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The National Union of Food, Beverage, Wine, Spirits and Allied Workers has lost its bid to set aside about 368 retrenchments by the South African arm of soft drink giant Coca-Cola’s largest bottling partner on the continent.
The union had sought to appeal an earlier judgment by the Labour Court that found in favour of Coca-Cola Beverages South Africa (CCBSA), the local subsidiary of Coca-Cola Beverages Africa (CCBA). The workers had been retrenched in 2019 after operations were negatively affected by SA’s controversial sugar tax and other economic headwinds.
Central argument
At the centre of the union’s original argument against the retrenchments was that they were unfair on the basis that they allegedly breached certain conditions attached to the regulatory approval of the merger in 2016, which led to the establishment of CCBSA. It also argued there were insufficient commercial reasons for the job cuts and that CCBSA had unfairly implemented the criteria to select those affected by them.
In terms of the merger conditions agreed upon in 2016, the bottling group had to maintain a certain number of employees from the pre-merger operations, while merger-related retrenchments were prohibited. There was, however, an allowance for retrenchments required by the ordinary course of business.
Apart from economic conditions deteriorating in 2017, the Health Promotion Levy on Sugary Beverages was introduced in 2018, which saw, according to the court papers, CCBSA paying R2.1 billion in sugar tax in the nine months between the introduction of the tax and the end of the 2018 financial year.
In order to remain competitive, CCBSA was forced to give discounts amounting to R850 million, and in the same period, its sales volume declined by 2%. CCBSA argued that the burden of the sugar tax and rising sugar input costs, on top of the difficult operating environment, required it to reset its cost base to ensure the short- and long-term sustainability of its business.
The Labour Appeal Court dismissed the appeal.
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Another key win
It also follows CCBA winning a separate appeal in the Constitutional Court in April relating to the same job cuts.
This case traced its roots back to the Competition Tribunal finding that CCBA had complied with the conditions of the merger even as it retrenched the workers. However, the Competition Commission then approached the Competition Appeal Court, which overturned the tribunal finding. This resulted in CCBA approaching the Constitutional Court to appeal the ruling.
The Constitutional Court found the Competition Appeal Court had “mischaracterised the nature of the appeal and applied the wrong tests in respect of both review and causation”, adding there was “no basis in law or fact for overturning the judgment of the tribunal”.
At the time of Constitutional Court judgment on 17 April, CCBA said it welcomed a decision that confirmed “CCBA had, at all times, substantively complied with the merger conditions as set out by the Competition Commission”.
Contacted in connection with the latest ruling in the Labour Appeal Court by News24, CCBA noted the position it had expressed in April still applied.
