In the recent case of National Union of Metalworkers of South Africa obo Members v ArcelorMittal South Africa Ltd (2025/173974) [2025] ZALCJHB 510 (30 October 2025), the key issue before the Labour Court was whether an employer is required to reignite a retrenchment consultation process that was previously paused, in circumstances where the original operational basis for the retrenchments had since changed.
Throughout 2024, ArcelorMittal South Africa Limited (“AMSA”) engaged with government, industry associations and trade unions about the declining viability of its Longs business.
On 8 January 2025 AMSA issued a notice in terms of section 189(3) of the Labour Relations Act 66 of 1995 (“LRA”). The notice stated that AMSA intended to wind down its Longs business located at Newcastle and Vereeniging. The reasons given for the proposed retrenchments were difficult trading conditions, electricity challenges, the impact of steel imports and the scrap-pricing system. Approximately 2,200 employees were potentially affected.
Consultations were facilitated by the CCMA in Newcastle and ended on 14 March 2025. Then two weeks later, on 31 March 2025, AMSA’s CEO issued a communication to all employees announcing that the wind-down of the Longs business, as well as the retrenchment consultation process, were being deferred for six months as AMSA had received funding from the Industrial Development Corporation (“IDC”) and assistance from the Temporary Employee Relief Scheme.
Thereafter, AMSA experienced certain positive developments: a possible acquisition of the Longs business by the IDC, the Energy Regulator’s approval of AMSA’s application for a reduced electricity tariff at its Newcastle and Vanderbijlpark plants and various efficiency initiatives.
Notwithstanding these positive developments, AMSA wrote to NUMSA on 10 September 2025 to inform it that the consultation process had only been ‘postponed’ on 31 March 2025 and because no reasonable alternatives to avoid retrenchments had been identified, AMSA would commence dismissals.
In response, NUMSA made an urgent application to the Labour Court in terms of section 189A(13) of the LRA. Section 189A(13) of the LRA provides a unique remedy for large-scale retrenchments where a party believes that the employer has not complied with a fair procedure.
NUMSA’s case was that its members had a clear right to proper consultation and that AMSA’s actions deprived employees of the opportunity to engage on issues that arose after the previous round of consultations had ended, including the impact of the reduced electricity tariff, the effect of operational improvements and the potential sale of the Longs business to the IDC. NUMSA contended that these developments were significant and warranted reopening consultations.
AMSA argued that there was no procedural unfairness because the retrenchment consultations were properly concluded under the facilitation process in March 2025, and conditions since then had not materially changed.
AMSA explained that the postponement of the wind-down of the Longs business was a short-term measure and that when no feasible long-term solution materialised, AMSA had no choice but to continue with the wind-down. AMSA emphasised that the developments referred to by NUMSA had been expected during the consultations, and did not have an effect on the underlying reason for the retrenchments.
Both parties accepted that the Longs’ business faced significant and ongoing financial strain, but they differed on whether the subsequent developments since the March 2025 consultations obliged AMSA to resume consultation before issuing dismissal notices.
When considering the matter, the Labour Court stressed that section 189 requires an employer contemplating dismissals for operational requirements to engage in a ‘meaningful joint consensus-seeking process’ with consulting parties. The aim is to ensure that dismissals occur only after employees and their representatives have had a genuine chance to influence both the decision to retrench and the manner in which the retrenchments are carried out.
Section 189A(13) gives the Labour Court the power to ensure that the statutory procedure is honoured in substance and not only form, although the Court noted that the purpose of the section is not for the Labour Court to second-guess the commercial rationale for restructuring.
Ultimately, the Labour Court found that between the consultation process that ended in March 2025 and the issuing of dismissal notices in September 2025, AMSA’s circumstances had indeed changed materially. These new developments had a direct bearing on the timing, scope, and necessity of retrenchments. The Court found that AMSA was obliged to resume consultations to assess the implications of the changed conditions, and that a failure to do so was a procedural defect.
The Labour Court directed AMSA to resume a fair consultation process within ten days and interdicted it from proceeding with any dismissals at the Newcastle and Vereeniging operations. It further ordered the reinstatement of all employees previously dismissed at those sites, pending AMSA’s compliance with a fair procedure.
This judgment serves as a reminder that an initial consultation process does not remain indefinitely valid where there has been a substantial delay before implementing proposed retrenchments. To avoid procedural unfairness, the employer must either proceed with issuing dismissal notices within a reasonable time after concluding consultations where no viable alternatives exist, or re-initiate consultations if the underlying operational circumstances have changed materially.
A retrenchment process must reflect the employer’s current operational reality, rather than relying on consultations conducted under conditions that no longer exist. Due to the complexity and the potential serious consequences of large-scale retrenchment processes, employers should take specialist legal advice when dealing with issues of this nature.
