- Worker dismissed after refusing transfer during Section 197 outsourcing, but no evidence of real redundancy.
- Arbitrator awarded compensation despite clear request for reinstatement.
- Court warns employers against using operational dismissals without proper evidence or consultation.
The Labour Court has cautioned employers against using retrenchment as a smokescreen for unfair dismissals, particularly during outsourcing and restructuring processes.
This comes after the court reviewed and set aside a flawed arbitration award that denied a hospital worker reinstatement, despite no evidence that her position had genuinely become redundant.
Lulama Ncanywa, a general worker at Mthatha Private Hospital, was dismissed in September 2022. The hospital, owned by Crossmed Health, claimed her dismissal was based on operational requirements after she allegedly refused to be transferred to another company under a Section 197 outsourcing arrangement.
However, when the matter went to arbitration, the hospital failed to present any meaningful evidence to support its claim. The only witness for the employer was an HR consultant with no direct knowledge of Ncanywa’s employment. Her testimony relied on what unnamed managers allegedly told her, hearsay that the Labour Court ultimately rejected.
Reinstatement, not compensation
Despite finding that the dismissal was unfair, the arbitrator, Commissioner Bongani Mtati, awarded Ncanywa five months’ compensation instead of the reinstatement she had requested. He claimed reinstatement was impractical and that Ncanywa had instead opted for compensation.
But the Labour Court found these conclusions to be unsupported by both fact and law. Her union, NEHAWU, had clearly argued for reinstatement throughout the arbitration process, and the arbitrator’s claim that compensation was preferred was not backed by any evidence.
Judge K Allen-Yaman stressed that under section 193 of the Labour Relations Act, reinstatement is the primary remedy for unfair dismissals. Compensation is only appropriate when reinstatement is impossible, for instance, due to intolerability or genuine operational impracticability.
Employer’s version based on hearsay
In this case, the employer failed to meet that threshold. The hospital provided no direct evidence that Ncanywa’s position was redundant. The HR consultant who testified was not even employed by the hospital and had no firsthand knowledge. Her version relied entirely on second-hand claims allegedly made by unnamed management staff.
Judge Allen-Yaman found this reasoning “speculative and unsupported” and concluded that the arbitrator’s decision was not rationally connected to the evidence before him. The award was accordingly reviewed and set aside.
Although the review application was filed five weeks late, the court granted condonation, citing the relatively short delay and strong prospects of success. The matter will now be heard afresh at the CCMA by a new commissioner.
Retrenchment must be real and not a legal shortcut
The ruling warns employers that retrenchment cannot be used as a shortcut to dismiss employees without proper consultation, process, and evidence.
Operational requirement dismissals carry a high legal burden. Employers must show that a post has genuinely become redundant, that alternatives were explored, and that fair consultation took place. A lack of documentation, vague explanations, or hearsay testimony will not suffice and may lead to costly reviews, reinstatement orders, or damages.
Lastly, restructuring does not excuse procedural shortcuts, and employees have the right to fair process even in periods of organisational change.
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