In a joint statement, the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) have welcomed the dismissal, by the Labour Appeal Court, of the appeal by the Business Rescue Practitioners (BRPs) of South African Airways (SAA) against a Labour Court judgment in May. That judgment held that the BRPs could not undertake retrenchments at SAA without first having developed a business rescue plan. (SAA, the State-owned national flag carrier, is currently under business rescue [BR].)
“Although the appeal was heard after the BRPs at SAA finally published a plan, it was important for us to defend the decision of the Labour Court, because it had far reaching implications for workers and the case is important for setting down clear guidelines for BRPs as a whole,” highlighted the unions in their joint statement. “There are many companies which have filed for business rescue in South Africa, citing the Covid-19 pandemic as the reason. This judgment effectively means that BRPs may not be sued by employers to prune the business by cutting jobs, and the fundamental challenges threatening the company’s survival must be addressed in the BR plan.”
The Labour Appeal Court upheld the finding of the Labour Court that Section 136(1) of the Companies Act did not allow a BRP to retrench workers without first having developed a BR plan. “How do you consult on retrenchment when there is no plan?” argued the unions’ legal representative in the court, Advocate Tembeka Ngcukaitobi. “How do you know where to cut costs? That is senseless. It must be guided by the plan. The business rescue plan is the central vehicle for deciding this.”
Numsa and Sacca jointly affirmed that the ruling confirmed that the function of business rescue was to provide an expedited assessment of whether or not a business was capable of being rescued, and, if it was, to draw up a business rescue plan as soon as possible. BR had to be both efficient and respect the rights of all the stakeholders in the company, and, in the end, preserve jobs.
The two unions attacked the SAA BRPs as incompetent, having failed to draw up a BR plan within the required period. They also accused the BRPs of having made decisions that were “dodgy” and “reckless”, including cancelling SAA routes but not cancelling leases on SAA aircraft that were no longer required, because of the route cancellations.
“We are pleased that the [Labour Appeals Court] found in our favour,” said Numsa and Sacca. “It was important for us as unions to defend the decision of the Labour Court because BRPs are not a law unto themselves. They cannot be given unfettered power to simply cut jobs as they wish, without adhering to the law which governs their existence.”