The looming coronavirus-induced mass retrenchments: At the crossroads of MPRDA & LRA

Since 27 March, South Africa has been on a nationwide lockdown due to a deadly outbreak of the coronavirus, coined Covid-19. At the time of writing, the coronavirus had infected 4996 people across the country, with 90 confirmed deaths. During the entire period of the lockdown, individuals, households and institutions are continuously urged to comply with strict lockdown regulations on social distancing and to observe the precautionary measures aimed at curbing the rapid spread of the virus. The economic damage emanating from the lockdown is evident and far reaching, with many businesses calling for it to be lifted.

With the understanding that the lockdown cannot be sustained indefinitely, President Cyril Ramaphosa has on 23 April announced a gradual and phased resumption of economic activities with effect from 1 May. This means that the lockdown will be relaxed very slightly to allow the resumption of certain economic activities. These include permitting the professional service workers to go back to work.  

For the mining industry in particular, the lockdown forced most companies into keeping the mines under care and maintenance (temporary closure). A mine is considered to be under care and maintenance when it has stopped production for various technical, environmental, financial or labour related reasons, but without necessarily having declared the intent to close the mine indefinitely. Among other reasons, this was done to observe the social distancing requirement and putting in place several precautionary measures to protect the workers in terms of the regulations. They also had to scale down their usual production rate, operations and workforce to 50 per cent in order for social distancing to be practically feasible. It is important to note that this requirement will remain in force even beyond 1 May, apart from open cast and coal mines supplying state power utility Eskom.

For this reason, of recent concern to most mining houses has largely been about means and ways of recovering the financial loss due to lockdown. This has led to most mining companies into having serious engagements around the restructuring of their financial outlook to match this ‘new normal’. Among other tough interventions to be taken in that regard is to issue the section 189 notification (explained below) for the mass retrenchment of some of the sector’s workforce. For instance, the Bokoni Platinum mine has announced its intention to retrench more than 2 600 permanent workers. There is also Samancor Chrome, one of the world’s largest sources of the stainless steel ingredient, which has quite recently communicated to the National Union of Mineworkers (NUM) its intention to retrench about 2 488 permanent employees. The list goes on.

In the midst of all these developments, a number of critical questions emerge, namely: which process between the one outlined in section 52 of the Mineral and Petroleum Resources Development Act 28 of 2002 [MPRDA] (read with the proposed amendments to the regulations pertaining to it) and the one outlined in section 189 of the Labour Relations Act 66 of 1995 [LRA] should apply in facilitating these looming retrenchments? And also, if the two processes are to apply concurrently, which one must prevail over the other in the event of conflicting outcomes? In a worst-case scenario, who must serve as an arbiter of the final outcome should the latter conflict of outcomes result in litigation or any mechanism of dispute resolution?

Section 189 of the LRA lays down the process of dismissals based on operational requirements. It guides the employer (mining companies) contemplating the dismissal of employees for reasons based on operational requirements on who must be consulted in the process. Among those to be consulted are trade unions, a workplace forum, employees to be affected, and any other member who might need to be consulted in terms of the collective agreement. Among other issues that get to be discussed in this process are appropriate measures to avoid the dismissals or minimise the number thereof, as well as to change the timing of dismissals and to mitigate their adverse effects. A section 189 notice must include the reasons for the proposed dismissals, the alternatives the employer considered before proposing dismissals, the number of employees to be dismissed and the possibility of future re-employment of those dismissed. It is a more detailed process.

In contrast, there is shallow section 52 of the MPRDA which mentions inadequately the process to be followed in the event of the curtailment of mining operations resulting in large-scale retrenchments. The MPRDA version of the process is not as detailed and comprehensively outlined as the LRA version. For instance, the MPRDA has a very confined and closed-list of who needs to be consulted by the employer in the event of proposed retrenchments. It says: “the holder of a mining right must, after consultation with any registered trade union or affected employees or their nominated representatives where there is no such trade union, notify the Board in the prescribed manner.”[1] It specifies only three categories of stakeholders to be consulted, unlike the LRA which adopts an open-ended approach to same. Another shortcoming with the MPRDA version is that, unlike the LRA, it does not stipulate upfront the key pointers or issues subject to engagements in the consultation process.

It is worth mentioning that there are proposed amendments to the regulations pertaining to section 52 of the MPRDA.[2] These amendments, however, are also not exemplary and are of less help in improving the content and utility of the MPDRA version of process to meet the required standard of the LRA. The amendments add very shallow, onerous and prescriptive requirements for mining companies to follow, which it appears are required to be implemented over and above the section 189 LRA process. This is problematic. The concern is that most mining companies might capitalise opportunistically on these shortcomings in the MPRDA process and retrench tens of thousands of miners, something that would not happen if the applied process is that of the LRA, for it provides adequate safeguards.[3] 

Therefore, it is argued that the LRA version of the process must be followed throughout. This argument is premised mainly on the settled fact that the LRA constitutes the primary law governing all employment related matters in the country. Any law that takes a contrary position regarding any employment matter, in this case being the MPRDA, should only be applied to the extent it is consistent with the LRA. It is estimated, however, that if both processes are to be followed, whether concurrently or not, the entire consultation process could take years. In this regard, one might argue this is time that most mining companies, which are already under pressure to retrench, cannot afford at the moment. But at the same time, the social and economic interests of those employees to be affected matter as well and are worth adequate protection. Such adequate protection is found in the LRA, and not the MPRDA.

In conclusion, it is important to highlight that the proposed 2019 amendments to the MPRDA regulations with a view of achieving more clarity, is a positive step. But those in relation to the retrenchment process are unfortunately in need of more attention and further scrutiny.

Written by Gaopalelwe Mathiba.

This work was carried out under the COVID-19 Africa Rapid Grant Fund supported under the auspices of the Science Granting Councils Initiative in Sub-Saharan Africa (SGCI) and administered by South Africa’s National Research Foundation (NRF) in collaboration with Canada’s International Development Research Centre (IDRC), the Swedish International Development Cooperation Agency (Sida), South Africa’s Department of Science and Innovation (DSI), the Fonds de Recherche du Québec (FRQ), the United Kingdom’s Department of International Development (DFID), United Kingdom Research and Innovation (UKRI) through the Newton Fund, and the SGCI participating councils across 15 countries in sub-Saharan Africa.