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IN THE
INDUSTRIAL COURT OF BOTSWANA

HELD AT
GABORONE

 
CASE NO. IC. 196/2005

IN
THE DISPUTE BETWEEN

 

JOHANNA
NGANUNU MACHARIA ………………………. APPLICANT

AND

 

PALEDI
MORISSON PARTNERSHIP ………………………. RESPONDENT

——————————————————————————————

CONSTITUTION
OF THE COURT

D.
J. de VILLIERS INDUSTRIAL COURT JUDGE

T.
MAKUNGA NOMINATED MEMBER (UNION)

M.
K. MASHUMBA NOMINATED MEMBER (BOCCIM)

FOR
THE APPLICANT:

MR
T. J. RUBADIRI OF TENGO RUBADIRI ATTORNEYS

GABORONE

FOR
THE RESPONDENT

MR
M. M. CHILISA OF CHIBANDA, MAKGALEMELE &CO.

GABORONE

PLACE
AND DATES OF PROCEEDINGS

GABORONE 3
AND 4 APRIL 2006

Retrenchment
– substantively fair but procedurally unfair because no prior
warning that applicant might be retrenched and no prior
consultation.

Onus
on employer to arrange forum for such prior consultation and to ask
for input from employee.

Three
months compensation granted.

JUDGMENT

Pre-trial
conference

[1] The parties
held a pre-trial conference on 30 March 2006 and handed in the
following amended signed minute at the commencement
of the hearing:

“1. The
parties are agreed that the following facts are common cause:

1.1 Applicant
was employed on 14^th January 2002 employed by the
Respondent as a Senior Architect.

1.2 Respondent
in mid 2004, began to experience a down turn in business fuelled in
part by the Government of Botswana’s decision
to suspend a number
of buildings projects that had been suspended. The situation was so
bad Respondent considered closing business
all together.

1.3 Respondent
in August 2004, held meetings at which some of the members of staff,
were called individually and informed that due
to the down turn of
the Respondent’s business, which did not look like improving there
would be a need to retrench and any retrenchments
would if they take
place effect within three months.

1.4 A
decision was taken in October 2004, to retrench three professionals
namely:

1. Mr
   John Kennedy

2. Ms
   Erna Santa

3. Applicant

1.5 Respondent
offered to make one month’s payment in lieu of notice to Applicant,
who chose to work for another month.

1.6 Applicant
worked until the 26^th November 2004.

2. ISSUES

2.1 The
parties are in agreement that the retrenchment was not entirely in
conformity with the Employment Act, the only issues that
stand to be
resolved are:

2.2 To
what extent was the retrenchment substantively and procedurally
unfair;

2.3 How
much compensation is Applicant entitled to from the Honourable Court;

1. Applicant
   contends before the Honourable Court that the retrenchment was not
   procedural because of the following:

1. She
   was not given written notice of an impending retrenchment as
   required by Section 25 (1);

2. The
   Labour Commissioner was not timeously informed of an impending
   retrenchment;

3. That
   the First in Last Out Principle was not adhered to;

4. That
   Applicant should have been the one offered employment when
   Respondent started redeploying following Applicant’s
   retrenchment;

5. That
   as a result of the foregoing Applicant is entitled to
   compensation;

2.3.2 Respondent
concedes and contends as follows; that:

1. There
   was failure to give written notice of an impending retrenchment to
   Applicant and other employees;

2. Respondent
   denies that the First in Last Out Principle was not followed;

3. Respondent
   denies that it was obliged to give Applicant a preference in
   re-employing retrenchees;

4. That
   there was substantial compliance with the Employment Act and no
   prejudice was occasioned by the failure on the part of
   the
   Respondent to strictly adhere to the provisions of the Employment
   Act.

3. WITNESSES:

3.1 Applicant
intends to call one witness to give evidence on the issues outlined
above in paragraph 2, namely the Applicant herself.

3.2 Respondent
intends to call Mr Paul Paledi the Managing Partner as its witness.”

[2] Both counsel
agreed that the word “substantively”
was inadvertently omitted from paragraph 2.2 of the said minute and
that the said paragraph should be amended to read as follows:

“2.2 To
what extend was the retrenchment substantively and procedurally
unfair;”

Final
submissions

[3] When evidence
was concluded, mr Rubadiri, for the applicant, forthwith proceeded
with making his final submissions. Thereafter
mr Chilisa, for the
respondent, requested a postponement to enable him to file written
heads of argument. A postponement was granted
and mr Rubadiri was
granted leave to file further written heads of argument in reply if
he so wished. Mr Chilisa filed comprehensive
heads of argument, for
which the court is indebted to him. Mr Rubadiri informed the court
that he did not wish to reply to the said
heads of argument.

The applicant’s
evidence

[4] The applicant
testified that she started working for the respondent as senior
architect on 14 January 2002 in terms of a letter
of offer, which
offer she accepted. In terms of this letter of offer she would “take
up the position of Senior Architect, with a view for the position of
Associate two years from January 2002.” She
said two years after January 2002 and even thereafter she never
became an associate.

[5] The applicant
stated that on 31 March 2003, which was 9 months before she expected
to become an associate, she wrote to the respondent
partners, because
they just never made themselves available to discuss her complaints
with her. She said she felt that she was just
not heading in the
direction of becoming an associate in 9 months time. Inter
alia her delegated work was not attended
to timeously, the excuse always being that they were busy with work
for seniors. Her salary
was not in line with that of other senior
architects, etc.

[6] The applicant
stated that in January 2004 panellists called her for a meeting to
discuss her terms and conditions of employment.
Her salary was then
P10450 per month and she requested a 100% increase. They however
offered her a 50% increase, bringing her salary
to P15675 per month.
They also informed her that they were moving the goal posts as they
will only consider her becoming an associate
in January 2005. She
was also informed that during the year of 2004 she would be given
more responsibilities. She accepted the
offer because she thought
more responsibilities would give her an opportunity to work towards
the goal of becoming an associate.
To her disappointment she was not
given any extra responsibilities.

[7] She carried on
working although she was not happy with the way she was treated. On
15 October 2004 she wrote 2 letters to the
partners. In the first
letter she enquired about the car benefit tax, as to who was
responsible for paying it. In the second letter
she complained that
in December 2003 she received a bonus only 50% of her salary, whereas
she was entitled to a thirteenth cheque
in terms of her contract of
employment. She was now claiming the other half of this bonus.

[8] She received a
reply dated 27 October 2004 in which mr Paledi, the senior partner
expressed his disappointment on her lack of
appreciating the
difficult times the practice was experiencing at that time by
demanding immediate payment of the balance of the
said bonus. A
cheque for the balance was nevertheless included. The applicant
stated that she found this attitude difficult to
understand because
another senior architect who was earning triple her salary, was paid
the full thirteenth cheque in December 2003.

[9] The applicant
testified that because of all the aforesaid she though that she was
being singled out and discriminated against,
especially when she
received a retrenchment letter on 28 October 2004, being the very
same day on which she also received the aforesaid
letter and the
cheque for the balance of her thirteenth cheque.

[10] The applicant
stated that in her opinion her retrenchment was substantively and
procedurally unfair, for which she is now only
claiming compensation.
Before dealing with further evidence of the applicant and of the
said senior partner, the court will once
again first set out the
legal (statutory) requirements as well as the equitable requirements
for a lawful and fair retrenchment.

Retrenchment

[11] The aforesaid
letter of retrenchment, which the applicant received on 28 October
2004, was signed by the said senior partner,
and reads as follows.

“Dear
Johanna,

RE: RETRENCHMENT
FROM EMPLOYMENT

We
refer to our meeting of beginning of August 2004 whereby we indicated
to all members of staff the lack of new projects forces us
to place
all staff on three months notice, we further requested all staff to
start exploring alternative job prospects. Unfortunately
our job
situation has not changed and therefore we cannot afford to continue
running the practice with the staff compliment against
declining
workload.

We
regret to say we have to retrench you from employment at the end of
the month. In lieu of a month’s notice we will issue you
a cheque
for the equivalent amount to facilitate you starting to look for
other prospects. We have calculated leave days due to
you as 5 days.

We
enclose a cheque for leave due and one month’s notice.

We
wish you all the best with your future.”

[12] This court
has already, in many previous judgments, held that although the
Employment Act (Cap.47:01) does not prescribe any
procedure, save in
section 25, to be followed in a retrenchment exercise, the rules of
natural justice or rules of equity, as they
are sometimes called,
dictate that there must be a valid commercial reason for a fair
retrenchment and that a fair procedure must
also be followed in the
execution of such retrenchment.

[13] In paragraph
10 of his heads of argument mr Chilisa states inter
alia:

“The
Honourable Court is not being called to determine whether the
retrenchment was lawful.”

Nowhere in the
minute of the pre-trial conference is any mention made of the
lawfulness or otherwise of the retrenchment. In any
case the
lawfulness of the retrenchment is a matter of law and not a factor
for discussion at a pre-trial conference unless it has
been pleaded,
like in the exceptional case of prescription, the raising of a legal
point in limine,
etc. There is therefore no way that the parties can dictate to the
court to ignore any relevant and applicable legislation. This
was
appreciated by mr Chilisa as he set out an alternative argument
should the court decide to deal with lawfulness as well. This
is
exactly what the court intends doing.

Legal
requirements

[14] The court
will start off with the legal requirements for a fair retrenchment.
Section 25 of the Employment Act is the only section
in the said Act
which deals with retrenchment and it does so under redundancy. The
said Section 25 provides as follows:

“25.
(1) Where an employer terminates contracts of employment for the
purpose of reducing the size of his work force, he shall do so in
respect of each category of employee, wherever reasonably
practicable, in accordance with the principle commonly known as
first-in-last-out:

Provided
that in so doing the employer shall take into account –

1. the
   need for the efficient operation of the undertaking in question; and

2. the
   ability, experience, skill and occupational qualifications of each
   employee concerned.

(2) Without
prejudice to the other provisions of this Part in relation to the
giving of notice, when an employer forms an intention
to terminate
contracts of employment for the purpose of reducing the size of his
work force, he shall forthwith give written notice
of that intention
to the Commissioner and to every employee to be or likely to be
directly affected by the reduction.

(3) Where
contracts of employment have been terminated for the purpose of
reducing the size of a work force, the employer shall if
he again
seeks employees in the occupations to which those contracts related,
give priority of engagement, to such extent as is reasonably
practicable, to those persons whose contracts of employment were so
terminated:

Provided
that this subsection shall not apply where the employer seeks such
employees more than six months immediately after contracts
in
question were terminated.”

[15] Firstly
section 25 (2) states that notice must forthwith
be given, which means that immediately after an employer has formed
an intention to reduce his workforce, he shall
forthwith notify in
writing every employee to be or likely to be
affected. The Act therefore provides for notice even to employees
who may not in the long run
be retrenched but who are only likely to
be affected by such retrenchment. The aforesaid notice in writing
must be given timeously
to prepare employees for a possible
retrenchment. In this matter it was conceded by mr Chilisa that the
respondent never gave any written notice of
intention to retrench to the applicant,
before she received her retrenchment letter on 28 October 2004. (The
court’s underlining).

[16] By using the
word “shall” in
said section 25 (2), the legislature intended these provisions to be
mandatory. The giving of written notice forthwith of intention
to
retrench to all employees likely to be affected is therefore
mandatory. See section 45 of the Interpretation Act (Cap.01:04).

The court therefore finds that substantial compliance of the said
provision, as submitted by mr Chilisa, does not enter the equation
when making a finding on whether the retrenchment was lawful or not.
Substantial compliance can however enter the equation when
dealing
with compensation.

[17] The court is
therefore satisfied that the respondent acted unlawfully, by failing
to forthwith give such written notice of intention
to retrench to
the applicant and other staff members who were likely to be affected
by such retrenchment. The court consequently
finds that the
respondent failed to comply with the aforesaid first requirement, set
out in the said section 25 (2).

[18] Secondly,
section 25 (2) also requires that, once an employer has decided who
is to be retrenched, then such employee must be
given further written
notice, which is in terms of section 18 of the Employment Act, which
is one month’s notice if he/she is paid
monthly or 14 days if
he/she is paid fortnightly, etc, that his/her contract of employment
is going to be terminated on a specific
date, or the employer can, in
terms of section 19 (a) of the Employment Act, pay the employee one
month’s notice pay in lieu of
such notice.

[19] As the
applicant was paid monthly, she was therefore entitled to one month’s
notice that her contract of employment was going
to be terminated on
a specific date, or to one month’s notice pay in lieu of notice.
The respondent did pay the applicant one
month’s notice pay in lieu
of one month’s written notice on 28 October 2004, stating that her
contract of employment will terminate
on 31 October 2004. The
applicant however refused to take the notice pay in lieu of notice
and insisted on working her notice month
so as to complete all her
unfinished work. The court therefore finds that the respondent had
complied with the aforesaid second
requirement of the said section 25
(2).

[20] Thirdly,
section 25 (2) also requires that an employer, after he has formed an
intention to reduce his workforce, shall
forthwith also give notice
of such intention to the Commissioner of Labour. Here too mr
Chilisa, in paragraph 39 of his heads of argument, concedes that
there
was a failure to forthwith inform the Commissioner of Labour of
the respondent’s intention to retrench. Mr Chilisa submitted
that
this was due to the fact that the partners were under the mistaken
impression that the Commissioner only had to be informed
once the
retrenchment had actually taken place. As stated in paragraph [16]
here above, the imperative word “shall”
also applies to the notice to the
Commissioner and any reason for not complying with the said provision
does not affect the lawfulness
or otherwise of such a non-compliance.
The court is therefore satisfied that the respondent also acted
unlawfully, by failing to
forthwith give such written notice of
intention to retrench to the Commissioner of Labour.

[21] Fourthly,
section 25 (1) of the Employment Act provides that when an employer
wants to reduce his work force, he shall
do so, wherever reasonably practicable, in accordance with the
principle commonly known as first-in-last-out. The court finds that
an employee cannot complain just because the aforesaid principle has
not been applied. The proviso to this subsection is imperative
and
states very clearly that the employer shall
take into account “the
need for the efficient operation of the undertaking in question; and
the ability, experience, skill and occupational qualifications
of
each employee concerned.”

[22] As to this
factor, the applicant pleaded as follows in her statement of case:

5.2 The
termination of the applicant’s employment was procedurally and
substantively unfair in that:

5.2.1 –
– – – – – –

5.2.2

1. Respondent
   failed to apply the principle of “last-in-first-out” when
   selecting Applicant for retrenchment, in that a senior
   architect and
   an architect were employed after the Applicant was employed.

2. The
   senior architect had more experience than the Applicant but was not
   better qualified than the Applicant and lacked computer
   drawing
   skills an experience that the Applicant had.

3. The
   architect did not have professional architectural qualifications and
   had less experience than the Applicant

4. Applicant
   avers that the efficiency of the Respondent’s business would have
   been best served by retaining the Applicant and retrenching
   both or
   one of the senior architect and the architect.”

[23] The applicant
testified that she is sure that her election for retrenchment was
influenced by the two letters of complaint she
had written just
before she received her retrenchment letter. This was denied by mr
Paledi and the court agrees with him that no
ground for such
allegation had been proved.

[24] In evidence
the applicant stated that the senior architect she was referring to
above, is Stuart Stanley. She said he was employed
14 months after
her and he was not retrenched. Mr Paledi testified that Stuart
Stanley has had 15 years experience after qualifying
as an architect
and therefore management valued his services more than those of the
applicant. The court will accept this, as it
was not disputed and as
it is also in compliance with the proviso to the said subsection 25
(1).

[25] The
respondent avers that the junior architect who the applicant refers
to who started after her and who was not retrenched,
was Gorata
Madigele. The senior partner testified that the reason why they kept
Gorata at the expense of the applicant, was because
the respondent
sought to keep a good mix of senior and junior architects. One of
the applicant’s complaints was in fact that there
were not enough
juniors to whom she could delegate work as they always said they were
busy with work for other seniors. Respondent
also said that because
of their financial problems at that time, it was cheaper to keep
Gorata than the applicant. For the same
reason as above the court
cannot fault the respondent on this decision.

[26] Fifthly,
section 25 (3) provides that when an employer seeks employees in the
post of retrenchees within 6 months of such retrenchment,
the
employer shall, “give
priority of engagement, to such extent as is practicable, to those
persons whose contracts of employment were so terminated.”
The
applicant avers that the respondent failed to comply with this
provision, because it approached Erna Santa, who was her junior
and
who was retrenched with her, to do work for them within the said 6
months’ period. The court finds that there is no merit
in this
submission of the applicant. Firstly, as both applicant and Erna
were retrenched at the same time, the respondent was free
to approach
anyone of them for re-employment, according to the needs of this
partnership undertaking. Secondly the respondent never
engaged
anyone to fill the respondent’s place. Thirdly the respondent did
not re-employ Erna. It only intimated to her that,
should the
fortune of the practice change, would she be willing to assist on a
part time basis.

[27] Regarding the
legal requirements, the court therefore finds that the respondent
acted unlawfully only in the two respects set
out above.

Equitable
requirements

[28] As to the
equitable requirements for a fair retrenchment, applicable principles
or guidelines are summarised as follows in A
Guide to South African
Labour Law, 2^nd Edition by Rycroft and Jordaan at page 233
et seq:

“(1) The
employer must consider ways to avoid or minimise retrenchment.

(2) The
employer must give sufficient prior warning to a recognised or
representative trade union of the pending retrenchment, and
to the
employee selected for retrenchment.

(3) The
employer must consult with such a trade union prior to the
retrenchment.

(4) If
no criteria are agreed the employer must apply fair and objective
criteria.

(5) The
employer must consult with the affected employee and consider any
representations made on his behalf by the trade union.

(6) The
decision to retrench must be reasonable, made in good faith and there
must be a commercial rationale for the retrenchment.”

[29] The aforesaid
guideline no.6 reflects on the substantive fairness of a retrenchment
while the other 5 guidelines reflect on the
procedural fairness of a
retrenchment. The aforesaid guidelines are largely based on ILO
recommendations and conventions. Recommendation
no.166 sets out from
article 19 to article 26, methods and procedures to be adopted by an
employer when he intends to terminate the
employment of an employee.
Similar and further guidelines can be found in Convention no.158,
article 4 of which requires a valid
reason for any termination of
employment, which includes retrenchment, if it falls under “the
operational requirements of the undertaking.” The
said article 4 provides as follows:

“The
employment of a worker shall not be terminated unless there is a
valid reason
for such
termination connected with the capacity or conduct of the worker or
based on the
operational requirements of the undertaking,
establishment or service.” (The Court’s
underlining)

Substantive
fairness

[30] Dealing
firstly with the aforesaid guideline no.6 which reflects on the
substantive fairness of a retrenchment, the court firstly
has to
establish whether the respondent did have a ‘commercial
rationale’ for the said retrenchment, that
is a valid commercial reason.

[31] The senior
partner testified that during 2004 and 2005 they experienced a cash
flow problem, mainly because less and less work
was coming in. When
the situation was not improving he said he had to sell some of his
own houses and paid the proceeds into the
partnership in order to pay
salaries and other expenses. He said that at the time of this
hearing the respondent’s bank overdraft
stood at P4.5 million. He
said that when they decided to downsize they had 20 staff members and
now they only have 15.

[32] This evidence
was not disputed by the applicant and the court accepts the evidence
of the senior partner and finds that the respondent
did have a valid
commercial reason, based on the operational requirements of the
partnership undertaking, to reduce the size of its
work force.

[33] Mr Rubadiri
does not agree with mr Chilisa’s submission that “all
the Respondent needs to demonstrate in order to establish that the
retrenchment was substantively fair, is to show that the
reason for
the retrenchment was commercially justifiable, reasonable and made in
good faith.”

Mr Rubadiri
submitted that a procedural irregularity, e.g. no or inadequate
consultation can sometimes spill over into substantive
fairness. He
referred the court to the following two South African cases:

Atlantis Diesel
Engines (Pty) Ltd. V. National Union of Metalworkers of South Africa,
(1994) 15 ILJ 1247 (A) and Chetty v. Scotts
Select A Shoe, (1998) 19 ILJ 1465 (LC).

[34] In the
Atlantis Diesel Engines – case,
supra, the court did
not deal with a procedural irregularity that could become
substantively unfair. It dealt with the need to consult
before
retrenchment in terms of the “unfair
labour practice” definition in the Labour
Relations Act. In the Scotts Select A Shoe –
case supra the court
dealt with the need to consult before retrenchment in terms of
section 189 of the Labour Relations Act if the retrenchment
is for
operational requirements, in which section the steps which an
employer must take are listed, almost exhaustively. The court
found
that the provisions of the said section 189 are peremptory. What
Landman, J. actually said in connection with such prior consultation
was the following at page 1473 F:

“However,
substantive dismissal and procedural dismissal are inter-related. If
there is a procedural irregularity, such as the absence
of
consultation, then it is difficult to predict whether or not the
substantive dismissal was fair or not.”

[35] The court
found a more recent South African case dealing with this same
subject. In Broll Property Group (Pty) Ltd v. du Pont and Others,
(2006) 27 ILJ 269 (LAC) it was held that inadequate consultation,
which normally amounts to procedural unfairness, may amount to
no
real consultation at all and can then render a retrenchment for
operational requirements substantively unfair. This judgement
was
however also based on the peremptory provisions of the said section
189 of the South African Labour Relations Act. All the aforesaid
judgments on this aspect are therefore based on South African
legislation and are consequently not applicable in Botswana.

[36] In the
circumstances, having found that the respondent did have a valid
commercial reason for retrenching the applicant, the
court finds that
the applicant’s retrenchment was substantively fair.

Procedural
fairness

[37] Procedural
fairness in a retrenchment case relates to the procedure followed by
an employer prior to retrenching an employee.
The court will now
deal with the aforesaid other 5 guidelines which reflect on the
procedural fairness of a retrenchment.

[38] As to the
first guideline that an employer must consider ways to avoid or
minimise retrenchment, mr Chilisa set this out as follows
in his
heads of argument, referring to the meeting the partners had with all
employees at the beginning of August 2004:

“27.1 To
avoid having to make the difficult decision of whom to retrench,
Respondent advised all employees to take up employment if
they found
any between August and October 2004, because there would in almost
all probability be a need to retrench. This was not
disputed by the
Applicant nor challenged in cross examination. Respondent had
obviously hoped that some of its employees would find
alternative
employment thus doing away with the need to retrench.

27.2 Respondent
could have closed down and all 18 employees would have found
themselves out of work, but one of the Partners (Mr Paledi)
made
personal sacrifices which went as far as selling personal assets in
order to keep the practice running.

27.3 Respondent
could have chosen to close down but instead chose to run its business
on an enormous bank overdraft of which one of
the Partners is a
personal guarantor. This was all done in order to avoid closing shop
and retrenching all the employees.

27.4 On
the basis of the foregoing, it cannot be disputed that Respondent
considered ways of minimizing retrenchments and avoiding
retrenchment.”

[39] Although the
respondent failed to arrange any consultation with the applicant to
discuss this aspect, the court finds that the
respondent did
nevertheless, in view of the above submissions, consider alternatives
to try and avoid retrenchments. The court finds
that the respondent
had therefore complied with the said first equitable guideline.

[40] The second
guideline is that there must be sufficient prior warning of a pending
retrenchment to a recognised or representative
union and to the
employees selected for retrenchment. The applicant concedes that on
3 August 2004 she was called into a partner’s
office on her own,
where she met the partners. They then informed her that they were
experiencing financial problems and may have
to reduce staff. She
was further told that if any staff member finds another job within
the next 3 months, they were free to leave.
They said they were
going to issue a letter to this effect to all staff members, but no
such letter was issued. The applicant stated
that during the next 3
months not a single word was said about this financial problem nor
was anything regarding it discussed with
her. She said that during
these 3 months she did not look for other work because she was not
alerted that she could possibly also
be retrenched and therefore she
never for one moment thought that she was in line for possible
retrenchment as the promise of an
associateship in January 2005 was
then only a few months off. She said her termination letter, which
she received on 29 October
2004, therefore came as a great shock to
her.

[41] As to this
guideline, mr Paledi, the senior partner testified that at the
beginning of August 2004 he called all staff members
into his office
individually and informed them of the cash flow problem the
partnership is experiencing. The partners therefore
put all staff
members on 3 months notice and told them that if they could find
other work within the next 3 months they should take
it. He said
that he also alerted the applicant of the possibility of
retrenchments.

[42] In the
absence of the involvement of a union, the court finds that for
purposes of this judgment the second guideline should
therefore read
as follows:

“The
employer must give sufficient prior warning – – – of the pending
retrenchment – – – to the employee selected for retrenchment.”

The court agrees
with mr Chilisa that this second equitable guideline does not require
prior written notice of a pending retrenchment,
as does the aforesaid
section 25 (2). A verbal warning 3 months prior to a retrenchment
the court finds could be sufficient prior
warning if it had been
properly given.

[43] The court
finds that a second requirement of this second guideline is that an
employee selected for retrenchment must be informed
that he/she is in
danger of losing his/her job. Any other interpretation would make
nonsense of this second guideline. The applicant
was adamant that
not at this meeting in August 2004 nor at any time thereafter, was
she alerted that she could possibly also be
retrenched. Mr Paledi
only said in general that they may have to retrench.

[44] Mr Paledi
testified that at this meeting he alerted the applicant of the
possibility of retrenchments. He did not say that he
alerted her
that she may possibly be retrenched. This is therefore in accordance
with the applicant’s evidence and also in accordance
with the first
paragraph of the applicant’s retrenchment letter, which makes no
mention of him having alerted her that she may
possibly be
retrenched. This paragraph reads as follows:

“We
refer to our meeting of beginning of August 2004 whereby we indicated
to all members of staff the lack of new projects forces us
to place
all staff on three months notice, we further requested all staff to
start exploring alternative job prospects. Unfortunately
our job
situation has not changed and therefore we cannot afford to continue
running the practice with the staff compliment against
declining
workload.”

[45] In reply to
this letter the applicant inter
alia stated
that she believes her dismissal was unfair because the proper
procedure was not followed. Mr Paledi replied to this allegation
in
the first paragraph of his letter, dated 18 November 2004, by stating
the following:

“We
refer to your letter of 15/11/2004 we wish to clarify that we have to
the best of our knowledge followed the proper procedure in
retrenching you and other staff members. If you recall we placed all
staff on three months notice and advised all, to look for alternative
employment due to reduction in workload, we further gave you an
additional month notice which we offered to pay for without serving
notice. We further advised Labour Department of our intention to
retrench. We therefore cannot understand why you believe we have
been unfair in the manner we have carried out the retrenchment.”

Once again there
is no mention that he had alerted her that she may possibly be
retrenched.

[46] The court
therefore rejects the following underlined portions of submissions
made by mr Chilisa in his heads of argument:

“28.1 It
was common cause between the parties that Applicant was called into a
meeting in August 2004 at which she was explicitly told that
the Respondent was in a financial conundrum and that should any job
opportunities arise she should not hesitate to take it,
because
she could be retrenched in 3 months time.

28.2 Applicant
chose not to heed the advice and for reasons known only to her, chose
to believe that she would not be retrenched.
Respondent would not
have called her, if it did not believe that she could be one of the
employees retrenched.”

The last sentence
of this last paragraph does not make sense, because mr Paledi said
that he called all staff members into his office
individually, not
only those who he believed could be retrenched.

“29.3 Applicant
having been informed by Respondent that it was considering
retrenching employees and that she may be one of the employees
affected, was at liberty to suggest ways in which retrenchments
could be avoided.”

[47] The court
consequently finds that, at this meeting on 3 August 2004, the
applicant was not alerted that she may possibly be retrenched.
The
court therefore finds that the respondent failed to comply with the
aforesaid second equitable guideline.

[48] As to the
third and fifth guidelines, that management must have prior
consultations with its employees and their union, where
applicable,
before it finally decides to retrench, the court agrees with the
following dictum of John Grogan in his book, Dismissal
at page 254:

“The
requirements of sufficient prior warning and adequate consultation
constitute the main procedural requirements of a fair retrenchment.”

[49] As to the
duty to consult, there are two opposing approaches evident in South
African labour judgments. Rycroft and Jordaan
op. cit. sets
out these approaches as follows at page 237 et seq:

“The
first [approach] requires consultation after the need to rationalize
has become apparent and before a final decision to retrench
has been
made. This view accords with the ILO Convention outlined above.

–
– – – – – –

The
second and opposing approach to the requirement of consultation is
one which says that consultation is not required where it would
not
have affected the decision to retrench and, furthermore, the onus is
on the retrenched workers to show that consultation would
have made a
difference.”

[50] John Grogan,
op. cit at page 254
refers to this second approach as the “no
difference” principle and continues as
follows:

“The
“no difference” principle has been criticised on the basis that
it is both contrary to public policy underlying the retrenchment
guidelines and that it effectively negates the purpose of the
procedural requirements.”

He goes on to say
that the courts and the legislature in South Africa have now accepted
these criticisms and that the “no
difference” principle accordingly has no
place in their labour law. The court agrees with this dictum and
finds that the “no
difference” principle also has no place in
the Botswana labour law when dealing with retrenchments.

[51] In view of
this finding and in view of the submissions made by mr Chilisa
regarding what should be understood by prior consultations,
the court
finds it necessary to refer to the aforesaid first approach, as set
out by Rycroft and Jordaan, op.cit.

[52] As to prior
consultations mr Chilisa submitted inter
alia the following:

11.4.1 There
was consultation on the need to retrench as Applicant concedes that
she was called into a meeting with the Respondent’s
Managing
Partner three months before she was retrenched;

11.4.2 It
was incumbent upon Applicant to suggest alternatives to retrenchment,
Applicant failed to do so;

–
– – – – – –

29.1 Respondent
was under an obligation to consult adequately before retrenching.
The purpose of consultation is to bona fide consider
suggestions from
employees on how job losses might be avoided or on how the effects of
retrenchment may be ameliorated.

29.2 The
test of whether there has been adequate consultation is whether the
employees were given a fair opportunity to suggest ways
in which job
losses could be avoided. – – –

29.3 Applicant
having been informed by Respondent that it was considering
retrenching employees and that she may be one of the employees
affected, was at liberty to suggest ways in which retrenchments could
be avoided. Applicant whose knowledge of equitable requirements
for
a fair retrenchment was immaculate and certainly a lot superior than,
that of the Respondent’s Partners, knew that she had
an equitable
entitlement to make alternative suggestions on how retrenchment could
be avoided.

–
– – – – –

29.4 It
was incumbent upon Applicant to suggest alternatives to retrenchment.
Applicant failed to do so, Respondent therefore proceeded
to retrench
without the benefit of alternative suggestions. It would be most
absurd if there was an obligation on the Respondent,
having already
taken the decision to retrench to think of alternatives to
retrenchment. Once the decision that retrenchments may
be necessary
was made the duty to think of innovative alternatives rests with the
employees.

29.5 It
was argued on behalf of Applicant that she may have taken a pay cut
to stay with the Respondent had it been put to her that
she would
have to take a pay cut in order to stay on. With the greatest
respect the argument lacks cogency for the simple reason
that it was
for the Applicant to come up with suggestions and put them to the
Respondent if she had any. The Applicant failed to
do so,
accordingly Applicant, can not be said to have completely over looked
suggestions put forth by employees who were affected
by the
retrenchment exercise.

29.6 On
the basis of the foregoing it is respectfully suggested that there
was adequate consultation as the employer did not fail
to take into
account any suggestions put to it by the employees with respect to
minimizing job losses.”

[53] The aforesaid
first approach is set out as follows by Rycroft and Jordaan, op
cit. at page 235:

“The
first approach maintains that consultation must take place prior to
the decision to retrench because: (i) this gives the employer
the
opportunity to explain the reasons for the proposed retrenchment and
to consider alternative measures to retrenchment; (ii)
this creates
the opportunity for the parties to agree on the timetable of the
retrenchment, notice and consultation with the individual
employee,
rights to re-employment, severance pay, and so on; (iv) this gives
the trade union the opportunity to make any specific
representations.

Inherent
in this first approach is a particular understanding of the meaning
of consultation. Consultation, described as the taking
of counsel or
seeking
information or advice
without implying an agreement, has been distinguished from
bargaining, which has connotations of haggling or wrangling in order
to
arrive at an agreement. At the same time it has been recognised
that consultation does not mean merely affording an opportunity
to
make a comment on, or express an opinion about, a decision already
made and which is in the process of being implemented. It
has
positive connotations of explaining the reasons for the proposed
retrenchment, considering alternative measures, agreeing criteria
for
selecting workers to be retrenched, agreeing the timetable of the
retrenchment process, and hearing other representations from
the
trade union. The industrial court has recognized that the question is
not whether prior consultation or consideration of the
alternatives
will be successful: what is important is that
workers be given the opportunity to make representations
and this way ‘minimize industrial conflict.’ (The
court’s underlining)

[54] From the
above submissions by mr Chilisa it is clear that he places the onus
to create an opportunity to come forward with representation,
squarely on the shoulders of the employee. The court finds this
submission absurd and contrary to equitable principles. It is the
employer who seeks “information
and advice” (the underlined words in the
above quotation from Rycroft and Jordaan), from employees to assist
him in deciding what steps to take
to alleviate the financial
problems. The court finds that the onus rests on the employer to
create a forum where the employees are
then given the opportunity to
make representations.

[55] The court
finds support for such finding in a judgment of the Supreme Court of
Appeal of South Africa in the case of Administrator,
Natal and Another v. Sibiya and Another, [1992] ZASCA 115; 1992
(4) S.A. 532 (A). That case dealt with the retrenchment of two
public service employees and the court, applying the principles of
Administrative
Law and in particular the audi
alteram partem-rule (a natural rule of
justice in terms of which the other party should also be given a bona
fide opportunity to state his or her case and
to be heard), stated the following per Hoexter, J.A at page 539E:

“In
the instant case a just and proper exercise of the power to dismiss
involved an inquiry into the individual circumstances of each
of the
workers whose retrenchment was being considered. The necessity for
such a careful appraisal seems to have been present to
the minds of
the appellants, but mistakenly they conceived the inquiry to be a
one-sided affair. Creeke expressed the belief that
all the
information relevant to the inquiry was to be found in his staff
files. But, given the opportunity of a hearing, the respondents
might have been able to call attention to relevant facts and
circumstances of which the appellants were unaware; or to make
suggestions
as to a solution of the problem of the redundant workers
which had not occurred to the appellants. In my view, this was a
case in
which elementary fairness required that the respondents
should have been accorded a hearing before the appellants took their
decision
to dismiss the respondents.”

[56] It is obvious
that when the Court said “
that the respondents [Employees] should
have been accorded a hearing”, it did not
mean a disciplinary hearing but an opportunity to be heard. As the
audi alteram partem
– rule is also an equitable principle of our
Labour Law, the court finds that the above dictum is equally
applicable to this case.
The court therefore finds that in the
present case elementary fairness required that the applicant should
have been accorded a hearing
before the respondent took the decision
to retrench her. As stated above the onus was on the respondent to
arrange such a meeting
and there was no onus on the applicant to do
so.

[57] The
respondent cannot dispute the applicant’s evidence that if she had
known that she was in line for retrenchment and if she
had been asked
for an input, she would have said that she was prepared to take a pay
cut and to forfeit her company car and medical
aid benefit. When
this was put to mr Paledi, he said that he would have looked at such
suggestion favourably, but he does not know
if that would have made
them to keep her. This sounds very much like the “no
difference” principle, which has no place
in our labour law.

[58] The court
finds that at the meeting of 3 August 2004 when he spoke to all staff
members individually he merely told them that
the partnership is
experiencing financial problems due to the down turn in work and
might have to reduce staff. He said he then
placed them on 3 months’
notice to see if they could find other employment. He never arranged
any opportunity for the applicant
to make any representations nor did
he ask her if she had any input to make. The court therefore finds
that he could not have considered
any representations from the
applicant as he never asked her for any input. The court
consequently finds that there was no prior
consultation whatsoever
with the applicant before the respondent took the final decision to
retrench her and therefore finds that
the respondent had also failed
to comply with the said fifth equitable procedural guideline.

[59] As to the
fourth guideline that, if no criteria are agreed in choosing which
employees are to be retrenched, then the employer
must apply fair and
objective criteria, the court has already found, under legal
requirements, that the respondent did comply with
the criteria set
out in subsection 25(1) of the Employment Act. The court therefore
finds that it is also in compliance with this
fourth guideline.

[60] The court
consequently finds that the retrenchment of the applicant was
procedurally unfair in that there was no prior warning
that she may
be retrenched and there was also no consultation prior to respondent
taking the final decision to retrench the applicant.

Compensation

[61] In this case
the court has found that the respondent did have a valid reason for
retrenching the applicant but that the procedure
followed by the
respondent in retrenching the applicant, was unlawful in terms of the
said section 25, and procedurally unfair in
terms of the aforesaid
equitable requirements, which means that the applicant is entitled to
some award of compensation. The court
however does not agree with
the following submission of mr Chilisa:

“13. If
there were any procedural flaws in the retrenchment process they are
not weighty enough to entitle Applicant to compensation
of no more
than half a month’s salary.”

[62] As to the
procedural unlawfulness of this retrenchment in terms of section 25
of the Employment Act, the court will not regard
the respondent’s
failure to notify the Commissioner of Labour timeously of the said
retrenchment, as a factor to be considered
against the respondent.
The court agrees with the following finding of Legwaila, J.P. in the
case of O. Boswabatau & 12 Others v. The Goodies (Pty) Ltd,
case No. IC. 217/99 (J.423), dated 26 May 2000 at page 10 of the
typed record:

“But
a distinction must be made between omitting to notify the
Commissioner and failing to notify the Applicants. The Commissioner
is not a party to this dispute. He has not subrogated his rights to
the Applicants. It is up to the Commissioner to deal with failures
to give him notice. The Applicants cannot claim to have been wronged
by the failure of the Respondent to notify the Commissioner
unless
they can point to a specific prejudice suffered by them as a result
of that failure, consequently entitling them to compensation.
In any
case, this case was reported to the Commissioner by the Applicant and
if the Commissioner did not assert his rights, the
Applicants have no
legal standing to assert that on his behalf.”

As to the second
ground for procedural unlawfulness, namely failure to forthwith give
written notice of intention to retrench to every
employer to be or
likely to be directly affected by the retrenchment, the court will
bear in mind, when deciding on an appropriate
award, that this factor
to some extent overlaps the equitable procedural guideline of prior
warning to an employee of an intention
to retrench and that he may
possibly be retrenched.

[63] Section 24
(4) of the Trade Disputes Act (Cap.48:02) sets out the following
seven factors the court may (my underlining) take into account
in assessing a fair and an appropriate amount of compensation:

“4 In
assessing the amount of compensation to be paid under subsection (1),
the court may take the following factors into account –

(a) the
actual and future loss likely to be suffered by the employee as a
result of the wrongful dismissal;

(b) the
age of the employee

(c
) the prospects of the employee in finding other equivalent
employment

(d) the
circumstances of the dismissal;

(e) the
acceptance or rejection by either the employer or the employee of any
recommendations made by the Court for the reinstatement
of the
employee;

(f) whether
or not there has been any contravention of the terms of any
collective agreement or of any law relating to employment
by the
employer or the employee;

7. the
   employer’s ability to pay.”

[64] The factors
mentioned in sub-paragraphs (a) and (c), actual and future loss and
the applicant’s prospects of finding other
employment, are closely
related and will be considered by the court in this case in favour of
the applicant. The applicant testified
that since her dismissal she
had been looking eagerly for advertised posts for architects but only
a few were advertised but none
were suitable. She then applied for a
post in the Government Department of Architecture. They took so long
to reply that she decided
to start her own business as architect,
which she started at the beginning of May 2005. On 18 May 2005 this
Government post was
offered to her, which she did not accept as she
had by then already started her own business. From the time of her
retrenchment
on 26 November 2004, when she left, she was without work
till end of April 2005. She was therefore without work and without
income
for just over 5 months.

[65] The court
finds the factor mentioned in subparagraph (b), the age of the
applicant is not really relevant. The applicant is
32 years old.
Her age as such should not have prevented her from finding other
employment.

[66] The factor
mentioned in subparagraph (d), the circumstances of the retrenchment,
is very relevant. The court will consider it
in favour of both
parties. The court will consider in favour of the respondent that
the applicant’s retrenchment was substantively
fair. In favour of
the applicant the court will consider that the respondent failed to
comply with the two most important equitable
procedural requirements
and that there was also no prior written notice in terms of the said
section 25.

[67] The factors
mentioned in subparagraphs (e) and (f) are not relevant in this case.
As to the factor mentioned in subparagraph
(g), the employer’s
ability to pay, mr Paledi testified that due to all his financial
problems, especially his huge bank overdraft,
he will not be in a
position to pay any compensation to the applicant. The court finds
that the respondent cannot just shrug off
his responsibilities like
this. He will have to make some plan. The only way the court can
assist him is to allow him to pay in
instalments.

[68] The court
finds that by using the underlined permissive word “may”
in the said section 24 (4), the legislature did not intend the said
seven factors to be exhaustive. This means that there could
be other
relevant factors as well, not mentioned in section 24 (4), which the
court may take into account as well in assessing an
appropriate
amount of compensation. One such factor, not mentioned in section 24
(4), which the court finds relevant and will take
into account in
favour of the respondent, is the relatively short period of
employment of the applicant. The applicant was in the
respondent’s
employ for 2 years, 10 months and 2 weeks.

[69] The applicant
reported her alleged unfair retrenchment to a labour officer on 26
November 2004 when proceedings in this case
commenced. The new Trade
Disputes Act, no.15 of 2004 came into force on 23 April 2004. This
dispute must therefore be determined
in terms of this new Act. In
terms of the old Trade Disputes Act, the maximum amount of
compensation this court could award, was
compensation equal to 6
months monetary wages. In terms of the provisions of the said new
Act, there is no longer such maximum amount.
It is therefore now in
the discretion of the court to award an appropriate amount of
compensation.

[70] Having
considered the aforesaid factors in favour of and against each party,
the members of the court are agreed that a fair
and an appropriate
award of compensation for procedural unfairness, in the circumstances
of this case, would be compensation equal
to 3 months’ monetary
wages.

[71 The amount so
to be awarded to the applicant is not salary but compensation. The
full amount, without any deductions, must therefore
be paid to the
applicant. The applicant’s undisputed evidence is that at the time
of her retrenchment her salary was P15,675.00
per month. The
applicant is therefore entitled to compensation in the amount of
P47,025.00 ( 3 x P15,675.00)

Determination

[72] The court
consequently makes the following determination:

1. The termination
of the contract of employment of the applicant, Johanna Nganunu
Macharia, by the respondent on 26 November 2004,
was substantively
fair but it was unlawful and procedurally unfair.

2. In terms of
section 24 (1) (a) of the Trade Disputes Act, the respondent is
hereby directed to pay to the applicant, the amount
of P47,025.00,
being three month’s monetary wages as compensation.

3. The respondent is
   hereby further directed to pay the amount of P47,025.00, to the
   applicant, through the office of the registrar
   of this court, in
   three equal monthly instalments of P15,675.00, commencing on 30 June
   2006, the second instalment to be paid on
   31 July 2006 and the last
   instalment on 31 August 2006.

3. No order is made
   as to costs.

Dated at Gaborone
this day of June 2006.

_________________________

D.
J. de Villiers

INDUSTRIAL COURT JUDGE

We agree on the
facts:

__________________________

T.
Makunga

NOMINATED MEMBER (UNION)

____________________________

M. K.
Mashumba

NOMINATED
MEMBER (BOCCIM)

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