Vishal Janynarayan and Others v Fugro Survey Africa (Pty) Ltd

The respondent, Fugro Survey Africa (Pty) Ltd, is a South African company forming part of an international group engaged in geophysical survey work, with a Netherlands counterpart undertaking construction work. The three appellants were construction survey engineers who had been seconded to the Netherlands entity. When Covid-19 occurred, much of the construction work terminated and their secondment was cancelled. The respondent had no construction work in South Africa and was unable to utilise the services of the appellants. The respondent experienced dramatic business impact with a 50% reduction in work and 65% reduction in operational revenue due to cancelled or postponed projects and movement restrictions during Covid-19. The respondent embarked on a consultation process prior to dismissing the appellants for operational requirements. During consultations, various alternatives to retrenchment were discussed, including an unpaid leave proposal whereby the appellants would be placed on unpaid leave (with various permutations regarding salary reduction, medical aid and provident fund benefits) and allowed to work freelance while the respondent marketed their availability within the group and to third parties. The respondent ultimately proceeded with the retrenchments without implementing the unpaid leave proposal.

• Whether the retrenchments were substantially unfair
• Whether the retrenchments were procedurally unfair
• Whether the respondent adequately considered viable alternatives to retrenchment, specifically the unpaid leave proposal
• Whether the court a quo exercised its discretion judicially in awarding compensation
• Whether the compensation awarded was reasonable in the circumstances
• What is the standard for appellate interference with discretionary awards of compensation for unfair dismissal

The appeal was dismissed with no order as to costs. The Labour Court's award of compensation to the appellants for substantively and procedurally unfair retrenchment was upheld.

An employer dismissing employees for operational requirements acts substantively and procedurally unfairly if it fails to adequately consider and engage with a viable alternative to retrenchment that was proposed during consultations, particularly where such alternative (such as unpaid leave with freelance opportunities) would cost the employer nothing and would immediately address the employer's financial concerns while preserving the employment relationship and providing time to explore further opportunities. Appellate courts will not interfere with discretionary awards of compensation for unfair dismissal unless there has been an irregularity, misdirection (such as considering irrelevant facts or ignoring relevant ones), the decision was based on totally inadequate facts, or there is a substantial variation or striking disparity between the award made and what the appellate court considers should have been awarded.

The Court expressed surprise that leave to appeal was granted in this matter, suggesting that the appeal lacked merit and the court a quo's decision was clearly correct. The Court observed that awards of compensation, like awards of damages in civil matters, are by their nature matters of estimation and discretion and are necessarily 'somewhat rough and ready'. The Court noted it is impossible and undesirable to attempt to arrive at a formula for how much compensation should be awarded for any specific type of unfairness, and there is not much value in comparing compensation awarded in other cases. The Court observed that given the leave pay option was 'at best, a very limited form of relief', limited compensation was clearly justifiable, suggesting that the nature and extent of the alternative relief available is a relevant consideration in assessing the quantum of compensation.

This case reaffirms important principles in South African labour law regarding retrenchment for operational requirements. It emphasizes that employers have a substantive obligation to genuinely consider and engage with viable alternatives to retrenchment, even temporary measures such as unpaid leave arrangements that would cost the employer nothing while providing employees with continued employment opportunities. The case demonstrates that merely going through consultation processes is insufficient if the employer does not genuinely engage with viable alternatives proposed during those consultations. The judgment also provides guidance on the limited scope for appellate interference with compensation awards for unfair dismissal, confirming that such awards are discretionary and appellate courts will only interfere in limited circumstances such as misdirection, consideration of irrelevant factors, or awards based on totally inadequate facts. The case is significant in the context of Covid-19 related retrenchments, showing that even in dire economic circumstances, employers must genuinely explore all viable alternatives before proceeding with dismissals.