Court reserves judgment in SAA retrenchment decision appeal

The labour appeal court has reserved judgment after hearing arguments on behalf of SAA's business rescue practitioners and unions on whether employees can be retrenched before finalising a rescue plan.

In April, after being informed by public enterprises minister Pravin Gordhan that the government had no more money available to restructure the airline, practitioners Siviwe Dongwana and Les Matuson issued notices of impending retrenchments at the airline.

The notices were set aside by judge Andre van Niekerk after an application by the National Union of Metalworkers of SA (Numsa) and SA Cabin Crew Association (Saaca).

The airline, which is not financially viable, has been in business rescue for six months. But the process has not been completed due to ongoing delays in finalising the business rescue plan. The plan was eventually to be put to a vote on Thursday, but a decision on the business rescue plan was postponed until July 14. If the plan is rejected and an alternative not proposed, SAA will be placed in provisional liquidation.

Advocate Andrew Redding, for the practitioners, on Tuesday argued in the labour appeals court that there was now a business rescue plan and that the interdict on retrenchments needed to be lifted otherwise the process would have to start from square one that consisted of a 60-day consultation period.

“I am informed as far as cash in the bank is concerned there are only a couple of weeks left and if no additional post-commencement finance gets injected in, either by the government or anyone else, then entire business rescue will fail,”  he told the court.

He argued that the retrenchment process that would now commence since the plan was tabled, was no different to the one that had started before.

Judge Dennis Davis asked whether the court should even be hearing the matter considering that a business rescue plan was now in place. He also criticised the practitioners for their handling of the SAA matter and the time taken for them to put a plan together.

Redding said when the retrenchment process began, with initial consultations, the business rescue practitioners aimed at preserving 2,400 of the 4,500 jobs at SAA, but then shifted from that position and said the only viable plan was a controlled wind-down of the business. Now with a business rescue plan, presented last week, 1,000 of the 4,500 jobs will be saved.

The practitioners were arguing that nothing stopped them from doing two sets of retrenchments, or doing them in stages depending on the circumstances, and that there couldn't be just “one shot” at retrenchments.

Advocate Tembeka Ngcukaitobi, for Numsa and Saaca, disagreed, arguing that a retrenchment process could not start without a business rescue plan.

He said this was putting the proverbial cart before the horse.

“We have BRPs who did not do their job,” Ngcukaitobi said, arguing that the practitioners should have published their plan within the 25 days provided for in legislation, and dealt with retrenchments in that rescue plan.

He said the practitioners were trying to retrench employees without knowing how the business was going to be restructured.

Ngcukaitobi argued that employees were entitled to participate in the development of a rescue plan, and that by retrenching them before publishing a plan it defeats their interest in the matter.

“You can't start by cutting down a business and then say I have a plan and say I am going to cut before I know it is rescuable or not.” 

He said the practitioners, in any event, would have to start the retrenchment process from scratch because the retrenchments they previously had in mind had been overtaken.

“The plan now exists and if it contemplates retrenchment now they must start the retrenchment process,” Ngcukaitobi said.

He asked that the court dismiss the practitioners' bid to appeal against the previous judgment.

quintalg@businesslive.co.za