Thesis Paper on Workers Retrenchment Under Labour Law

Thesis Paper on Workers Retrenchment Under Labour Law


Barriers to timely resolution of labour disputes involve two types of issues; one is the legal barrier and the other is the practical one. To deal with the first one, we begin by outlining the origin of Labour Courts, its constitution, composition, powers and procedures, including the Labour Appellate Tribunal, as the machinery for disposal of various types of labour cause. This outline is then followed by a short account for the territorial and other jurisdictional aspects of Labour Court. The next, third, section offers a detailed expose of the barriers, along with suggestion for facilitating timely disposal of labour cases, ending with a concluding section. This thesis includes numerical representations of the state of labour case under various relevant laws.

The Objectives of Study

The object of both the law is to establish a continuous process of harmonious relationship between the employers and employee. They have another object of fastening together both the labour and capital in order to create an atmosphere that they are an indivisible whole in production. The ultimate object of labour and industrial law is to maintain industrial peace security and steady growth of production.

The origin and growth of labour law may be ascribed mostly to the development of organized industry  where a large number of workers including women and children are employed under conditions which tend to be detrimental to their safety and welfare and against which they are often to protect themselves.

From historical point of view labour law has given birth to some fundamental industrial rights to labours in the field of production. At the same time it has also provided protection for those rights.

From a practical point of view labour and industrial law provide for three types of dispute settlement measures voluntary settlement machinery, quasi judicial machinery and judicial machinery.

 Importance of the Study

Labour and industrial legislation is necessary for the following reasons:

The individual workers are economically weak. They cannot bargain with the employees for the protection of their rights and even for subsistence wages. As such legislation for protection of labour against long hours of work unhygienic conditions of work low wages and exploitation is needed. The workers are exposed to certain risks in factories mines and other establishment. As such in order to make provisions for their health safety and welfare legislation is needed. In order to increases the burning power of labour legislation is necessary to encourage the formation of trade unions.

Scope and Limitation of Study

The discussion of this dissertation will be limited within the scope of the Origin and historical development of Labour law of Bangladesh, the Problems of Labour law of Bangladesh, problems of Labour education in Bangladesh and some case studies. The system of enrolment in the Bar Council also discussed. There will be discussed about some nature of crimes committed usually.

Methodology of Study

The methodology used in the thesis is Qualitative Methodology. Our research works are based on   1. Historical Study and 2. Analytical Study.

1. Historical Study: It has a historical back ground of worker’s movement for the establishment of their rights. The worker’s movement becomes successful. Now the modern world, Modern state and United Nations Organization highlighted the worker in their dignity, honor, position, participation social work political activity etc.

In Bangladesh the worker’s retrenchment are guaranteed in their constitution, state laws, and social and state activities. Through the historical revolution the worker’s right has come to this position. The history worker’s movement started from 1971 after successful victory of the Bangladesh war of Independence. So, to write this thesis we have to use historical study.

2. Analytical Study: In this thesis the formation development and solutions regarding worker’s right and retrenchment are to be discussed. In this process of analysis the laws related to the subject and solutions from the judicial process are to be discussed. The enforcement of worker’s right is judicial matter. So in this process of study the analytical study is necessary and important for this thesis. For our research works we followed the analytical study.

The main object of the study is to evaluate effects and importance on persons, society and the state. The study is mainly qualitative in nature because, the impact that the study has searched would not be possible to assess without qualitative data. Legal issues, judicial rulings and administrative management of the government and the public, all are related with the issues. The research work is involved with the legal matter, administrative matter and judicial decision of the worker’s retrenchment. Under these circumstances a regulated research work will be suitable to solve the problems after investigating different variables such as laws relating to “A Study on Worker’s Retrenchment under Labour Law: Bangladesh Perspective”.

Normally researchers depend on different methodological approaches. Research method is an important factor for all kinds of study. There are two kinds of empirical research methods namely.

Qualitative Research Method and 2.Quantitative Research method.

Research on “A study on worker’s retrenchment of Bangladesh”   a new admiration has emerged among the judicial persons, educators, sociologists, psychologists and public interest, lawyers, politicians, scientists and many others.  Peaceful, legal, moral, ethical happy life in the society is the vital issue for the man kind.  So considering all the above factors this research works utilizes the following methodologies –

  1. Case study method,
  2. Judicial method,
  3. Ground theory method.
  4. Sociological Method,
  5. Statistical Method.

Method Used in this thesis:

The method is used in this dissertation is action oriented. The study has been conducted on the basis of two principal sources of data collection. These are: 1. Primary Source, 2. Secondary source.

The basic data has been collected from the administrative source, legislative laws and historical events.  Other data has been collected from judicial rulings and affected person’s information. By focusing efforts on critical issues of authority concern, and the victim persons concern are the important sources of data collection.

Organization of Thesis

Labour Law is very importance in Bangladesh perspective. Labour law of Bangladesh is developed by origin and historically. There are many problem of labour law of Bangladesh, problems also labour education in Bangladesh and some cases studies. I try organized this thesis and mentioned that condition for a valid retrenchment of labour. I include procedure of retrenchment of Bangladesh and retrenchment compensation with studies. I also try includes Labour court and Labour appellate tribunal.

In the first chapter I tried to include Introduction, Objectives of the study, Importance of Study, Scope and Limitation of Study, Methodology of study and Organization of Thesis. It is the introductory chapter of the thesis.

In the second chapter I tried to discuss about Labour laws in Bangladesh like Employment Conditions, Labour Laws, Settlement of Labour Disputes, Wages and Fringe Benefits, Leave & Holidays, Social Security and Labour Union for the better improvement of industrial sector of Bangladesh.

In the third Chapter I tried to discuss about retrenchments including Conditions for a valid Retrenchment, Procedure of retrenchment, Retrenchment compensation, Re-employment of retrenched workers, Condition of re-employment for retrenchment workers and Distinction between lay-off and retrenchment.

In the fourth chapter I discussed about 10 cases like M/S Caltex oil (Pakistan) Ltd. vs. The chairman second labour Court, Aminul Islam vs. James Finlay Co.Ltd, Bangladesh tea estate ltd vs. Bangladesh tea estate staff union, Banks & Another vs. Coca-Cola SA, Oosthuizen vs. Telkom SA Ltd., Perumal & another vs. Tiger Brands, Zero Appliances (Pty) Ltd vs. CCMA & Others, Leppan and Suretrade 110 CC t/a Bra Boutique, Retrenchment: breakdown of trust relationship14-MAY-08                                                                                                                                                                                                             Zietsman & others vs. Transnet Limited, Thekiso vs. IBM South Africa (Pty) Ltd [Redundancy & EEA requirement etc.


Labour Law in Bangladesh:

Bangladesh offers an abundant supply of disciplined, easily trainable and low-cost work force suitable for any labor-intensive industry. Of late, there is an increasing supply of professionals, technologists and other middle and low level skilled workers. They receive technical training from universities, college, technical training centers, polytechnic institutions etc. The expenditure incurred by an employer to train his employee is exempted from income tax.

Employment Conditions

The minimum age for workers in Bangladesh is 16 years in factories and establishments. Contracts are made in the form of a letter of offer. Workers may also be engaged on verbal agreements. In government organizations and in some private organizations as well, a probation period exists for skilled or semi-skilled workers varying between three month’s to one year and during this period either party may serve one month’s notice for  Termination from or giving up to the job. In the private sector, the dignity of labor is ensured in accordance with the principles enunciated in the ILO convention and recommendations.

Labour Laws

In Bangladesh 47 labour laws are now in operation. These relate to (a) wages and employment, (b) trade union & industrial disputes, (c) working environment and (d) labour administration and related matters. The main labor laws are:

  •        Workmen’s Compensation Act, 1923,
  •        Payment of Wages Act, 1936
  •        Maternity Benefit Act, 1936
  •        Employment of Labour (Standing Orders) Act, 1965
  •        Shops & Establishments Act, 1965
  •        Factories Act, 1965
  •        Industrial Relations Ordinance, 1969

 Settlement of Labour Disputes

Contract or agreement is usually made between the management and the Collective Bargaining Agent (CBA) on settlement of industrial disputes as per provisions of Industrial Relations Ordinance, 1969[1]. In case a bipartite negotiation fails, conciliation machinery of the government is requested by the aggrieved party to intervene and the conciliation process is undertaken. If succeeds agreement is signed between the parties and the Conciliation Officer becomes a witness. If it fails, the party raising the dispute may go for strike or lockout as the case may be. The government may, however, prohibit the same after one month in the interest of the public. In the essential services like, (a) electricity, gas, oil & water supply etc. (b) hospital & ambulance service, (c) fire brigade, (d) railway & Bangladesh Biman and (e) ports etc., strike is prohibited.

Wages and Fringe Benefits

In the public sector, wages and fringe benefits of the workers are determined by the government on the recommendation of the National Wages Commission established from time to time. Such commissions were appointed in 1973, 1977, 1984, 1989 & 1992. Wages & fringe benefits declared by the government in 1977 having 20 grades of wages. The public sector employees are, however, covered by the Pay Commission declared by the government from time to time.

In the private sector, the wages & fringes benefits of the workers and employees are determined through collective bargaining process. Sometimes private industries follow the public sector wages & salary structure for their workers and employees respectively.

Leave & Holidays

Leave & holidays of the workers & employees are regulated by the Factories Act, 1965 and shops Establishment Act, 1965.

Social Security

Workmen Compensation, Maternity Benefit (Tea Estate) Act, 1950, Maternity Benefit Act, 1939, Employment of Labour (standing orders) Act, 1965 etc. deal with provident fund and gratuity.

Labour Union

Industrial Relations Ordinance, 19691 deals with trade union in Bangladesh. In any industrial and commercial establishment, a trade union may be formed with 30% of the total number of workers employed. If there is more than one union in any establishment, Collective Bargaining Agent is determined by the Registrar of Trade Union through sector ballot for a term of two years. Only the Collective Bargaining Agent is authorized to raise industrial disputes and negotiate with the management. The Director of Labor of the government acts as the Registrar of Trade Union in Bangladesh. Till December 1996; 4955 trade unions (worker’s union – 4104 & employers association- 851) exits in Bangladesh having 17, 30, 927 members.

Industrial Relations Ordinance, 1969 and The Industrial Relations Rules, 19772 provides that any worker or employer/ has the right to form a union/association without previous authorization. But such a union/association can not function as a trade union without being registered under the law.

Working Hours

Workers in the public or private sector remain at their job for eight and a half hours daily (including half an hour for meal or rest) with Friday as weekly holiday marking 48 working hours a week. Work in excess of these, is paid as overtime. The rate of overtime is 2 hours pay for 1-hour job.



Section 2(11) define the term retrenchment as the termination by the employer of service of workers not as a measure of punishment inflict by way of discipline action but on the ground of redundancy. “Retrenchment” means the termination by the employer of the services of workers on the ground of redundancy {sec. 2(q)}. Thus retrenchment measure to remove surplus staff it results in a complete severance of employer relationship. The definition also makes it clear that retrenchment is a kind of termination but every termination is not retrenchment. To be retrenchment the termination must be on the ground of sedentary. 1

Conditions for a valid Retrenchment

According to section 20 read with section 2(11) the conditions of a valid retrenchment are as follows:

  1. The workers to be retrenchment must be given one month’s notice;
  2.  The notice must be given in writing;
  3.  the notice must be contain reasons for retrenchment;
  4.  alternative to condition (2) above, instead of giving one months, a worker may be retrenched instantly by giving him payment of wages for the period of notice;
  5.  a copy of the notice of retrenchment must be send to the chief inspector;
  6.  a copy of the notice must be send to the CBA;
  7.  there must be termination of services of a workman on the ground of redundancy or surplus labour;

(3.3) Procedure of retrenchment

Section 20 of the code incorporates the well recognized principle of retrenchment in industrial law1, namely, the “last come first go” or “first come last go”. The principal laid down in section 20 for retrenchment procedure are to be adhered to by every employer. The conditions which this section prescribes for the procedure of retrenchment are as follows:

  1. The claiming  the protection of retrenchment procedure under section 20 must be a ‘worker’ within the definition in clause(65) of secion2;
  2. The person must belong to a particular category of workers in the establishment concerned;
  3. There should not be any agreement between the employer and employee contrary of ‘last come first go’.
  4. The employer is bound to comply with all the above conditions while retrenching a worker. However, the employer can deviate from this procedure on justifiable reasons which must be recorded.

Retrenchment compensation

Under clause (c) of section 20(2) payment of compensation for retrenchment is mandatory. The provisions of compensation for retrenchment are as follows:

(1)  At the time of retrenchment the worker must be paid compensation equivalent to thirty day’s wages for every completed year of service or for any part thereof in excess of six month’s or gratuity, if any, whichever is higher,

(2)   To claim compensation for retrenchment the worker must show that he has been in continuous service for not less than one year under that employer who has retrenched him;

(3)  If a worker who is to be laid-off even after first 45 days in a calendar year under section 16(7), is retrenchment instead of laying-off, no notice will be required. However, he shall be paid 15 day’s wages in addition to the compensation or gratuity which may be payable;

(4) Wages as compensation for retrenchment will mean the average of the basic wages plus dearness allowances, if any, paid during the period of twelve months immediately preceding the date of retrenchment.

 Re-employment of retrenched workers

Retrenchment of surplus workers causes undue suffering not only to the retrenched worker but to all his dependents. Therefore in order to avoid hardship to the worker and his family the provisions have been made in section 21 of the code that such workman should be given an opportunity to join service whenever an occasion arises to employ another hand. This principle was regarded as of general application in industrial adjudication on the ground that it was based on considerations of fair play and justice. The section provides that after effecting retrenchment, if the employer proposes to take into his employment any person:

(1)He shall give opportunity to the retrenched workers who offer themselves for re-employment; and

(2) These retrenchment workers will have preference over the new applicants. Thus section 21 imposes legal obligation on the employers to give preference to retrenched workers when he subsequently employers any person.

Condition of re-employment for retrenchment workers

A retrenched worker may claim preference under section 21 on the fulfillment of the following conditions:

(1) to apply for preference under section 21 the worker concerned must have been retrenched in last one year time prior to re-employment (thus a dismissed or discharged worker cannot claim preference in employment)

(2) The worker must offer himself for re-employment in response to the notice by the employer;

(3) Workers will have priority according to the length of his service under the employer;

Distinction between lay-off and retrenchment

(1)               In case of lay-off there is failure, refusal or inability of the employer to give employment to a workman for a temporary period while in retrenchment the workman is deprived of his employment permanently by his employer.

(2)               The grounds of lay-off are May. In lay-off the failure refusal or inability to give employment is on account of one or more of the reasons specified in section 2(58) such as shortage of coal shortage of power, raw materials, break down of machinery etc. while in retrenchment the termination of service is on the ground of surplus labour only. Thus the ground of retrenchment and lay-off are completely different.

(3)               The reasons of lay-off are completely different as compared to reasons of retrenchment. The situation of surplus labour may arise due to economic drive, rationalisation in the industry installation of new labour saving machinery etc. But in lay-off reasons of non-employment are mainly non-availability of power raw materials, coal or break down of machinery etc.

(4)               In lay-off labour force is not surplus but in retrenchment labour force is surplus which is to be retrenched.

(5)               In lay-off employment relationship of employer and employer and employers is not terminated but suspended while in retrenchment relationship is terminated.1


M/S Caltex oil (Pakistan) Ltd. Vs. The chairman

Second labour court (1967) 19 DLR 264 1

Judge: S.D Ahmed and Abdul Hakim Khan

Heard on: 3rd, 6th, 7th March 1967

Judgment date: 9th March 1967

Dr. F.K.M.A Muslim                                                        ……….. (Petitioner)


M.M Golam Hafiz                                                        ……… (Respondandent)


Whether to effect retrenchment condition of the section must be fulfilled or not


In the present, case service of the employees have not been terminated in the manner provided in section (12)of the Act. The termination of the service on the ground of  retrenchment in terms of section 12 can only take place when all the condition mentioned there under have been complied with and not before.

1. M/S Caltex oil (Pakistan) Ltd. Vs. The chairman second labour court (1967) 19 DLR 264

In the present case it is obvious that one of the condition, namely, dispatching the notice in respect of the retrenchment to the chief inspector was not complied with. The Labour court was, therefore justified and acted quite within its jurisdiction in holding that the termination of the service of the respondents concerned was under section 19 of the Act and not under section 12 and claimed by the petitioner.  The essential of a termination on the ground of retrenchment as prescribed under section 12 are (a) the worker must be given one month notice is writing indicating the reason for retrenchment or he has been paid in lieu of such notice in respect of retrenchment in sent to the chief inspector and(c) the worker has been paid at the time of retrenchment compensation or gratuity which ever is higher as required under clause (c) of the section 12 .

If notice in the chief inspector has not been served in terms of diction 12, the retrenchment of the employee by the employer is not is according with law.


For the purpose of calculation of the compensation under the section, wages shall mean the verge of the basic wages plus dearness allowance. If any paid to the worker during period the date of retrenchment. For the reasons stated above, we don’t think that the impugned order passed by the labour court suffers from any illegality. We accordingly discharge the rule in each one of the two petitioners without any order as to costs. Judge Abdul Hakim Khan also agrees with.

Aminul Islam Vs James Finlay Co.

Ltd 26DLR (SC) 33 1


Mr.Aminul Islam was a head Clerk-cum Accountant under James Finally Company Ltd at Khulna. His service was terminated allowing him wages in lieu of 90 days notice. The company preferred to pay his wages for that period in addition to compensation at the rate of 14 days wages for every completed year or part thereof in excess of six months. It was asserted that the termination was for trade union activities of the workers and that it was case of victimization. The labour court upheld the contention of the worker. On the appeal before the high court no opinion was expressed on merits as the case was remanded to the labour court since the opinion of a member was not obtained. On farther appeal to the Appellate division, it was held on fact that the worker’s service was terminated without any stigma or charge and it was a termination simplicater.


It has been contended that the service of Aminul Islam ware terminated due to his trade union activities and as such it was act of victimization and the termination

1. Aminul Islam Vs James Finlay Co. Ltd 26DLR (SC) 33

virtually amounted to dismissal under the cloak of the tram ‘termination ’. But his contention does not hold good as on examination of the impugned order it has been found that the termination simpliciter under section 19 and as such he was no longer a worker within the meaning of the Act.

Bangladesh tea estate ltd v Bangladesh tea estate staff union

(1976)28DLR (AD) 190 1


 One Mr. Nurul Abser Chowdhury was appointed as a clerk by the Bangladesh tea Estate ltd. On 1st June 1964. He was subsequently promoted to grade 2, gardener clerk on 3-7-67. The employer company terminated his service under section 19 of the employment of labour act 1965 by a letter with all termination benefits. The employer instead of receiving his dues raised a labour4 dispute through the union under the estate Pakistan labour dispute act 1965. The labour court on consideration of evidence held that the termination of service of Nurul Abser was malafide a code of victimization for his trade union activities and according made an award directing to be a unit representative of the union.

On appeal by the employer company the high court of East Pakistan made an elaborate discussion of evidence and dismissed the appeal on the ground that Nurul Abser was victimized for his trade union activities. Because of his participation in trade union activities the order of termination was passed by the management in disapproval of such activities.

The employer company obtained leave from the supreme court of Pakistan.


  1. Whether the question of termination under section 19 should only be decided under section 25 of the standing orders act 1965 and cannot be raised as an industrial dispute under the labour dispute act or it can be raised as an industrial dispute.
  2. Can the court go behind the order of termination to see if it is really victimization or not.


The ratio decldendi of the two cited decision reported in 25 DLR (SC) 85 and in 13 DLR (SC) 280 (PDL 1961 (SC) 403) appear to be that the employer has a right to terminate the service of a worker under section 19 of the standing order act without disclosing any cause and that the court should not go behind an order of termination simpliclter to find out whether the order was malafide or not.

There is however an exception to the rule that court not to go behind the order of a service of the termination to see if it really was victimization. This exception is contained in section 19, itself when read with section 25. it says that if purported termination is in reality victimization of an officer of a registered trade union for his trade union activities the court can go behind the order to see the real purpose of termination and grant such relief as it thinks fit. The two propositions should be read together in order to arrive at the true import of section 19 of the standing orders act.

Labour dispute is broad enough to include a dispute of a terminated worker under section 19 of the standing act 1965 if the dispute centres round the victimization of the worker for his trade union activates. It is to be remembering that section 25 of the standing orders act has clearly provided that an individual worker can claim relief before the labour court under the said act unless the grievance ha was raised as labour dispute under labour dispute act (IRO). Through section 25 bars all complaints against the order of termination under section 19 of the said act yet it authorized the worker to claim relief if the termination is of an officer of the registered trade union for his trade union activities or the worker is deprived of his benefits under section 19. The two acts are pair material and the provision in section 25 indicates that if the termination of a worker is for his trade union actives and if he is an officer of a registered trade union his code may be raised as an industrial dispute.

Banks & Another v Coca-Cola SA 1

Case No. J 1114 / 07
Award Date 29 June 2007
Jurisdiction Labour Court Johannesburg
Judge A Van Niekerk AJ

Subject: procedural fairness in Retrenchment.


An application to interdict the employer from implementing a dismissal based on operational requirements on the grounds of procedural fairness. There was a delay in the launch of the proceedings and disagreement on what the appropriate remedies were. There was also a material dispute of fact. The matter was referred to trial for the hearing of oral evidence.

1. Banks & Another v Coca-Cola SA

Summary of facts:

The two applicants, both senior executives were dismissed due to operational requirements after the process of consultation had broken down. Two and a half months later they approached the Labour Court for relief in terms of Section 189A (13) and sought compensation in the event that the court found that their dismissal had been procedurally unfair.

The allegations of the process being a “shambles” was denied by the Respondent Company and the disputes were therefore factual and material to the issue.

The notice of termination was due to take place on the 30 June 2007 and therefore the urgency of the matter being heard to interdict the employer from dismissing the applicants and directing the respondent to commence the consultation process afresh as required by Section 189 of the Act.

The facts as alleged by the applicants on the consultation process used by the Respondent were very comprehensive and the basis of the claim was that the respondent failed to engage in any meaningful individual consultations about a structure that could save their jobs and that the consultation process was “nothing less than a shambles, that vague and subjective selection criteria were applied, that the respondent made a decision on restructuring and sought to consult thereafter and that it failed to make a proper severance proposal”.

The respondent alleged that the applicants’ referral was opportunistic and that the applicants are seeking to do no more than secure themselves reinstatement for the purposes of negotiating a more generous severance package.

Summary of Judgment:

Three considerations were apparent.

The first was a material dispute of fact, the second was the time passed since the breakdown of consultations and the launching of the application and the third is the acrimonious relationship between the parties, best described as a hostile stand-off, in so far as is relevant to the remedy sought by the applicants.

It was held that no purpose would be served by requiring the respondent and applicants to go back to square one in the process and it was held that Section 189A would not serve its purpose if the court would grant an interdict against dismissal and issue directions on how the parties should conduct themselves in a resurrected consultation process.

The court did not make a finding on the papers before court as to whether either party had discharged their obligations in terms of Section 189 and held that the inevitability of a future referral to the court on the substantive fairness of the dismissal, that the procedural and substantive aspects of the dispute are dealt with simultaneously in a trial action.

The order granted by the court was therefore:

1. The application in terms of section 189A (13) was referred to the trial roll for hearing of oral evidence.

2. The application in terms of section 189A (13) to be enrolled simultaneously with any action that the applicants may institute in relation to the substantive fairness of the dismissal. Should the applicants not institute this action then the application made in terms of section 189A (13) should be enrolled on the trial role.

osthuizen v Telkom SA Ltd 1

Case No. PA 5 / 04
Judgment Date 29 June 2007
Jurisdiction Labour Appeal Court, Johannesburg
Judge Zondo JP, Kruger AJA

Subject: Dismissals based on Operational Requirements Substantive Fairness in Retrenchment.


Whether the respondent employer ought to have redeployed the appellant, rather than make retrench him, and whether the selection criteria that did not include length of service were fair in the circumstances.

Summary of Facts:

The appellant had been retrenched by the respondent. He lodged a claim in the Court that partially rested on the fact that the respondent had not negotiated with him personally but with a union that was representative at the workplace. The Court dismissed the applicant’s claim.

The appellant appealed to the LAC on the basis that (1) the respondent ought to have avoided the redundancy by redeploying to one of the positions that he applied for and (2) on the basis that the respondent’s selection criteria was unfair.

1. Oosthuizen v Telkom SA Ltd

Summary of Judgment:

On the issue of redeployment, the Court noted that the appellant had applied for 26 positions, some of which he was short listed for. The respondent led no evidence at to why he was not appointed to those positions and the Court found that it had failed to justify the dismissal of the appellant. Interestingly, the Court found that if the appellant required training to be suitable for an alternative position, that the respondent must arrange such training as part of its obligations to look for alternatives to redundancy.

On the issue of the selection criteria, the respondent’s evidence was that skills, suitability and employment equity policy were the criteria adopted. The respondent did not take into account length of service, which was a significant issue given the appellant had been employed for 30 years with the respondent. The Court did not making any findings on this point, having already ruled that the dismissal was substantively unfair because the appellant could have been redeployed. The LAC did appear to find that the length of service was also relevant to the obligation to redeploy.

The LAC ordered that the appellant be reinstated. It also made specific orders about the need for a fair reasons and procedures to be adopted should the respondent maintain that it has a surplus because of the reinstatement. Costs were awarded against the respondent.

Perumal & another v Tiger Brands

Case No. D 987 / 04
Judgment Date 1 June 2007
Jurisdiction Labour Court, Durban
Judge Pillay J

Subject: Dismissals based on Operational Requirements Substantive Fairness in Retrenchment


In what circumstances can an employee allege that in the Labour Court that his or her dismissal, as part of a ‘mass redundancy’ (necessitating s.189A procedures), is procedurally unfair?

1. Perumal & another vs. Tiger Brands

Summary of Facts:

The applicant challenged the substantive and procedural fairness of her redundancy.

The respondent contended that the provisions of the LRA prohibited the applicant from disputing the procedural fairness in this instance.

In relation to substantive unfairness, the applicant alleged that the respondent had applied its selection criteria in an unfair manner, a contention denied by the respondent.

Summary of Judgment:

In respect of procedural fairness, the Court agreed with the respondent. It found that s.189A (18) of the LRA operates to bar procedural challenges from being raised in s.191 (5) (b)(ii) disputes (relating to dismissals for operational requirements), because s.189A(13) allows for challenges to procedural defects by way of an order compelling the employer to conform to fair procedure. In other words, because the applicant had not brought the procedural flaws to the attention of the employer via s.189A (13), she forfeited the right to challenge the procedural fairness altogether.

In respect of the substantive fairness, the Court noted that the respondent had subjected the applicant and her colleagues to a competency test and also required them to attend a meeting held by an interviewing panel. The Court found that in both the test and the interview, the respondent had acted in a biased manner towards the applicant. Accordingly, it found that the dismissal was substantively unfair. It ordered that the applicant be reinstated, paid compensation of 12 months with a partial costs order against the respondent

Zero Appliances (Pty) Ltd v CCMA & Others

Case No. JR 805 / 06
Judgment Date: 28 March 2007
Jurisdiction: Labour Court, Johannesburg
Judge: Rampai AJ

Subject: Practice and Procedure/Appeal and Review


The matter rested on the correct jurisdiction for a claim relating to a mass retrenchment

1. Zero Appliances (Pty) Ltd vs. CCMA & Others

Summary of Facts:

The applicant employer implemented a redundancy program that included, at the union’s request, the appointment of a facilitator from the CCMA and the execution of a facilitation agreement. Some three months after they have been made redundant, 63 employees lodged unfair dismissal claims alleging procedural unfairness. The employer alleged that the referral was out of time and had been directed at the wrong body. Nevertheless, a CCMA commissioner condoned the later referral and issued a certificate to the effect that the dispute remained unresolved.

The employer approached the Court to have the commissioner’s condonation and the certificate set aside.

Summary of Judgment:

The Court found that the mere fact that the CCMA had been involved during the facilitation phase of the retrenchment did not ‘entail the transfer of jurisdiction over the dispute’.

The Court noted that it is the correct forum for lodging disputes about the procedural fairness of ‘mass retrenchments’ pursuant to s.189A(13). The employees had embarked on the wrong dispute referral procedure. Accordingly, the Court held that the certificate was issued in error and set it aside.

As to the condensation, the Court noted that the retrenched employees did not dispute or question the retrenchment process while it was in progress and only did so 97 days after their contracts were terminated, which ‘raised serious questions about their bona fides’. It took the employees 238 days, from date of termination of their contracts, to raise the dispute in the Court. It also found that the employees provided no explanation and had not applied for condensation.

Finally, the Court assessed the employer’s chances of success as ‘excellent’. The condensation was also set aside.

Costs were awarded against the employees.

Leppan and Suretrade 110 CC t/a Bra Boutique

Retrenchment: breakdown of trust relationship
14-MAY-08 1

Case No. KNDB 6002-07
Award Date 04 February 2008
Jurisdiction CCMA, Durban
Commissioner L Williams-de Beer

Subject: Retrenchments, Jurisdiction


The Employer had retrenched an employee with whom the Employment relationship had irretrievably broken down. The Commissioner held that Employer was entitled to do this, and that CCMA does not have jurisdiction to entertain procedural challenges in disputes concerning retrenchments of single employees.

Summary of Facts:

The Employer was a close corporation in which the Employee held a 15% membership. Other members were his mother (15%), Andre Dippenaar (40%), and Lynette and Kim Thompson (each 15%).

The Employee had also been the general manager for a period of 2 years. When a fellow employee complained about him to the CEO, Ian Thompson (not a member of the CC), Thompson suspended him.

The Employee then called a meeting with all the members where he pointed out that Thompson was an un rehabilitated insolvent, and as a result, not allowed to act as the CEO, with the result that Thompson was removed from this position.

Dippenaar, the majority shareholder then indicated that he would take over as CEO and the employee indicated that he was not prepared to “back” Dippenaar in this position.

He failed to return to work and attempted to negotiate an exit package via his attorneys. This was followed by another letter from his attorneys, indicating that he would return to work under certain conditions. The conditions were not accepted by the new CEO, and indicated that he was not prepared to work with the Employee.

The Employer then invited the Employee to participate in consultation pending a dismissal for operational reasons. No agreement was reached and the Employee was retrenched.

Summary of Award:

The Commissioner held that, with reference to the LC decision in Rand Water v Bracks NO & others, she did not have jurisdiction to adjudicate the procedural fairness of the dismissal. The LC held in that matter that: “As soon as the procedural fairness of the dismissal is put in issue by a single employee, I am satisfied that section 191(12) of the LRA must be interpreted as meaning that such cases must still be referred to the Labour Court and that the CCMA will not have jurisdiction to hear them.”

She held, however, that she was entitled to split the issues and make a finding in the substantive fairness of the dismissal. In this regard she held that the wording: “requirements based on the economic, technological, structural or similar needs of an employer” in section 213 of the LRA was wide enough to include a breach of trust or a breakdown in the relationship.

In this matter, the Employee was unable to function in a harmonious work environment with the CEO and a breakdown in the employment relationship resulted. The breakdown was mutual in this case.

The Commissioner held that there does not need to be a long history of problems for trust to be damaged, particularly at a senior level and where parties are co-members of a close corporation. As a result, the dismissal was held to have been substantively fair

  Zietsman & others v Transnet Limited 1

Case No. JS 614 / 06
Judgment Date 21 June 2007
Jurisdiction Labour Court, Johannesburg
Judge Molahlehi J

Subject: Retrenchment: Severance Pay

1.Zietsman & others v Transnet Limited


The Employees sought a determination on whether the calculation of the severance pay by the Employer should have included the dealer bonuses of each of the Employees as provided for in a bonus scheme agreed to by the Employer.

The court held that as long as the Employer complied with the statutory minimum payments, there was no additional entitlement to other payments.

Summary of Facts:

The 3 applicant Employees were retrenched by the Employer. They had all participated in a bonus scheme in terms of which bonuses were paid to them bi-annually.

When they were retrenched they were paid a severance package of 2 weeks’ salary for each completed year of service. The Employees claimed that their severance packages were calculated incorrectly as the bonuses were excluded from the quantum of remuneration on which the 2 weeks’ severance pay was calculated.

Summary of Judgment:

In exercising powers given to him in terms of section 35(5), the Minister published a schedule indicating payments to be included in an employee’s remuneration for the purposes of calculating pay for severance pay in terms of section 41 of the Act.

In terms of this notice discretionary payments not related to an employee’s hours of work or performance do not form part of the remuneration for the purpose of calculating severance pay. The court held that where an employer paid more than what section 41 of the Act required, a section 35(5) calculation would not apply. In this case, the Employees severance packages exceeded what they would have received had they been paid the statutory minimum calculated to include the bonuses.

As the Employees received more than what was provided for in section 41 of the Act and in the absence of an agreement to use the formula provided for in section 35, the court held that the Employer had complied with the requirement of the Act and that the Employees were not entitled to payment of their bonuses.

Thekiso v IBM South Africa (Pty) Ltd

[Redundancy & EEA requirement] 1

Case No. JS415/05
Judgment Date 18 October 2006
Jurisdiction Labour Court, Johannesburg
Judge Freund, Acting Judge

Subject: Procedural Fairness in Retrenchment


The applicant was made redundant and challenged the decision on a number of grounds, namely:

1. That she had not been adequately consulted;

2. That her employer used an inherently subjective selection criteria and she should have been informed of the merits of each employee that was subject to the redundancy process; and

3. That the redundancy was unfair because the employer failed to consider the obligations contained in the Employment Equity Act (EEA).

Summary of Facts:

The applicant worked in the employer’s asset management division which lost a number of contracts that necessitated redundancies. Positions in the division were made redundant and affected employees were invited to apply for a more complex post of asset administrator. The applicant applied but was unsuccessful. The employer appointed a white male.

The applicant’s claim for inadequate consultation relied on the fact that the employer commenced consultation meetings on the same day that she was given a s.189 letter.

Interestingly, the applicant initially pleaded that her dismissal was automatically unfair because of direct discrimination (on the grounds of race and gender). During the hearing, by leave of the Court, she amended her claim to plead that the employer failed to consider the obligations of the EEA when determining parties for retrenchment. The applicant relied on s.15 of the EEA.

Summary of Judgment:

The Court dismissed the applicant’s contention that she had not been adequately consulted, noting that the applicant, when asked to attend a meeting on the same day as receiving her s.189 letter, had not objected or asked for more time. A number of consultation meetings were also held subsequent to the initial meeting.

On the issue of the selection criteria, the Court found against the employee, noting that ‘a retrenching employer that has one post to fill is not required to debate the merits of each employee with the others before making the selection’.

The Court noted that the applicant relied on the EEA to claim that the employer was obliged to retain the applicant (a black woman) in preference to a white male provided she was ‘suitably qualified’ for the available position.

The Court was quick to reject this claim, referring to its earlier decision of Dudley y City of Cape Town in which it was determined that the EEA does ‘not bring about an individual right to affirmative action’. The applicant had submitted to the Court that Dudley was wrongly decided and should not be followed.

The Court did not agree and it noted, ‘the obligation imposed by the EEA obliges designated employers to take measures to retain and develop people from designated groups does not mean that designated employees should be afforded a preference when it comes to selection in the retrenchment context’.


Basic Idea

To promote industrial peace and to establish a harmonious and cordial relationship between labour and capital by means of conciliation mediation and adjudication. With this end in view different authorities have been created under the code to resolve an industrial dispute. Of these tow bodies are adjudicatory or judicial. They are the labour court and the labour appellate tribunal. The code has streamlined for some non-adjudicatory as well as adjudicatory authorities. Non-adjudicatory authorities include participation committee conciliator and arbitrator while adjudicatory authorities include labour court and labour appellate tribunal.

Application of the labour court1

An industrial dispute may be referred to the labour court in any of the following ways:

(1)If no settlement is arrived by way of conciliation and the parties agree not refer the dispute to an arbitrator and the parties have received a certificate of failure under section 210(11) the worker may go on strike or the employer may declare lock out. However the parties raising the dispute may either before or after the commencement of a strike or lock out make an application to the labour court for adjudication of the matter (section 211)

(2) Again if a strike or lock out lasts for mare than 30 days the government may prohibits such strike or lock out and in that case the government must refer the dispute to the labour court 1 (section 211,(3,4,5))

(3) Again under section 213 any collective bargaining agent or any employer or worker may apply to the labour court for the enforcement of any right guaranteed or secured to it or him by or under this code or any award settlement.

Jurisdiction of the labour court

Under section 214(10) a labour court shall have exclusive jurisdiction to

(1) Adjudicate and determine an industrial dispute which has been referred to or brought before it under this code;

(2)Enquire into and adjudicate any matter relating to the implementation or violation of a settlement which is referred to it by the government

(3) Try offences under this code

(4) Exercise and perform such other powers and functions as are or may be conferred upon or assigned to it by under this code or any other law.

Power and status of the labour court in trying offences

Section 215 and 216 of the code provides the procedure and powers of labour court which is may be of two types; 1

(1)               Power and status in trying offences and

(2)               Power and status in civil maters

(a)                The labour court shall follow as nearly as possible summary procedure as prescribed under the code of criminal procedure 1898 (Act V of 1898)

(b)               A labour court shall for the purpose of trying an offence under the code have the same powers as are vested in the court of a magistrate of the first class under the code of criminal procedure.

(c)                The labour court shall for the purpose of inflicting punishment have the same powers as are vested in Court of Session under that code.

(d)                A labour court shall while trying an offence hear the case without the members.

Labour court is a civil court

In the case of Pubali Bank V the Chairman 1st labour court 44DLR(AD)40 the question was raised whether a labour court is a civil court or not their. Lordship of the appellate division upon consideration of relevant provision of the industrial relations ordinance 1969 held that the labour court acts as civil court for limited purpose but not a civil court at all it is only by a legal fiction or a statutory hypothesis that it is to be treated as a civil court.

Labour Appellate tribunal Constitution

(1)               The labour Appellate tribunal shall consist 1 of a chairman or the government deems fit of a chairman and such number of members as determined by the government additional judge of the high court division (section 218(1))

(2)               The chairman of the tribunal shall be from amongst persons who is or has been a judge or an additional judge of the Supreme Court or is or has been a district judge for at least three years.

(3)               If the chairman is absent or unable to the tribunal the chairman any reasons the senior the senior member of the tribunal if any shall discharge the functions of the chairman.

(4)               An appeal or any matter before the tribunal may be heard and disposed of by the tribunal sitting as a whole or by any bench thereof.

Power and function of the tribunal 2

(1) Subject to this code, the tribunal shall follow as nearly as possible such                                                                                                                                                                                            procedure as are prescribed under the code of civil procedure, for hearing of an appeal by and appellate court from original decrees.

                 If the members of a bench are divided in their opinion as to the decision to

                  be given on any point-

 (a)The same shall be decided according to the opinion of the majority, if any

(b) If the member of the bench is equally divided, they shall state the point on

     which they differ and the case shall be referred by them to the chairman for

     hearing on such point by the chairman himself, if he is not a member of the

     tribunal, and such point shall be decided according to the opinion of the

     chairman or member or majority of the members hearing the points, as the

     case may be.

1. The Labour Code of Bangladesh 2006, {section 218(1)}

2. Md. Abdul Halim, The Bangladesh Labour Code, 2006, CCB Foundation, Ed.1, p.287

(2) Where a bench includes the chairman of the tribunal as one of its members and there is a difference of opinion among. The members and the members are     equally divided, the Decision of the chairman shall prevail and the decision of The Bench shall be expressed in terms of the opinion of the Chairman.

(3) The judgment of the tribunal shall be delivered within a period of not    more then    60 days following the filing of the appeal.

(4) The tribunal shall have authority to punish for contempt of its authority, or that of any labour court as if it’s were a high court division of the Supreme Court.

(5) The tribunal may, on its own motion or on the application of any party, transfer a case from one labour court to another.

(6) The tribunal shall have superintendence and control over all labour courts.



Worker’s retrenchment is a very essential function of the labour law. It’s a very effect  for Labours and the Employers. No worker employed in any shop or commercial or industrial establishment who has been in continuous service for not less then one year under an employees shall not be retrenched by the employer unless-

(a)    the worker has been given one month’s notice in writing, indicating the reason for retrenchment or the worker has been paid in lieu of such notice, wages for the period of notice;

(b)   a copy of the notice in respect of the retrenchment is send to the chief  inspector or any other officer authorized by him ; and

(c)    the worker has been paid, at the time of retrenchment , compensation which shall be equivalent of fourteen days’ wages for every completed year of service or for any part thereof in excess of six month, or gratuity, if any, whichever is higher :

For the purpose of calculation of compensation under this Section, wages shall mean the average of the basic wages plus dearness allowance, if   any, paid to the   worker during the period of twelve month immediately preceding the   date of retrenchment.


The importance of labour law is very much in Bangladesh perspective. It is highly importance in Bangladesh perspective of labour law. We know that labour is a most important part of an industry. So, we can not think an industry with out labour. Labour right is most essential in Bangladesh. But the labours are aware about their right. They don’t know properly about labour education. It is a great problem.

For this reason, they retrenched by the employee as the employers wish. Very often, they retrenched with out any legal process. This is injustice and in human. This should be protected for the interest of industrialisation in Bangladesh. Proper and strict provisions should be included in Labour laws and state laws.  The labours should not be deprived. Their rights should be protected.

Illegal retrenchment by the employer is inhuman and increased the suffering of the labours. In this respect he following action should be taken:

1. The cause of retrenchment should genuine and proper in the eye of law.

2. Proper notice for three months should be given to the respective labour for his self defence,

3. If not the labour should be paid three months salary and other benefits allowable as per law.