Edge Line Engineering (Pty) Ltd v Association of Mineworkers and Construction Union (AMCU) (JA104/24) [2025] ZALAC 65 (29 December 2025)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: Labour Appeal Court South Africa: Labour Appeal Court You are here: SAFLII >> Databases >> South Africa: Labour Appeal Court >> 2025 >> [2025] ZALAC 65 | Noteup | LawCite sino index ## Edge Line Engineering (Pty) Ltd v Association of Mineworkers and Construction Union (AMCU) (JA104/24) [2025] ZALAC 65 (29 December 2025) Edge Line Engineering (Pty) Ltd v Association of Mineworkers and Construction Union (AMCU) (JA104/24) [2025] ZALAC 65 (29 December 2025) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZALAC/Data/2025_65.html sino date 29 December 2025 THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG Not Reportable case No: JA104/2024 In the matter between: EDGE LINE ENGINEERING (PTY) LTD                                            Appellant and ASSOCIATION OF MINEWORKERS AND CONSTRUCTION UNION (AMCU)                                                    First Respondent AMCU MEMBERS AS PER ANNEXURE “X”                                   Second Respondent Heard : 21 August 2025 Delivered : 29 December 2025 Coram:        Mahalelo ADJP, Van Niekerk JA et Chetty AJA JUDGMENT CHETTY, AJA Introduction [1]  This appeal lies against the decision of the Labour Court (Morgan AJ), with the leave of this Court, in which the dismissal of the second to further respondents, all of whom were members of the first respondent, the Association of Mineworkers and Construction Union (AMCU), was found to be substantively unfair and whose reinstatement was ordered from the date of their dismissal, including backpay. The procedural fairness of their dismissals was not an issue in dispute before the court a quo . [2] The issues for determination before this Court are whether the Labour Court correctly concluded that the retrenchment of the 15 employees (to whom I refer hereinafter as the ‘affected employees’ or collectively as the ‘union members’) was substantively fair and whether the remedy of reinstatement was appropriate in the circumstances, given the appellant’s reliance on s 193(2) (c) of the Labour Relations Act [1] (‘LRA’ or ‘the Act’) in light of it having subcontracted and outsourced all of its labour in the production and manufacturing lines of the company. At the time of the hearing in the court a quo , the appellant contended that it did not have any employees. Factual background [3]  The brief background to the matter is that the appellant was engaged in the manufacture and production of what are termed ‘electrical kiosks and distribution sub-stations’. These kiosks are typically found alongside public roads and are distribution sites for electricity to houses and factories, with the electrical components housed inside a powder-coated metal shell. The clients of the appellant include municipalities, as well as State-owned enterprises like Eskom. All of the contracts secured by the appellant are through tenders, in terms of which it is required to manufacture and supply a specific volume of units. The flow of work to the appellant was not constant and was entirely dependent on the contracts it secured. [4]  In March 2019, the appellant issued notices to all employees, including AMCU and its members who constitute the second and further respondents, of a proposed restructuring of the company that could result in retrenchment and redundancy. The notice, in terms of s 189(3) of the LRA, recorded that over the past two years the appellant had been experiencing huge financial losses, and due to the lack of business growth and the potential closure of departments, there was a risk of certain positions being made redundant. Although the notice, which forms part of the record, is not specifically directed at employees in a particular department, ACMU interpreted the notice as being directed to all the staff in the powder coating department, which faced total closure by 10 April 2019. According to the notice, the appellant had already embarked on the retrenchment of 35 employees, with the powder coating department purportedly comprising a further 40 employees earmarked for retrenchment. Ultimately, retrenchment notices were issued to 17 employees in the powder coating department, of which 15 were members of AMCU and constitute the affected employees herein. [5]  The Commission for Conciliation, Mediation and Arbitration (‘CCMA’) was requested to facilitate the consultation process between the appellant and AMCU in terms of s 189A of the LRA. Various meetings took place over the period March to May 2019, during which time discussions focused on alternatives to the proposed retrenchment, as well as the number of employees to be affected. It is common cause that AMCU requested details of the appellant’s finances in order to satisfy itself that the proposed retrenchments were motivated by sound and genuine operational criteria. AMCU proposed alternatives, including that the appellant terminate the services of contract workers on site in order to preserve the employment of permanent workers who had been earmarked for retrenchment. [6]  During the course of the facilitation, the appellant’s list of potentially affected employees reduced from 26 to 15. AMCU, however, submitted that this reduction was merely a sham, as the list of 26 affected employees also included managerial employees, an accountant and human resources personnel, whereas the target of the retrenchment was aimed at the closure of the powder-coating department. In essence, it was contended that the augmentation of the list was merely to convey that a wider spectrum of potentially affected employees was considered and that the reduction to 15 was indicative of the appellant’s intention of preserving posts wherever possible. [7]  Ultimately, of the eventual list of 17 employees who were selected for retrenchment, two employees (who were not members of AMCU) were removed from the list by virtue of one of them retiring, and the other having applied for and successfully secured an alternative position. [8]  AMCU contended that the retrenchments effected on 17 May 2019 were substantively unfair as the appellant had failed to consult with it in any meaningful manner in order to avert the retrenchments, and that immediately after the retrenchments were effected, the company secured two business contacts, resulting in additional work. Despite this, it failed to retain the services of the affected employees and opted to engage the services of contract workers and casuals. In its statement of case, the union, as part of its grounds for challenging the dismissal of its members, obliquely contended that they were retrenched due to their union membership. The union sought reinstatement of the affected employees, alternatively, what it described as ‘maximum compensation’. [9]  The appellant, in reply, simply denied the allegations of unfairness raised by the union, disputing that it had secured two new business contracts or that it had acted unfairly in any manner. [10]  A pre-trial conference was held in November 2022, at which it was recorded as common cause that the union received an ‘updated list’ of affected employees, which increased from 17 to 28 employees. In the course of these discussions, the union put forward various alternatives in an attempt to safeguard the employment of its members. It was also agreed that the union only sought to challenge the substantive fairness of the retrenchment, accepting that procedural unfairness was not an issue. Proceedings in the Labour Court [11]  The matter was set down to proceed in October 2023 in the Labour Court, pursuant to s 191(5) (b) (ii) of the LRA. In September 2023, barely a month before the trial, the appellant filed an amendment to its response, in essence revealing that, for operational reasons, it terminated the employment of all its employees with the result that it has no positions to which any employee could be reinstated, particularly in the event that the retrenchment of the affected employees is found to be unfair. On that ground, the appellant contended that even if the dismissals were found to be unfair, reinstatement would not be a proper remedy. [12]  In the Labour Court, the union contended that, firstly, there were no operational grounds for the closure of the powder coating department, and even if this were the case, many of the affected employees could have easily been transferred to other departments in the company, thereby averting their dismissals. There was much debate in the court a quo as to whether the appellant was still operating and in what form, as the evidence of its director, Mr Shear, was that the appellant had restructured its operations and adopted a new business model in terms of which it shed itself of all its employees involved in the manufacture and production lines of its electrical kiosks. While it still continues the engineering and design component of the business, all the manufacturing has since been outsourced through the use of subcontractors. [13]  Mr Shear testified that due to the fluctuation of the volume of work, it was decided to embark on the use of sub-contractors, who were employed as and when new orders were placed. The retention of a permanent complement of employees throughout periods when orders were scarce weighed heavily on the financial well-being of the appellant. He described the operations of the appellant as being divided into three departments: first, the sheet metal department, where steel would be laser cut and bent into components, before being welded together. The powder coating department would then receive the fabricated product and apply a dry finishing process in which the powder is electrostatically charged to the manufactured item, giving it a durable and protective coating. Lastly, the item would then move to the electrical and assembly department, where all the components, including circuit breakers and meters, are installed. Significantly, when addressing the concern of the union that some or all of the affected employees were not employed in the powder coating department and therefore, ought not to have been selected by the appellant to be retrenched, Mr Shear said the following in evidence: ‘ Mr Shear: The departments are very close together so they are cross-pollinated(sic) between the electrical department and the powder coating. The two buildings are right next to one another so they cross-pollinated between the two departments. So they would basically assist to mount the boxes onto the kiosks and to tighten the bolts down and items like that.’ [14]  When Mr Shear was asked what all the affected employees have in common, he responded that the ‘ whole department being the whole powder coating assembly department is what we closed down, the paint shop .’ [15]  Mr Shear justified the decision to retrench and close down the powder-coating department by engaging the services of subcontractors. The only aspect of the business which has been retained is the engineering component, with everything else being outsourced. Effectively, Mr Shear testified that all its employees engaged in the manufacture and production of their kiosks, including contract workers and casuals, have effectively been terminated. He conceded under cross-examination that he was unable to corroborate this evidence with reference to any contract concluded with a subcontractor, as these documents had not formed part of the discovery process. [16]  Insofar as the appellant’s contention that the decision to restructure its business model and the consequent decision to retrench was predicated on the poor financial performance of the company, Mr Shear testified that in the 2018 financial year, the appellant recorded a loss of R1.7 million, and in the preceding year, R260 000. In the 2019 financial period, the appellant recorded a loss of R5.3 million. In light of its failing, Mr Shear testified that the appellant took a decision to minimise its overheads as much as possible and, in particular, its powder coating department, which was outsourced.  This decision, according to his testimony, reduced overheads and salaries. [17]  Mr Shear went on to explain that the current subcontractor operates more modern machinery, resulting in significant cost savings from reclamation processes. As a result, their production costs have halved compared to those of the appellant. Apart from not having to pay subcontractors when there are no orders, Mr Shear went on the explain that the appellant was struggling to pay its suppliers on time. With the employment of subcontractors, they are able to arrange more favourable payment terms, allowing the appellant to improve its liquidity position. He further explained that employees in the powder coating department could not be absorbed into the two other departments as they were relatively unskilled in comparison to their colleagues, who were responsible for fabricating sheet metal or working in the electrical department. [18]  The evidence in relation to outsourcing resulted in AMCU raising the spectre of a breach of s 197 of the LRA. This argument was short-lived before us as counsel conceded that this was neither the case pleaded by the union in the Labour Court nor in respect of the evidence which was led by its witnesses. [19]  While Mr Shear’s evidence of the decision to outsource its labour-intensive operations to subcontractors remained intact under cross-examination, he failed to impress the court a quo with his justification for why these specific employees in the powder coating section were selected for retrenchment despite their evidence that not all of them were indeed employed in the powder-coating department. In addition, he could not explain what became of the other 26 employees in the same department, as only 15 AMCU members were retrenched. Perhaps in desperation to offer some justification for their selection, Mr Shear assumed that the appellant employed LIFO as a criterion. His explanation suffered, however, as he failed to provide any details of the employees against whom the affected employees would have been compared. [20]  Ultimately, Mr Shear conceded that he had not been involved in the facilitation process, nor was he able to shed any light on the selection of the affected employees to be retrenched and was unable to offer any justification as to why the affected employees were selected, and 11 other employees in the same department appeared to have been spared from the fate of being retrenched. He was unable to offer any insight into whether the appellant considered cross-transfers or bumping of employees in other departments, where the affected employees who had the necessary skills could be retained ahead of newer recruits to the workforce. [21]  Mr Shear fared no better when he was examined in relation to a list, which was introduced into evidence by the appellant, which was used as the basis to select the employees for retrenchment. The second to further respondents’ names appear on the list, which bears the date of 14 May 2019 and is completed in manuscript. The evidence of the union and its witnesses, including Mr Jeffery Chauke, the regional organiser of AMCU for the Johannesburg Central region, who was integrally involved in the facilitation with management in an attempt to avert the retrenchment, was that the list was presented by the appellant to the union with the names of the employees already inserted. The employees were required to insert their respective occupations or positions at the company under the column headed ’Position’. They then placed their signature alongside their name and position, as inserted. This was the list that was ultimately used by the appellant to effect the retrenchment. Mr Chauke also testified that during the facilitation, the union made several attempts at proposing cost-saving measures with the intention to avoid a retrenchment, including sacrificing the payment of their bonus and forsaking an increase in salary. None of these proposals resonated with the appellant as a measure to avoid the loss of jobs. [22]  In the court a quo , the appellant’s human resources officer, Mr Clement Makhaloa (‘Mr Makhaloa’), testified that he was familiar with all the employees on the list and disputed the details inserted under the column ‘Positions’, contending that all of the employees worked only in the powder coating department and that they could not be accommodated elsewhere in the company. It begs the question, put to him under cross-examination, as to what possible motive would have existed for the employees to insert false information on a list, without knowing that it would become the point of dispute almost four years later at trial. [23]  The inescapable fact is that the list was introduced by the appellant at trial and formed part of the documents on which it relied. The purpose of disputing the positions that the affected employees contend they performed is to negate the submission of the union that most of the employees on the list could have been absorbed elsewhere in the company had proper consideration been given to finding alternative placements for them. It pours cold water over the argument by the appellant that only employees from the powder coating department were selected for retrenchment. [24]  In order to bolster the appellant’s version that the list was riddled with inaccuracies regarding the positions which the affected employees performed, Mr Makhaloa testified that the selected employees were not grinders, nor could they be transferred to the electrical department, as this involved ‘intricate wiring’, in respect of which none of them supposedly had the capacity to do. There was no evidence by the appellant that this comparative exercise was carried out in respect of each affected employee. Mr Shear’s evidence was that they were selected because they all worked in the powder coating department. As to why the selected employees could not be retained in the assembly department, Mr Mokhaloa stated that these tasks were already being performed by subcontractors. The evidence of Mr Shear was that the appellant had no intention of cancelling any of the sub-contracts. As a result, the listed employees were sacrificed ahead of cancelling any subcontracts, without any consideration for their periods of service. Ultimately, and in a similar vein to the evidence tendered by Mr Shear, Mr Makhaloa testified that the decision to retrench was a business strategy in order for the appellant to survive. [25]  Much time in the court a quo was devoted to the issue of the employees selected for retrenchment being singled out because of their affiliation with AMCU. This contention, which would constitute grounds for an automatically unfair dismissal, was repeatedly denied by the appellant. I will deal with this contention and the court a quo ’s findings in due course. [26]  The decision of the court a quo concluded that the dismissal of the affected employees was substantively unfair and ordered their reinstatement, retrospective to the date of their dismissals, inclusive of back-pay. The evidence before the court a quo was that the retrenched employees had been without gainful employment since their dismissal in May 2019. The judgment devoted much attention to underlying general principles of retrenchment, including the requirement that it be justified by operational requirements, in the sense that it was a reasonable decision in the circumstances. Put differently, the court is permitted to scrutinise the circumstances of the retrenchment with an eye to ensure that the decision was not a sham or a ruse for what would otherwise constitute an unfair dismissal. [27]  The court a quo found that the appellant’s evidence of financial distress was unconvincing in light of its actions post-retrenchment, particularly the securing of two new contracts and the continuation of its powder coating operations through the engagement of subcontractors. The Labour Court found that these factors were not indicative of a genuine operational requirement, and the failure to explore, through, genuine efforts, alternatives to retrenchment, undermined the substantive fairness of the retrenchment. Insofar as the selection of the affected employees, the court a quo found that in the absence of agreed criteria, the unilateral decision by the appellant to select 15 employees only, without any transparent criteria, evidenced a lack of fairness. This, coupled with what the court termed the appellant’s ‘dubious financial justification’, the re-engagement of sub-contractors and its failure to consider alternatives, made the retrenchment unjustifiable. The court concluded that ‘appropriate remedial action, including possible reinstatement or compensation, should be considered to rectify the injustice suffered by the affected employees’. The court a quo eventually awarded the employee reinstatement from the date of their dismissal, including back pay. Grounds of appeal [28]  The appellant contended that the Labour Court erred by embarking on an enquiry into alleged discrimination against AMCU members despite the dispute not having been framed and pleaded as an automatically unfair dismissal under s 187 of the LRA. It was further contended that the court a quo erred in concluding that the retrenchments were used as a stratagem to target AMCU members; that the closure of the powder coating department and the engagement of subcontractors were not the result of genuine operational decisions and that the authenticity of the retrenchment was disbelieved in light of the appellant having secured two new business contracts shortly after the retrenchment. [29]  In light of the above grounds, the appellant contends that the Labour Court erred in calling into question the authenticity of the retrenchment as being justified on grounds of operational requirements. In response, the union contended that the powder coating department is an integral part of the appellant’s business and its closure was not brought about by a lack of work, but by a decision to rather outsource its production to subcontractors. [30]  Insofar as the selection of the affected employees, the union maintained that their selection was unfair as the appellant was unable to offer any justification for their selection and the retention of 11 other employees in the same department. [31]  In refusing leave to appeal, the court a quo noted that it had carefully scrutinised the grounds of financial distress and found them to be unconvincing, particularly as the powder coating department continued to function after the retrenchment, through the engagement of subcontractors. The court also concluded that the decision to retrench was pre-determined. That said, the court further found that the appellant’s retrenchment operation was a sham, in which union members were targeted for selection. [32]  Leave to appeal was granted on 8 November 2024 on petition to this court. Analysis [33]  The two main issues to be determined by this court, in light of the evidence led, are whether the Labour Court’s finding that the dismissal of the affected employees, based on the method of their selection and the justification on operational grounds, can be sustained as being substantively unfair. The second issue is whether, if their dismissals are found to be unfair, the relief of reinstatement is appropriate in light of the contention by the appellant that it no longer has any employees in the production and assembly lines, given its business model of outsourcing all its labour. [34] In assessing the fairness of the operational requirements as justification for the retrenchment, the employer bears the onus not only to establish a fair reason for the dismissal, but also that the dismissal was effected in accordance with a fair procedure. The latter aspect is not a matter for this Court to consider, as procedural fairness was not disputed by the union. In SACTWU and others v Discreto (A Division of Trump and Springbok Holdings ) , [2] this Court noted that ‘ fairness to the employer is expressed by the recognition of the employer’s ultimate competence to make a final decision on whether to retrench or not ’ [3] , provided that the retrenchment is preceded by a fair consultation process and is properly and genuinely justifiable by operational requirements or business rationale. [35]  It is well established that in scrutinising the grounds advanced for a retrenchment, the court does not embark on an exercise at second-guessing the commercial or business efficacy of the employer’s ultimate decision, but rather determining whether the decision was genuine and not a sham. In the context of the present matter, the union contends that the retrenchment was a ruse to rid the appellant of union members, and their selection was made solely on the basis of their union affiliation with AMCU. [36] It bears noting that in determining the rationality of the employer’s decision to retrench, it is not the court’s function to decide whether this was the best decision under the circumstances, but only whether it was a rational commercial or operational decision. This principle was underscored in Chemical Workers Industrial Union and Others v Algorax (Pty) Ltd , [4] where the Court stated that: ‘ The question whether the dismissal was fair or not must be answered by the Court. The Court must not defer to the employer for the purpose of answering that question. In other words it cannot say that the employer thinks it is fair, and therefore, it is or should be fair.’ [37] In relation to the appellant’s decision to adopt the business model of outsourcing its labour, the evidence of its director, Mr Shear, was subjected to intense examination. The Labour Court concluded that the appellant’s engagement of subcontractors and the acquisition of two new contracts shortly after the retrenchments were announced called into question its bona fides and reliance on operational needs. The Court concluded that its argument of financial distress could not be sustained. In BMD Knitting Mills (Pty) Ltd v SA Clothing and Textile Workers Union , [5] this Court suggested that a higher standard of substantive review was required in assessing the fairness of a commercial decision taken by an employer to retrench employees. It noted that: ‘… The word “fair” introduces a comparator, that is a reason which must be fair to both parties affected by the decision. The starting-point is whether there is a commercial rationale for the decision. But, rather than take such justification at face value, a court is entitled to examine whether a particular decision is also fair to the affected party, namely the employees to be retrenched. To this extent the court is entitled to enquire as to whether a reasonable basis exists on which the decision, including the proposed manner, to dismiss for operational requirements is predicated. Viewed accordingly, the test becomes less deferential and the court is entitled to examine the contents of the reasons given by the employer, albeit that the enquiry is not directed to whether the reason offered is the one which would have been chosen by the court. Fairness, not correctness, is the mandated test.’ [38] The evidence tendered by the appellant, substantiated by its financial statements, indicated that it was suffering financial losses from 2017 onwards. In the year preceding the retrenchment , it suffered a loss of R5.3 million, resulting in the decision to cut overheads. In his evidence as set out earlier, Shear explained the multiple benefits of the outsourcing model over the model which preceded it. [39] To the extent that the Labour Court found that the appellant secured two new contracts shortly after the retrenchment, causing it to doubt the economic justification of resorting to a retrenchment, there was no evidence led by the union to gainsay the version of the appellant. Mr Shear testified that nothing had come of these contracts, as alleged by the union. That version was not met with a rebuttal, bolstered by any evidence. [40] Despite the rejection of the direct evidence of the appellant as to the economic justification for embarking on the retrenchment, the decision of the Labour Court provides no indication that this defence was considered and analysed in any meaningful way. The Court did not make a finding that it disbelieved the evidence of Mr Shear or that his credibility was destroyed under cross-examination. Mr Shear was not a model witness, as evidenced by his testimony on the consultations which preceded the retrenchment, the selection criteria utilised in determining which employees were to be retrenched. However, his evidence of the economic rationale, in my view, could not have been said to have been adopted for an ulterior purpose, including that of wanting to rid the appellant of union members, as emerged during the course of the evidence. In light of the test laid down in Sidumo [6] the question posed by the appellant in this Court is whether is whether the conclusion reached by the Labour Court is one that a reasonable decision-maker could reach, having regard to the available material. [41] As stated earlier, the Labour Court’s judgment is silent on any critical analysis of the evidence presented by the appellant as to its financial justification for the decision to retrench. The appellant, through evidence, established an objective link between the dismissal of the affected employees and an economic need or business rationale on its part. It took the decision to close down the powder coating department, outsourcing all of the production to a service provider, based on the volume of orders it received. Shear testified that if the appellant did not take these steps, it would have been forced to close its operations. In South African Transport and Allied Workers Union v Old Mutual Life Assurance Company South Africa Limited , [7] the court endorsed the test that involves a measure of deference for the managerial prerogative of whether to retrench, provided this is for the purpose of attaining a commercially acceptable objective. I am of the view that the finding of the Labour Court of substantive unfairness owing to the lack or absence of a commercial rationale for the retrenchment cannot be sustained. [42] The next leg in assessing substantive fairness concerns the selection criteria of the affected workers to be retrenched. It was not disputed that all of the employees retrenched from the powder coating department were members of AMCU. The union contended during the trial that the reason for their selection was their union affiliation. This was disputed by the appellant. [43] A perusal of the union’s statement of case does not reveal any reference to an automatically unfair dismissal, challenged in terms of s 187(1) (d) of the LRA, nor is there any averment in the pleadings to sustain this cause of action. Counsel for the union conceded that the union did not refer an automatically unfair dismissal dispute to the Labour Court for determination. That court, despite the issue of an automatically unfair discrimination suit not being a live dispute before it, made the following observations: ‘ [70]  The selection of employees for retrenchment must be based on fair and objective criteria, such as the "last-in, first-out" (LIFO) principle. There is no evidence that Edgeline adhered to any agreed or objective selection method. The unilateral decision to retrench specific employees, particularly those affiliated with AMCU, without transparent criteria, indicates a lack of fairness in the selection process. [71]  AMCU's concerns that the retrenchment targeted its members raise serious issues of potential discrimination and union-busting. The disproportionate impact on AMCU members, coupled with the flawed consultation process and dubious financial rationale, supports the claim that the retrenchment may have been motivated by anti-union sentiment rather than genuine operational needs.’ [44]  In this Court, the appellant contends that the Labour Court had no jurisdiction to entertain a claim of discrimination against AMCU members, either in terms of s 5(1) of the Act which provides that no person may discriminate against an employee for exercising any right conferred by the Act, or s 187(1) (d) which pertains to automatically unfair dismissals. The case advanced by the union related to the substantive fairness of the dismissal, and in particular, the commercial rationale relied on by the appellant. A perusal of the record indicates that the first instance of the contention that the retrenchment was a ‘ simulation in order to justify the dismissal of AMCU’s members ’ emerged in the opening statement by the respondent’s counsel. This argument was developed and gained traction, with the contention being that employees were selected for retrenchment, notwithstanding that they were not part of the powder coating division, which was the focus of the retrenchment. [45] In Tecmed Africa v Minister of Health and Another , [8] the Supreme Court of Appeal held that: ‘… appeals do not lie against the reasons for judgment but against the substantive order of a lower court. Thus, whether or not a court of appeal agrees with a lower court’s reasoning would be of no consequence if the result would remain the same ( Western Johannesburg Rent Board v Ursula Mansions (Pty) Lt d 1948 (3) SA 353 (A) at 354).’ A fair reading of the record and the judgment of the Labour Court reflects that the issue which was before the court was that of the substantive fairness of the retrenchment. To the extent that the Labour Court strayed to make observations in relation to issues which did not form part of the case pleaded, I do not consider that the court a quo misdirected itself. In my view, the observations by the Labour Court, alluded to above, about AMCU members being targeted in the selection of affected employees, do not establish that the Labour Court was seized with an automatically unfair dismissal. It confined itself, as reflected in the order, to the issue of the substantive fairness of the dismissal. Accordingly, this ground of appeal cannot be sustained. [46]  The onus fell on the appellant to prove that fair selection criteria were applied in deciding that the affected employees were to be retrenched. While Shear’s evidence may have satisfied the threshold in deciding the commercial rationale for the retrenchment, his evidence on the selection criteria fell woefully short. The appellant’s case was that it decided to close the powder coating department, and all of the employees in that department were selected for retrenchment on that basis. However, the list of employees compiled by the appellant, which initially comprised 26 employees, included persons who were not engaged in the powder coating department. The evidence established that this augmented list included a receptionist, a director of the company and a human resources practitioner. These persons were later removed from the list, leading to the union’s submission that this was intended to falsely convey to the facilitator at the CCMA that the appellant was indeed considering alternatives to prevent job losses. The application of fair and objective criteria would have demanded an analysis of whether employees in the powder coating department had the requisite skills and experience to be deployed in other departments. [47] A further contention centred on the failure to explore the possibility of moving employees from one department to another to avoid or minimise the retrenchments and retain those with longer service. In this respect, the evidence of Mr Shear confirmed that the powder coating department was located close to the electrical department, to the extent that there was “cross-pollination” of employees between the two departments. Given this factual scenario, it was incumbent on the appellant, in the absence of any agreed criteria with the union, to have employed a fair and objective selection criterion. [9] The explanation that it simply closed down the entire powder coating unit and retrenched all of the employees in that department was rejected in the Labour Court. The appellant was unable to justify why it retained 11 of the employees from the powder coating department but chose to retrench the affected employees. Neither the evidence of Mr Shear nor Mr Chauke was found to be convincing in this regard, with Mr Shear simply stating that he could not remember. A further stumbling block for the appellant is that it tendered no evidence that it compared the length of service and experience of the affected employees to any of those who were retained. Any purported reliance on the application of LIFO (last in, first out) as a fair and objective criterion was without any foundation and was correctly jettisoned by the Labour Court. As noted by Le Roux in Retrenchment Law in South Africa , [10] the absence of fair and objective criteria could give rise to abuse, ‘ where [criteria] are used to get rid of employees that the employer may view as unwanted but against whom it is unable to produce acceptable proof of unacceptable conduct. That is why the Act contemplates the use of subjective selection criteria only where the parties have reached agreement thereupon .’ [11] I am of the view that the decision of the Labour Court of substantive unfairness as a result of flawed selection criteria cannot be faulted on a fair assessment of the evidence. This ground of appeal falls to be rejected. Remedy [48]  The last ground of appeal relates to the relief of reinstatement despite the appellant amending its defence that reinstatement was not reasonably practicable in light of it no longer having any employees and having no positions available for any employee who may be reinstated. The evidence of Mr Shear established that this was indeed the position, and apart from the engineering design component, all of the appellant’s manufacturing and production is performed by new independent subcontractors. In sum, even if the appeal were to be dismissed, the appellant submits that it cannot reinstate the retrenched workers as it has no positions available. A reinstatement would only serve to delay an eventual ‘fair’ retrenchment. [49]  The Labour Court, in arriving at its decision, made the following observations as regards reinstatement: ‘ [78]   Edgeline's retrenchment process was substantively unfair. The dubious financial justification, immediate re-employment of subcontractors, inadequate consideration of alternatives, and potential discrimination against union members collectively render the retrenchment unjustifiable. The dismissal of the Second to Further Applicants is found to be unfair, and appropriate remedial action, including possible reinstatement or compensation, should be considered to rectify the injustice suffered by the affected employees.’ [50] In light of the dismissals being found to be substantively unfair, the legislative framework of s 193 provides that reinstatement is the primary remedy unless one of the exceptional circumstances in s 193(2) (a) - (d) is found to exist, in which case compensation may be awarded. [12] The appellant contends that reinstatement is ‘impracticable’. Whether it is reasonably impracticable to reinstate an employee will depend on the circumstances, where ‘ in many cases the impracticability of resuming the relationship of employment will increase with the passage of time’ . [13] Section 193(2) requires that ‘[a] court or commissioner must order the appellant to reinstate or re-employ the respondent unless one or more of the circumstances specified in section 193(2)(a)-(d) exist, in which case compensation may be ordered depending on the nature of the dismissal .’ [51] In Afgen (Pty) Ltd v Ziqubu , [14] Waglay JP noted that where the employee’s dismissal is found to be substantively unfair, such an employee is entitled to reinstatement. The Court noted that ‘ there has to be extraordinary reason to deviate from such relief ’ if the relief in section 193(2) is resorted to. In that case, the Court observed that the conduct of the employee plays a crucial role in determining whether the relief of reinstatement or re-employment should be departed from. The Court endorsed the decision of the commissioner who held that reinstatement was not appropriate and substituted that order with a decision which directed that 12 months’ salary be paid. As noted, the decision to deviate from the award of reinstatement is a decision which has to be judicially exercised, taking into account considerations of fairness to both parties. [15] [52] The respondents, in opposing the application for leave to appeal, submitted that to permit the appellant to avoid reinstatement would be tantamount to condoning the employer’s flagrant disregard for fairness and the cynical manipulation of its business structure. [16] The undisputed evidence of the appellant however, following its amendment to its defence in December 2022, is that subsequent to the dismissal of the affected employees it took an operational decision not to employ any workers. This evidence was not shown to be contrived or fabricated. In the absence of any finding to the contrary, the Labour Court was enjoined by s 193(2) (c) to consider whether reinstatement was impracticable. The judgment of the court a quo reveals no such assessment. In the result, such failure constitutes a misdirection which permits this Court to vary the order of the court a quo and grant appropriate relief. [53]  In light of the de facto position set out by the appellant, counsel for the respondents in this Court conceded that reinstatement was impracticable. It was drawn to our attention that the affected employees remain unemployed since their dismissal in May 2019. If this Court were inclined to find that reinstatement was not the appropriate remedy, it was submitted by the union that an appropriate alternative would be for the employees to be awarded the fullest compensation permitted by the legislature, particularly as their dismissals were not due to any misconduct on their part. [54]  In summary, the finding of the Labour Court that the employer did not have a sound commercial rationale for adopting a business model in terms of which it decided to outsource its manufacturing and production streams to subcontractors cannot be sustained. That said, in order for a dismissal for operational reasons to be fair, employees must be selected according to fair and objective criteria, in the absence of criteria that may have been agreed upon. The finding in the court a quo in this regard cannot be assailed, even if regard were had only to the evidence of the appellant’s witnesses. As regards an appropriate remedy, the Labour Court, in our view, failed to consider at all the evidence presented by the appellant that it no longer employed any employees in the manufacturing and production lines, where the affected employees had been stationed. This evidence was not seriously challenged in the court a quo, yet it was rejected without any assessment. Save for this latter aspect, the appeal must fail. [55]  In light of the outcome, I am of the view that fairness and the law dictates that there be no order as to costs. [56]  I make the following order: Order 1.  The appeal is dismissed, save that paragraph (3) of the Order directing the reinstatement of those employees listed in Annexure ‘X’, is set aside and substituted with the following : ‘ The respondent is ordered to pay the second and further respondents who are identified by name in Annexure ‘X’ to their statement of claim each an amount equivalent to twelve (12) months compensation, calculated at the rate of pay as at May 2019, within twenty (20) days of this order, with interest calculated on such amounts at the prescribed rate of interest from 16 July 2024, being the date of judgment of the Labour Court, to date of final payment.’ 2.  There is no order as to costs. M R Chetty Acting Judge of the Labour Appeal Court Mahalelo ADJP et Van Niekerk JA concur APPEARANCES: FOR THE APPELLANT:               Mr S Snyman, instructed by Higgs Attorneys Inc FOR THE RESPONDENT:           Mr A Snider, instructed by LDA Attorneys Inc [1] Act 66 of 1995, as amended. [2] [1998] 12 BLLR 1228 (LAC) at para 8. [3] Ibid at para 8. [4] (2003) 24 ILJ 1917 (LAC) at para 69. [5] (2001) 22 ILJ 2264 (LAC) at para 19. [6] Sidumo & another v Rustenburg Platinum Mines Ltd & others (2007) 28 ILJ 2405 (CC). [7] (2005) 26 ILJ 293 (LC). [8] [2012] 4 All SA 149 (SCA) at para 17. [9] Section 189(7) (b) of the LRA as a whole. [10] R Le Roux, ‘ Retrenchment Law in South Africa’ , LexisNexis (2016) at p 125. [11] Chemical Workers Industrial Union & Others v Latex Surgical Products (Pty) Ltd (2006) F27 ILJ 292 (LAC) at para 88. [12] In Booi v Amathole District Municipality and others [2022] 1 BLLR 1 (CC) paras 39-40 and 42, the Constitutional Court noted the primacy of the remedy of reinstatement in the LRA as a deliberate policy choice adopted by the legislature. It recognised that this choice, reflected in section 193(2) (b) , which aims inter alia to protect the rights of the individual worker and achieve industrial peace, dictates ‘ that the bar of intolerability is a high one. The term “intolerable” implies a level of unbearability, and must surely require more than the suggestion that the relationship is difficult, fraught or even sour ’. A finding of intolerability is not to be easily reached, and ‘ the employer must provide weighty reasons, accompanied by tangible evidence, to show intolerability ’. [13] See Republican Press v CEPPWAWU [2007] 11 BLLR 1001 (SCA) at para 20 where the Court noted in paragraph 22 that a passage of six years elapsed from the time when the workers were dismissed, and in light of the union not pursuing their claim expeditiously, it was found that reinstatement would not be reasonably practicable. [14] [2019] 10 BLLR 977 (LAC) at para 25. [15] Equity Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others 2009 (2) BCLR 111 (CC) at para 48. [16] See Amalgamated Pharmaceuticals Limited v Grobler NO and others [2004] 6 BLLR 537 (LC). sino noindex make_database footer start