DON’T LIGHTLY DEPART FROM THE DISCIPLINARY CODE

Introduction

Most companies state quite categorically that the disciplinary code is a guideline. It is usually also recorded that it is not exhaustive, meaning that there are instances of misconduct which were not included in the code. It is understood that even these so-called unlisted acts of misconduct may attract a number of different sanctions, depending on the facts.

In the matter of Mushi v EXXARO Coal (Pty) Ltd Grootegeluk Coal Mine (JA62/2018) [2019] the Labour Appeal Court was recently required to determine whether an employer could deviate from the recommended sanctions which are stated quite clearly in the disciplinary code next to the different acts of misconduct.

Facts

The employee, Hosea Mushi, was employed by the employer, Exxaro Coal (Pty) Ltd at the Grootgeluk Coal Mine, for 24 years when he was dismissed following a disciplinary hearing.

On 10 March 2015 at around 22h50, the employee was on duty driving an oversized coal haul truck, the wheel size of which exceeded the height of two adults. He reported to his foreman that the shovel operator was loading the truck in an unsafe manner. The foreman instructed the appellant to continue loading and undertook to observe the loading process. Shortly thereafter the foreman informed the appellant via radio that he would board the truck at the loading area. The employee refused to let the foreman board the truck at this area. As the foreman walked towards the loading area, the employee moved the truck forward causing the foreman to have to move out of the way.

At the ensuing disciplinary hearing, the employee admitted that he had behaved improperly, but denied that he had undermined the authority or threatened the life of the supervisor.

Although the disciplinary code was only a guideline, it stated that such an act of misconduct should attract a final written warning.

The chairperson disregarded the recommended sanction and dismissed him for having refused to obey the foreman’s instruction, for having committed ‘unsafe acts’ while driving the truck, and for improper behaviour in operating the truck after the foreman was proceeding towards it.

At arbitration, the employee was retrospectively reinstated with a final written. The employer took the Award on review.

The Labour Court disagreed with the arbitrator and confirmed the dismissal.  This prompted the employee to take the matter on appeal to the Labour Appeal Court (the “LAC”).

 

The LAC judgment

One of the main issues dealt with by the LAC was the question of what the purpose and function of a disciplinary code is.  In this regard the LAC held as follows:

[11]       The respondent’s disciplinary code, which was expressly stated to be a guideline, provided that the appropriate sanction in cases of insubordination, refusal to obey instructions, misuse of property or improper behaviour was that of a final warning. Disciplinary rules are intended to create a degree of certainty and consistency in the application of discipline in the workplace. It follows that departures from a code should not be arbitrary or for no valid reason.  Even where the code is expressed as a guideline there must be a plausible and reasonable justification” for the sanction imposed, having regard to the gravity of the misconduct and relevant aggravating or mitigating factors. It follows that in this matter for dismissal to be appropriate the respondent was required to prove that the imposition of the most severe of sanctions, on which exceeded that provided in the disciplinary code, was fair (Emphasis added).

The LAC further commented on the fact that the arbitrator was aware that the employee had a clean disciplinary record, long service and that the disciplinary code recommended a final written warning for the type of misconduct committed. The arbitrator correctly concluded that the imposition of the sanction of dismissal was too harsh. He had accordingly endorsed the concept of corrective or progressive discipline when he retrospectively reinstated the employee with a sanction of a final written warning.  The LAC continued to say the following:

[13]       In finding that reinstatement with a final written warning was appropriate when there was no evidence that the misconduct committed was so serious and of such gravity that it made a continued employment relationship intolerable, the arbitrator cannot be faulted. No reviewable error or irregularity was committed by him and the decision arrived at was not one which a reasonable decision-maker could not reach on the material before him.

The importance of this Judgment

The importance of this judgment is summarised in paragraph 11 thereof where the LAC held that:

  • Disciplinary rules are intended to create a degree of certainty and consistency in the application of discipline in the workplace
  • Even if the disciplinary code is styled as a guideline, a departure therefrom should not be arbitrary or without a valid reason.
  • Regard must be had to recommended sanctions.
  • An appropriate sanction is one for which there is both “plausible and reasonable justification” after the finder of fact has had “regard to the gravity of the misconduct and relevant aggravating or mitigating factors.”

Resignation revisited once Again!

Introduction

After Naidoo and a fellow employee resigned from Standard Bank with immediate effect, they were told that the employer would continue with their disciplinary hearings nevertheless. In the circumstances they approached the Labour Court on an urgent basis.

Case law history of resignations with immediate effect

When the Labour Court was called upon to determine the matter of Naidoo and Another v Standard Bank SA Ltd and Another (J1177/19) [2019] ZALCJHB 168, two other Labour Court decisions relating to resignations with immediate effect had already left their mark.

It was held in the matter of Mtati v KPMG Services (October 2016) that the employer could not proceed with the disciplinary hearing following a summary resignation, as the resignation terminated the employment contract.

When the court handed down the decision in the matter of Coetzee/ v Zeitz Mocca Foundation Trust and Others (June 2018) a different approach was adopted in that the court held that contractually and statutorily an employee’s contract of employment comes to an end only once his resignation takes effect at the end of his notice period.

By resigning with immediate effect, an employee is in breach of contract. At this point it is up to the employer to hold the employee to the contractual notice period.  Alternatively, the employer may accept the resignation, cancel the contract and claim damages.

Coetzee’s employer elected to hold him to the notice period stated in his contract. In practical terms this meant that the employer could continue with a disciplinary hearing during the notice period as the employment contract had not yet come to an end.

The Standard Bank decision is the third decision that deals with the same issues.

Facts

The applicants tendered their respective resignations as Equities Traders at Standard Bank with immediate effect when they were instructed to attend a disciplinary hearing where the would face charges relating to gross misconduct and dishonesty.

Standard Bank did not accept the letters of resignation and the applicants were informed that they were required to work out the notice period, and that the disciplinary hearing would take place during that period. They were told that if they failed to attend,  their respective hearings would proceed in their absence.

They approached the Labour Court to interdict the Bank from proceeding with a disciplinary hearing against them. They inter alia argued

  • That the employer had cleared their workstations and removed the furniture while they were suspended from work. This indicated to them that the employer was intent upon terminating their services;
  • The chairperson of the disciplinary hearing was an attorney on the Bank’s panel and therefore they had reason to believe that they would not be afforded a fair hearing;
  • HR told them in an email that if they were found guilty, their names would be entered into the REDS register;
  • The Bank was precluded from proceeding with the disciplinary hearing as the employment relationship had terminated.

The court had regard to the various judgments in which decisions relating to the question of resignation were handed down.

It relied on the authority of the Constitutional Court judgment in the matter of Toyota SA Motors (Pty) v CCMA and Others  (CCT 228/14) [2015] ZACC 557 (15 December 2015)   where the Zondo J held (in a minority judgment)s:

[142]  ‘Where an employee resigns from the employ of his employer and does so voluntarily, the employer may not discipline that employee after the resignation has taken effect. That is because, once the resignation has taken effect, the employee is no longer an employee of that employer and that employer does not have jurisdiction over the employee anymore.’

The court per Nkutha-Nkontwana J concluded that:

[29]       I have already alluded to the fact that resignation with immediate effect, as in this case, brings about an end to the employment relationship in breach of the termination clause. Whilst I sympathise with Standard Bank, it is not without remedies but self-help is not one of them and this Court cannot sanction it.  Once the employer elects to hold the employee to the terms of the contract, it must enforce that election by means of a court order.

 

Reason for the Decision

Paragraph [19] of the judgment is at the heart of the reason for the decision:

[19]       At this juncture, it is apposite to deal with the misconception amongst employers that they have a right to refuse to accept a resignation  –  this is flawed and was frowned upon by the Court in Sihlali where the Court held at paragraph [11] such conduct to amount to a form of indentured labour: it said:

‘If resignation to be valid only once it is accepted by an employer, the latter would in effect be entitled, by a simple stratagem of refusing to accept a tendered resignation, to require an employee to remain in employment  against his or her will. This cannot be-it would reduce the employment relationship to a form of indentured labour’.

The importance of this Judgment

This decision has confirmed the principles in both the KPMG and the Zeitz Mocca Foundation Trust decisions in such a way that the apparent contradictions have been clarified.

Circumstantial Evidence is Important

Introduction

Any and all evidence that is placed before either a disciplinary hearing or an arbitration must be taken into consideration.

In the matter of City of Tshwane Metropolitan Municipality v South African Local Government Bargaining Council and Others (19 August 2019) the Labour Court emphasised the necessity to heed circumstantial evidence and to draw the necessary inferences based on that evidence.

Facts

The applicant (an employee by the name of Banda) was dismissed when he was found guilty of defrauding the municipality. The fraudulent transactions consisted of closing certain customer’s municipal rates debtor accounts and creating new accounts for them thereby extinguishing the debt and causing the municipality a loss of approximately R168,000-00.

The arbitrator was not convinced that the employee was correctly found guilty of working in concert with other employees to defraud the municipality, and inter alia advanced the following reasons for his finding that the dismissal was unfair:

  • The evidence against the applicant was circumstantial and could therefore be disregarded;
  • The fact that two other employees had resigned when they were confronted by the investigator, didn’t make the applicant guilty;
  • The fact that the applicant contacted another employee by the name of Makoka to obtain the credentials of someone who was not on duty did not mean that he did so with an ulterior motive. Rather than accept that these credentials were used to commit the fraud, the arbitrator accepted the applicant’s version that he wanted the said contact details because he supposedly had romantic designs on the female in question;
  • The applicant disputed that he had made a confession implicating himself during the investigation. As he did not make this confession in the form of a written statement, it came down to the employer’s version and the investigators evidence on the one hand as opposed to the applicant’s denial on the other.  The arbitrator found that the employer could not provide any evidence to corroborate the investigator’s evidence in this regard.  Consequently the arbitrator accepted the applicant’s version that he had not made such a confession.

The Judgment

The court held that the arbitrator had reached a conclusion which no reasonable arbitrator could have arrived at given the evidence before him.

In a detailed analysis of the evidence the court held, inter alia, that

  • While much of the evidence was circumstantial this did not mean that this evidence “could not be compelling” [8];
  • The arbitrator ignored material facts such as that the employee had received the necessary training and therefore not only knew how to open and close the accounts from which the municipality was defrauded, but also used the credentials he had obtained from Makoka while the person (whose credentials were used) was not at work. The arbitrator further ignored the email trail taken from the employee’s computer which was direct evidence of his involvement.  The court commented as follows:

[10]  Even more remarkably, the arbitrator ignored the utterly incredible evidence of Banda that he was aware of the emails which were sent in his name but that even though he claims not to have sent them, it did not alarm him that his email was being abused by an unknown third party in this way.

  • The arbitrator improperly disregarded the investigator’s evidence that the employee had made a confession which provided information that implicated two other employees. Those employees resigned when they were confronted with the information provided by him, and therefore

“the arbitrator completely ignored the corroboratory evidence that other persons involved could not have been identified without Banda providing that information” [9].

The court thereafter held that in the event that the arbitrator had

[12] (…)  dealt with the inconvenient evidence he ignored he would have been compelled to conclude that the only reasonable inference to draw was that Banda was guilty as charged

 

The importance of this Judgment

This judgment once again emphasises that circumstantial evidence cannot be brushed aside on the basis that it does not constitute direct or factual evidence.

If the arbitrator had had any regard to the circumstantial evidence and had he drawn the most readily apparent and acceptable inference in the circumstances, he would have found that the employee was guilty as alleged.

In summary the court emphasised how important it is to analyse and evaluate circumstantial evidence, and to draw inferences from that evidence.

Establish the true reason for the Dismissal “Written by Dr. Hilda Grobler”

Introduction

When sales had decreased while costs had increased, Aveng – a large steel manufacturer – had no choice but to restructure in order to save costs, and to ensure its continued viability.  This meant that certain functions were combined in what was described as “redesigned job descriptions”.

Following extensive consultations, Aveng presented the employees with new contracts of permanent employment which set out their new terms and conditions of employment, but at exactly the same rate of pay.

When the employees were offered posts in the new structure, they were informed that if they rejected the new contracts, Aveng would have no option but to terminate their services by retrenching them.

When it came to accepting the new terms and conditions:

[29] …  all the employees refused to accept the new terms and conditions of employment. On 24 April 2015, they were dismissed.

In essence they refused to accept the alternative positions offered to them.

The issue before the Court

NUMSA referred an unfair dismissal dispute on the basis that the dismissals of their members were automatically unfair.

Aveng argued that the dismissals related to genuine operational requirements and were therefore not automatically unfair as envisaged in the amended provision of section 187 (1)(c) of the LRA which reads as follows:

(1) A dismissal is automatically unfair if … the reason for the dismissal is –

(c)  a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer.

When the Labour Court held that the dismissals in the matter of National Union of Metalworkers of South Africa (NUMSA) obo members and Aveng Trident Steel were not automatically unfair, NUMSA took the judgment on appeal.

The Labour Appeal Court (“the LAC”) had to determine whether the employer had terminated the services of some of its employees for operational reasons or whether it did so to compel them to accept new terms and conditions, that is, to force them to accept a demand of mutual interest.

If they were retrenched for operational reasons, their dismissals would not have been unfair.  If, however, they were dismissed for refusing to accede to a demand of mutual interest, their dismissals would have resulted in automatically unfair dismissals.

In essence the Labour Appeal Court was faced with the question as to whether employees could be dismissed for refusing to accept new terms and conditions of employment when an employer restructured the business and had properly consulted with the employees.

When the LAC handed down its judgment on 13 June 2019, it held that the dismissals were not automatically unfair after asking two key questions in order to establish what the true reason for the dismissals was:

  1. Did the employer dismiss them because of “a refusal by employees to accept a demand”?
  2. Was the refusal to accede to the demand the most likely reason for the dismissal?

The evidence showed that the employer did not force the employees to accept a demand.  Consultations over a period from approximately a year preceded the instance where the employees were offered new contracts which, if they accepted the alternative positions, would have prevented the necessity for retrenchments. The employees could either accept or reject the offer. They chose to reject it. The only remaining option was therefore to retrench them.

The LAC asked, firstly if the reason for the dismissal was as a result of “a refusal by employees to accept a demand”.  The answer to this question was in the negative because Aveng had not simply made a demand – it had consulted with the employees regarding reasonable alternatives to the retrenchments. The employees had rejected the regrading of the envisaged positions, and only when they did so, were their services terminated.

Having established what the true reason for the dismissals was, the court held that the dismissals were for operational reasons and consequently did not invoke the provisions of section 187 (1)(e) which, in turn, meant that the dismissals were not automatically unfair.  Put differently, the dismissals were fair.  The LAC phrased it thus:

“[68] Hence, the essential inquiry under section 187(1)(c) of the LRA is whether the reason for the dismissal is the refusal to accept the proposed changes to employment. The test for determining the true reason is that laid down in SA Chemical Workers Union v Afrox Ltd.   The court must determine factual causation by asking whether the dismissal would have occurred if the employees had not refused the demand. If the answer is yes, then the dismissal is not automatically unfair. If the answer is no, as in this case, that does not immediately render the dismissal automatically unfair; the next issue is one of legal causation, namely whether such refusal was the main, dominant, proximate or most likely cause of the dismissal.”

The importance of this Judgment

This judgment confirms, firstly, that the true reason for a dismissal must be determined and, secondly, that an employer may dismiss employees who, after a fair consultation process, refuse to accept alternative positions which come with new terms and conditions in circumstances where the organisation has restructured for operational reasons.