Employers may claim operational reasons as a basis for terminations as long as the reasoning is related to what may be considered a “similar need”.
INTRODUCTION
When an employer aims to justify the fairness of a dismissal based on operational requirements, it is often in the context of retrenchment or restructuring. However, there are cases where employers have successfully used operational requirements to defend dismissals in other scenarios. For instance, in SA Transport and Allied Workers Union and Others v Khulani Security Services (Pty) Ltd , the employer justified dismissing employees who failed polygraph tests on these grounds. Similarly, the Labour Court’s recent decision in Fatima Begum Sayed Ally Khan v Durban University of Technology presents another noteworthy example.
In 2021, the Durban University of Technology (“DUT”) made the significant decision to retrench 31 lecturers who had not attained a master’s degree, which was set as the minimum qualification. These employees were not accused of any misconduct, nor did the employer contend that the dismissals were due to poor work performance. Instead, DUT argued that the dismissals were necessitated by its operational requirements.
BACKGROUND AND FACTS
The Durban University of Technology (“DUT”) was formed following the merger of Durban Technikon and ML Sultan Technikon. After the merger, DUT implemented a Strategic Direction policy requiring all lecturers to obtain a master’s degree as a minimum qualification. This requirement was introduced for several reasons, including the growing trend among South African and international universities to mandate a master’s degree for lecturers.
By upskilling its academic staff to this standard, DUT sought to enhance its profile and reputation, attracting both local and international students. Additionally, this move aimed to strengthen the university’s research capacity and academic excellence. Higher academic qualifications among staff would position DUT to secure increased grant funding and research revenue, while also ensuring that undergraduate programs were taught by highly qualified lecturers.
To support this initiative, DUT introduced several incentives for employees to pursue a master’s degree. These included generous study leave and financial assistance for tuition, which could be utilized at DUT or any other South African university. From 2012 onwards, DUT periodically sent correspondence and held meetings to remind lecturers of this qualification requirement.
One of the lecturers, Ms. Ally Khan, registered for a master’s degree in 2011 and applied for financial assistance from DUT. However, she deregistered within the same year. In August and October 2020, DUT sent correspondence to Ms. Ally Khan and other lecturers, noting that they had yet to complete the master’s qualification despite prior reminders. DUT further warned that failure to provide proof of obtaining the degree by 31 December 2021 could result in termination of employment. In her response, Ms. Ally Khan expressed her commitment to completing her master’s degree and supported the initiative requiring lecturers to hold such qualifications.
On 2 June 2021, DUT initiated a large-scale consultation process under section 189A of the Labour Relations Act (“LRA”) for lecturers, including Ms. Ally Khan, who were unlikely to complete the postgraduate degree by the deadline. This consultation process ultimately led to the retrenchment of 31 employees, including Ms. Ally Khan. The trade unions representing the affected employees filed an urgent application seeking reinstatement, arguing that further consultation and procedural compliance were necessary. However, the Labour Court dismissed the application, ruling that the consultation process was procedurally fair and sufficiently thorough. Subsequently, Ms. Ally Khan referred an unfair dismissal dispute to the Labour Court, asserting that her dismissal was substantively unfair.
IN THE LABOUR COURT
The Labour Court was tasked with determining whether the reason for dismissal put forward by DUT fell within the definition of operational requirements as outlined in the Labour Relations Act (LRA). A key aspect of Ms. Ally Khan’s argument was her claim that, at the time of her appointment in 2009, there was no requirement—either explicit or implied—for her to hold or obtain a master’s degree. The DUT, however, argued that while this may not have been an express condition in her employment contract, the operational realities had evolved. DUT argued further that it could no longer effectively or sustainably employ lecturers who lacked a master’s degree. Essentially, DUT asserted that Khan’s dismissal was due to its operational requirements.
Section 213 of the LRA defines operational requirements as “requirements based on economic, technological, structural or similar needs.” The Court concluded that the dismissals met this definition, as they were tied to the financial management and competitive positioning of DUT. The Court also noted that correspondence from Ms. Ally Khan demonstrated her acknowledgment of the operational requirement for lecturers to obtain a master’s degree. Furthermore, during the consultation process, the trade unions representing the affected lecturers did not dispute that this qualification had become a necessary operational standard in the university’s lecturing environment
CONCLUSION
The judgment reinforces the principle that employers may justify dismissals on the basis of operational requirements, even in scenarios that are significantly different from the typical retrenchment or restructuring cases, as long as the reason associates itself with what can be classified as a “similar need.” However, it can be expected that the Labour Court will closely scrutinize the fairness of such dismissals when they arise in these contexts.
HERE ARE THE KEY TAKEAWAYS:
- The case highlights that operational requirements are not limited to financial challenges or restructuring. Employers can rely on operational needs tied to strategic objectives, such as maintaining competitiveness or improving institutional standing, to justify dismissals.
- To be valid, dismissals must align with the definition of operational requirements in the Labour Relations Act (LRA). The Labour Court affirmed that operational requirements under Section 213 of the Labour Relations Act include “economic, technological, structural, or similar needs.” The need for lecturers to have a master’s degree fell under the “similar needs” category, tied to the financial and reputational goals of the university.
- The university conducted an extensive consultation process under Section 189A of the LRA, which the Court found procedurally fair. This underscores the necessity for employers to follow due process when implementing dismissals based on operational requirements.
- The case also emphasized the importance of substantive fairness in operational requirement dismissals. Employers must show that the dismissal is genuinely necessary and that no viable alternatives exist.
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© Maserumule Corporate Employment Law – March 2025
