Subjective Selection Criteria in Retrenchments: A Costly Blunder
Umicore Catalyst South Africa (Pty) Ltd v National Union of Metalworkers of South Africa and Others (2024) PA3/2023 [2024] ZALAC 37; [2024] 11 BLLR 1138 (LAC)
Case Summary
In this significant Labour Appeal Court ruling, Umicore's retrenchment of five employees was scrutinised. The employees challenged the fairness of the selection criteria used in the retrenchment process.
Selection criteria constitutes the method imposed by an Employer to select which employees could be considered to be ultimately retrenched. As part of their selection criteria, Umicore included “behavioural assessment” as part of their selection criteria, in an attempt to aid the company with skill retention despite the retrenchments.
The Labour Court initially found the dismissals substantively unfair and ordered reinstatement. Umicore appealed the decision to the Labour Appeal Court. The Labour Appeal Court upheld the Labour Court's ruling, emphasising that the “behavioural assessment” used as part of the selection criteria was subjective and unfair. The Court stressed that selection criteria for retrenchments, in the absence of an agreement to the contrary, must be fair and objective. Umicore's reliance on subjective factors, such as a behavioral assessment questionnaire, was deemed insufficient to justify the dismissals.
Key Takeaways:
Fair and Objective Criteria: This case underscores the critical importance of using fair and objective selection criteria in retrenchment procedures. Subjective assessments can lead to unfair dismissals and costly legal battles.
Skills Assessments: While skills assessments can be a legitimate component of selection criteria, their implementation must be carefully designed to ensure objectivity and fairness.
Agreement on Criteria: When possible, employers should strive to reach agreement with employees or their representatives on the selection criteria to avoid disputes.
Compliance with Legal Obligations: Employers must adhere to all legal obligations and arbitration awards related to employment matters.
Conclusion:
The Umicore judgment serves as a stark reminder for employers to meticulously evaluate their selection criteria during retrenchments. The use of subjective assessments without a clear and justifiable link to job requirements can result in adverse outcomes for businesses. By prioritising fairness and objectivity in selection processes, employers can mitigate legal risks and ensure that retrenchments are conducted in a manner that respects the rights of employees.
