which would allow a decision on retrenchments before the plan was published.”
Read the complete SAA judgment on business rescue proceedings here:
SAA vs NUMSA
