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Court halts SAA retrenchments as unions score big win

08 May 2020 - 17:10 By Nick Wilson
Unions representing SAA employees scored a big win in court on Friday. Stock photo.
Unions representing SAA employees scored a big win in court on Friday. Stock photo.
Image: 123RF/ Jaromír Chalabala

The labour court has ordered the business rescue practitioners of SAA to stop planned retrenchments at the stricken state-owned airline, saying a business rescue plan had to first be presented before employees were invited to consult in such a process.

The National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca), which together represent about 60% of the 4,700 employees at SAA, had taken the airline’s business rescue practitioners, Leslie Matuson and Siviwe Dongwana, to court in a bid to stop a retrenchment process involving the entire staff complement.

The case was heard on Thursday, with judge Andre van Niekerk issuing his ruling on Friday afternoon via e-mail.

In his summary, Van Niekerk said the “crisp issue” was whether Section 136(1)b of the Companies Act permitted a business rescue practitioner to retrench employees “only as part of a business rescue plan and on presentation of that plan or whether a retrenchment process may be initiated in the absence of a business rescue plan”.

Van Niekerk said the court decided that “on a proper interpretation of S136(1), a business rescue practitioner may initiate a retrenchment process only once a business rescue plan that contemplates retrenchments has at least been presented”.

“In the absence of a business rescue plan, the issuing of notices commencing a consultation process over proposed retrenchments is procedurally unfair,” the judge said.

However, Van Niekerk  said nothing in the order precluded the business rescue practitioners from offering, or employees from accepting, a voluntary retrenchment offer.

Contacted for comment, the business rescue practitioners said: “We are considering the judgment.”

In a joint statement, Numsa general secretary Irvin Jim and Sacca president Zazi Nsibanyoni-Mugambi said they “welcome the judgment” and that the favourable ruling “means we have been vindicated”.

The statement also slammed the business rescue practitioners, saying the unions had “exposed their true motives”.

“We have said in our court papers that the proposal by the BRPs of winding down of SAA, without even producing a draft business rescue plan, is nothing more than an extended gravy train for the BRPs and their advisers.”

They said though the business rescue practitioners were appointed “five months ago at great cost to the tax payer” they had “produced nothing” and that Numsa and Sacca were doing the work of devising a “turnaround strategy”.

The statement said the unions were working with the department of public enterprises on this and urged the business rescue practitioners to join them.  

Public enterprises minister Pravin Gordhan said it was "an important judgment as it offers further guidance to the business rescue process".

Gordhan said both his department and the business rescue practitioners would now "evaluate the implications for the business rescue process".

"We have asked our lawyers to study the judgment."