The labour appeal court in Johannesburg on Thursday ruled in favour of the unions over the retrenchment process at South African Airways (SAA).

In May, the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) took to the labour court to seek an application to prevent SAA's business rescue practitioners (BRPs) Siviwe Dongwana and Les Matuson from proceeding with retrenchments at the airline.

The unions won that case, and the practitioners wanted the appeal court to set aside the earlier decision of the labour court that they may not proceed with retrenchments at SAA without a business rescue plan.

Phakamile Hlubi-Majola said their legal representative, advocate Tembeka Ngcukaitobi, summed up the case when he said: “How do you consult on retrenchment when there is no plan? 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.”

Ngcukaitobi argued that the employer cannot decide precisely who to retrench until it is known how the company will be restructured and saved through a business rescue plan.

“Conceivably, employees could be retrenched, only to find that the business rescue plan, in final form, required them to be retained and that another distinct group of employees be retrenched,” he said.

Hlubi-Majola said though the appeal was heard after the BRPs 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.

“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 used by employers to prune the business by cutting jobs, and the fundamental challenges threatening the company’s survival must be addressed in the business rescue plan,” she said.

She said Dongwana and Matuson have already gone against the law in many respects, by failing to develop a business rescue plan within the stipulated period, while charging exorbitant fees — about R36m in total — at great cost to the taxpayer.

“They have also taken numerous dodgy decisions, which have done more harm than good and worsened the situation at SAA.

“A clear example of this was the reckless decision to cut routes, and their refusal to cancel the leases on the planes after the routes were cancelled. SAA has now incurred an additional bill of R30bn for planes which were parked and not being used.”