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.

Resignation to avoid the Chopping Block

The moot question as to whether an employer may lawfully proceed with and conclude disciplinary proceedings against an employee, post resignation, before the end of the employee’s notice period, is now settled.

What was known as a trite legal position was disturbed in the Labour Court matter of Kalipa Mtati v KPMG Services (Pty) Ltd . In Kalipa, the Labour Court held that a Chairperson of a disciplinary enquiry does not have power to make a dismissal determination, if an employee resigned with immediate effect, before the conclusion of a disciplinary hearing. The impact of Kalipa, if followed, is that the employer is disempowered from flexing its disciplinary arm, even if an employee breaches the statutory or contractual notice period.

It was brought to light in a recent judgment of the Labour Court in the matter of Mark Michael Coetzee v the Seidz Mocaa Foundation Trust and others , a judgment of the Labour Court determined by Judge Rabkin-Naicker that:

• The Kalipa judgment has been overturned on appeal by the Labour Appeal Court. Accordingly, insofar as
Kalipa conflicted with the application of law, it is no longer persuasive authority.

In the Coetzee case, the Court cited with approval the matter of Vodacom (Pty) Ltd v Motsa and another determined by Van Niekerk J, that the following legal position is correct and stands as good law:

“(19) The principles that regulate a resignation are well established. Resignation is a unilateral act (C Sihlali vs Broadcasting Commission Ltd [2010] 31 ILJ 1477 (LC)). When an employee gives the required notice, the contract terminates at the end of the notice period. When an employee leaves his/her employment, without giving the required period of notice, the employee breaches the contract. Ordinary contractual remedies dictate that the employer may hold the employee to the contract and seek an order of specific performance requiring the employee to serve the period of notice. Alternatively, the employer may elect to accept the employee’s repudiation, cancel the contract and claim damages. Of course, it is always open to the parties to terminate an employment contract on agreed terms and for either of them to waive whatever rights they might otherwise have enjoyed.”

In the Vodacom case, the issue at hand concerned a dispute over a post-employment restraint covenant. The employer sought to enforce the contractual notice period during which the employee was placed on “garden leave”. The Court held that an employer is entitled to require an employee to remain at home on “garden leave” for any period of contractual notice, and that the employee is prohibited during that period from working for anyone else. Such leave is an exercise of the employer’s contractual right. Reasonableness of any restraint covenant may be assessed by a Court of law to vary restraint periods.

In the Coetzee case, the Court cited the obiter dictum of Zondo J. (as he then was) in his dissenting judgment in the matter of Toyota SA Motors (Pty) Ltd vs CCMA and others: Zondo J. (as he then was) said the following:

“(144) Since an employee has no right of withdrawing a valid and lawful resignation, once it has been communicated to the employer, except with the consent of the employer, this means that as the date of dismissal, Mr Makhotla was bound to leave Toyota’s employee on 31 March 2011. As already indicated, Mr Makhotla was dismissed a few days before his resignation would take effect. One can, therefore, say that the dismissal interrupted the resignation. That is why we cannot say that Mr Makhotla’s employment with Toyota came to an end as a result of his resignation. We say that it came to an end as a result of his dismissal on 24 March 2011. However, the fact that Mr Makhotla’s employment came to an end as a result of dismissal and not as result of resignation, does not mean that the fact that he was dismissed at the time when he submitted a letter of resignation and was serving his notice period, was due to leave Toyota’s employ in seven days’ time is irrelevant. The fact that Mr Makhotla was dismissed at a time when, in seven days’ time his contract of employment with Toyota could have come to an end by his resignation, and he could have left Toyota’s employment is highly relevant if his dismissal dispute is arbitrated or adjudicated after the date when he would have left Toyota’s employ, had he not been dismissed.”

In the Coetzee case, the Court confirmed the legal position to be that as set out in the Vodacom case cited above.

The implication of the Coetzee case and the Labour Appeal Court’s decision to overturn the judgment of the Labour Court in Kalipa, is that an employer may lawfully proceed with disciplinary action against an employee, despite an employee’s resignation as long as the proceedings take place and is concluded within the employee’s notice period.

The position in law is that it falls within the province of the employer’s managerial prerogative to make the election as to whether or not to proceed with disciplinary action during an employee’s notice period.
Employees who resign to avoid the chopping block and who without just cause, refuse to participate in disciplinary proceedings, will not be entitled to complain about procedural unfairness.

DISMISSAL FOLLOWS THE IRRETRIEVABLE BREAKDOWN OF THE TRUST RELATIONSHIP

Depending on the facts of the case, it is no longer necessary to lead evidence to show that the employment relationship has irretrievably broken down. This is the finding of the Labour Appeal Court (“LAC”) in the 2017-judgment in the matter of Impala Platinum Limited v Zirk Bernardus Jansen & Others (JA100/14). The LAC found that:

[10] The court a quo’s reliance on Edcon was totally misconceived. That judgment turned on its own facts and did not establish as an immutable rule that an employer must always lead evidence to establish a breakdown in the trust relationship in order for the sanction of dismissal to be appropriate.

And:

[13] Since Edcon, this Court has repeatedly stated that where an employee is found guilty of gross misconduct it is not necessary to lead evidence pertaining to a breakdown in the trust relationship as it cannot be expected of an employer to retain a delinquent employee in its employ.
The LAC concluded that when the misconduct is such that there was a clear breach of the employee’s duty towards his employer, it may be implied from:

“the gravity of the misconduct that the trust relationship had broken down and that dismissal is the only appropriate sanction”.

In essence the judgment found that when the misconduct goes to the heart of the employment relationship, there is no need for the employer to prove that the relationship has irretrievably broken down.
But what does it mean when we refer to the “trust relationship” or when we say that the misconduct went to the “heart of the employment relationship”?

Although a number of terms are used to describe this relationship, it all comes down to a matter of good faith, meaning that the employee must promote the best interests of the employer.
The employee’s duty to act in good faith is an inherent part of the employment contract.
When an employee damages or undermines the employer’s business interests by, for example, bringing its good name into disrepute; competing with it; by his dishonest, fraudulent or corrupt conduct; or by theft, it stands to reason that the employer can no longer trust that employee.

Despite the many cases that have dealt with this issue, there isn’t a list of specific acts of misconduct or circumstances which destroy the trust relationship. However, the 1998- judgment in the matter of Sappi Novoboard(Pty) Ltd v Bolleurs (1998) 19 ILJ (LAC) is helpful where the court per Myburgh JP provided the following instances by making reference to judgments which were handed down as early as 1886:

[7] “It is an implied term of the contract of employment that the employee will act with good faith towards his employer and that he will serve his employer honestly and faithfully: (…) . The relationship between employer and employee has been described as a confidential one (…). The duty which an employee owes his employer is a fiduciary one ‘which involves an obligation not to work against his master’s interests’ (…). If an employee does ‘anything incompatible with the due or faithful discharge of his duty to his master, the latter has a right to dismiss him’ (…). In Gerry Bouwer Motors (Pty) Ltd v Preller (1940) it was said at 133: ‘I do not think it can be contended that where a servant is guilty of conduct inconsistent with good faith and fidelity and which amounts to unfaithfulness and dishonesty towards his employer the latter is not entitled to dismiss him.’ The conduct of an employee in receiving a commission which arises out of the employment relationship without the knowledge of his employer constitutes a lack of good faith (…).

The principle that dismissal is the appropriate sanction for employees whose misconduct results in the breakdown of the trust or the employment relationship is well-known. In this regard, for example, the Supreme Court of Appeal held in the matter of Council for Scientific & Industrial Research v Fijen (2002) 11 SCA that the relationship between the employer and the employee is essentially one of trust and confidence. Should the employee behave in a manner which is inconsistent with these principles, the employer is entitled to cancel or terminate the contract.

It is important to remember that each case turns on its own facts.

It stands to reason that there is even a stricter requirement on employees who are appointed in positions of trust, not to betray that trust.

EMPLOYER’S FIGHT BACK

Employees can cost employers millions through negligence, gross dereliction of duty, mismanagement, fraud and corruption, dishonesty or theft.
While employers seldom lay criminal charges or initiate civil litigation because of time and cost factors, they could in fact both dismiss the employee and get some of that lost money back.
Employers can either approach the Labour Court with a claim for damages, or petition the employee’s pension or provident fund.

Going to the Labour Court
In the matter of Stoop and Buckle versus Rand Water the employer dismissed both employees, laid criminal charges against them and instituted a counter-claim for damages against them in terms of the Basic Conditions of Employment Act (BCEA).

When the Labour Court agreed with the employees that it did not have the necessary jurisdiction to hear the matter because the employer relied, inter alia, on a breach of contract, the employer took the jurisdictional ruling on appeal.

The Labour Appeal Court (LAC) not only held that it had jurisdiction in terms of Section 77(3) of the BCEA, but also that employers could turn to the Labour Court to claim damages against employees for a breach of contract:

[36] “ (…) The BCEA benefits both employers and employees. This is clear from a number or provisions. (…). The
BCEA was designed to promote the right to fair labour practice which is available to everyone, employees
and employers alike. If the employee can claim damages for breach, so too can the employer, to suggest
otherwise is to argue that this section is unconstitutional.” (My emphasis).

After the LAC had dealt with the jurisdictional point, the matter was referred back to the Labour Court for a trial on the merits.

The Labour Court found that the two employees were jointly and severally liable for the loss suffered by the employer, and that their respective dismissals were both procedurally and substantively fair.
The court accordingly granted the employer the relief sought:

“137.3 The counterclaim against both the first and second applicants is upheld with costs on an attorney
and own client scale.
137.4 The first and second applicants are held liable jointly and severally for the amount of R8 091
607.16.”

Petitioning the Pension/Provident Fund
In the matter of Moore Road Gas CC v B Gumbi the employer laid a criminal charge against the employee after he was dismissed.

Although the Pension Funds Act includes provisions designed to protect a retirement benefit, deductions can be made from the withdrawal benefit in circumstances where an employer is to be compensated for losses or damages suffered either after the employee has admitted in writing to being responsible or, alternatively after the employer had obtained a court order.
Moore Road Gas CC proved its claim to the Auto Workers’ Provident Fund by handing it a letter signed by the employee, Mr Gumbi, in which he admitted liability and received the funds. Thereafter, Mr Gumbi lodged a complaint with the Pension Funds Adjudicator stating that the provident fund had paid his money to his employer.

In her determination, the adjudicator, Muvhango Lukhaimane, said the rules of the Auto Workers’ Provident Fund provided for the fund to withhold a member’s benefit pending the outcome of a criminal charge against the member.

The adjudicator said that the following requirements must be met before a deduction from the provident fund could be permitted:

• An amount must be due by a member to his or his employer;
• The amount must be due at the date of retirement, or the date on which the member ceases to be a member of
the fund;
• The amount must be in respect of compensation payable for damage caused to the employer, or legal costs
recoverable from the member;
• The damage caused to the employer must be by reason of theft, dishonesty, fraud or misconduct by the
member; and
• The member must have furnished a written admission of liability to the employer in respect of the
compensation, or judgment must have been obtained against the member in a court.

These requirements are in line with the provisions of section 37D(b)(ii) of the Pension Funds Act which state that a deduction will be paid in instances where

• The damage was caused by the employee’s “theft, dishonesty, fraud or misconduct” while the employee was
still an employee and a member of the fund; and
• the employee has admitted liability in writing, failing which the employer would have to obtain a court
order against the employee for the amount.

The employer may not make a demand for a contractual debt against the provident or pension fund. A contractual date would, for example, be for payment of a vehicle, training or a study loan in respect of which the employee still owes a balance to the employer.

A REFERRAL TO THE CCMA OR BARGAINING COUNCIL INTERRUPTS PRESCRIPTION

The Prescription Act 68 of 1969 provides that if a debt is not claimed in a period of three years it prescribes. It further provides that prescription is interrupted when the debt is claimed.
The question whether a claim for unfair dismissal was a “debt” and when the running of such prescription is interrupted, has resulted in numerous conflicting judgments in the Labour Courts.

When the amended Labour Relations Act took effect on 1 January 2015, section 145(9) provided that a review application interrupts the running of prescription in terms of the Prescription Act. Despite the certainty that this section brought, there were still many unanswered questions.

When the matter finally made it to the Constitutional Court, it turned essentially on two main issues:

• Does an employee’s claim for relief constitute a debt to which prescription applies?

• Does a referral to the CCMA or a Bargaining Council interrupt prescription?

On 20 March 2018 the Constitutional Court handed down a landmark judgment which speaks directly to the issue of prescription in respect of any employee’s unfair dismissal or unfair labour practice claim.

The judgment in the matter of Food and Allied Workers Union obo Gaoshubelwe v Pieman’s Pantry (Pty) Limited (CCT236/16) [2018] ZACC 7 has finally ended the uncertainty.

It goes without saying that when an employee refers an alleged unfair dismissal dispute, he does so because he seeks some form of relief. If the arbitrator finds in his favour, the arbitrator will direct the employer to retrospectively reinstate the employee; or to re-employ him; or to pay him compensation.

The Constitutional Court found that any of these three remedies constitutes a debt.

Given that any of these three remedies constitutes a debt for the purposes of the Prescription Act, the next question which had to be answered, was: what act would interrupt the running of the three-year prescription period?

It is trite that the referral document invariably states what relief the dismissed employee seeks. FAWU obo Gaoshubelwe (the applicant) accordingly argued that a referral to the CCMA or a Bargaining Council interrupted prescription.

In evaluating this submission, the Constitutional Court had to ask whether a referral document initiates legal proceedings. In practical terms the question was whether the referral document fell within the requirements of section 15(6) of the Prescription Act, that is, whether it fell within the provision that refers to “a petition, a notice of motion, a rule nisi, a pleading in reconvention, a third-party notice referred to in any rule of court and any document whereby legal proceedings are commenced”.
The Constitutional Court concluded that the referral document fell within those requirements.

Having reached this conclusion, the Constitutional Court found that a referral to the CCMA or a Bargaining Council constitutes a document commencing legal proceedings, and that, in turn, interrupted the running of prescription.
Once the matter is set down for conciliation, the proceedings for the recovery of the debt arising from the dismissal or the unfair labour practice, commences

WHEN THE SHERIFF COMES KNOCKING

Arbitrators often award compensation, or reinstate an employee retrospectively. This means that the employer must pay the employee his salary/wages from the date of dismissal until the date on which he is to be reinstated.
The CCMA’s functions do not, however, include the enforcement of its awards.

While that is the end of the arbitration, it might be the beginning of a different journey for the employee, and could become a nightmare for the employer if the latter refuses to pay the compensation or to reinstate the employee retrospectively.

The immediate question that arises is what the employee can do to enforce the award?

The answer is that he can make use of the mechanism provided in section 143(3) of the Labour Relations Act. In terms of this section the employee can have the arbitration award certified by the director (or his delegate) of the CCMA. Thereafter, the employee can approach the registrar at the Labour Court for a writ of execution which he then takes to the sheriff. The sheriff, in turn, has the power to go to the employer’s premises in order to make a list of the employer’s movable assets. These assets may then be attached and sold during a public auction to pay the amount due to the employee.

In the matter of Levine v Wienand and Others (C362/2018) [2018] ZALCCT 23 (29 June 2018), the Labour Court dealt with a matter where a company by the name of Osmosis, was directed by the arbitrator to pay an erstwhile employee, Wienand, an amount of R183 233.29.

The facts before the court were quite simple. Levine paid the money when the sheriff came calling because he didn’t want the sheriff to enter his home, but then went to the Labour Court to try and get the money paid back. He sought an order from the court that the sheriff had behaved unlawfully, that he, Levine, was forced to pay the money on behalf of a third party being the company, and wanted the court to prevent the sheriff from paying the money over to Wienand.

The employer originally used his home address as his business address. Although Levine had in the interim changed his business address, the change was only to take effect on 1 May 2018. Therefore, the sheriff argued that he was entitled to make a list of the movable assets in the house, as it was still the company’s address.

The judgment reads as follows at paragraph [6]:
The deputy sheriff (Stander) arrived at the private residence of the applicant on April 29, 2018 in the early morning, duly empowered to attach goods owned by Osmosis in respect of an arbitration award in favour of Wienand. He explained that, as is the norm, he needed to compile an inventory of sufficient goods to secure the judgment debt and that such goods, although attached, would not be removed from the premises at that stage.

Levine was having none of it, wouldn’t let the sheriff enter his home, and instead paid the amount out of private bank account. Once paid, he wanted it back, arguing that he made the payment on behalf of the company under duress.
The court did not accept Levine’s submission that he did not pay the money over voluntarily. It also did not accept that the sheriff was acting unlawfully or illegitimately by having arrived to make a list of the movable assets in the house, given that Levine’s residential address was also the registered address of Osmosis.
In the circumstances the court held that it could not issue an order sought by Levine.
Levine not only lost this application – the court further instructed him to pay the costs incurred by Wienand and, on a more punitive scale, the sheriff’s costs on an attorney- own client scale.

The importance of this Judgment
When an employer is directed in an arbitration award to make payment to an employee, he should do so unless he takes arbitration award on review. Failing to do so simply means that he opens himself or the company up to steps that an employee can take in terms of section 143 (3).

In the end it might cost the employer much more than the amount that was initially due.
It also sends a warning to the employer who uses his home address as his business address and then fails to pay his debts.

WORDS CAN’T BE RETRACTED ONCE UTTERED

INTRODUCTION

It doesn’t often happen that employment-related cases dominate the headlines for days on end, but the judgment in Chowan v Associated Motor Holdings (Pty) Ltd and Others (22142/16) [2018] ZAGPJHC 40 did and became one of the most talked about cases in years.

THE FACTS

Ms Chowan, a qualified chartered accountant, was employed by Associated Motor Holdings (Pty) Ltd (AMH).
Instead of enjoying a promising career path, things went horribly wrong when nothing came of the promises made to her by the CEO, Mr Mark Lamberti. Lamberti had promised her that she would be appointed as a Chief Financial Officer within a year – a promise on which he reneged. By way of explanation he told her that she is “a female, employment equity, technically competent” before adding that she was not yet ready for a leadership position.
She sued her employer, as well as Imperial Holdings and Lamberti, because of what she perceived to have been racism and gender discrimination. During evidence she explained why she turned to the High Court:

[21] “Because I pride myself on the fact that I am a qualified professional chartered accountant. I had
built my career. I had been a CFO. And in Mark Lamberti’s eyes I was being narrowed down because
of my colour and being female.”

The court agreed with s Chowan that her sense – that racism and gender discrimination were at work – was justified:

[20] “Ms Chowan’s inference of racial and gender discrimination against her based inter alia on those
facts, as well as what had been said to her by Mr Lamberti when he made the utterance, was
justified….”

The court found that Chowan was, professionally speaking, well qualified and experienced, came highly recommended internally, and had been promised the appointment.

The court not only concluded that she was entitled to damages due to the company’s wrongful actions and injury to her reputation and dignity, but also awarded costs against the respondents.

While this judgment sends a very strong message to employers to ensure that there is neither racism nor gender discrimination at work, it is also a timely reminder to all employers that they must follow a fair procedure at all times.

It is common cause that when the applicant informed the HR director that she wanted to lodge a grievance against Lamberti, he cautioned her that “it would be a career limiting move if [she] raised a grievance against a powerful man like Mr Mark Lamberti’” despite the fact that all she wanted from the grievance procedure “was an apology from Mark Lamberti for insulting me and offending my human dignity, and l wanted him to honour the promise he had made”.

This was a clear attempt to stop her from lodging a grievance, but she persisted and went ahead.

She also lodged a grievance against the CFO, Mr Ockert Janse van Rensburg, inter alia for having said that her brown car matched the colour of her skin. One of the outcomes she sought was that he should “apologise and refrain from making any discriminatory comment, based on race, gender and ethnicity”. Despite Janse van Rensburg’s denials that he uttered those words, the court found that Chowan was a more credible witness, and believed her version.

The outcome of the grievance investigation was a finding that her allegations were “without any foundation in fact and devoid of any substance”.

The court held at paragraph [34] that this should have been the end of the grievance procedure. However, Mr Thulani Gcabashe, a non-executive director and group chairman of Imperial’s board, however, did not see it in the same light.

Gcabashe accused the applicant of “misconduct and an abuse of the grievance procedure”. She was informed that she was suspended with immediate effect pending a disciplinary hearing. In this regard the court held that no one:

[30] “(…) could give any plausible explanation for why Ms Chowan (who was in the position of a
complainant) was summarily suspended, or why Messrs Lamberti and Janse van Rensburg were not also
so suspended. Furthermore, no plausible explanation could be proffered for suspending her prior to
giving her the opportunity to make representations as to why she should not be suspended.”

It is apparent from the judgment that the court had difficulty understanding why the applicant – who had exercised her right to lodge these grievances – was being punished for having done so, and why she was only given the right to object to the suspension after she had already been summarily suspended and marched off the premises in circumstances where the CFO and the CEO, who were the subjects of the grievances, were not suspended.

The court found later in the judgment that the employer not only breached the general practice regarding the grievance procedure and the employee’s rights when it summarily suspended her, but that its conduct was unlawful given that it was the court’s finding that these grievances constituted a protected disclosure:

[51] “The disclosure made by Ms Chowan, therefore, is a protected disclosure and the occupational
detriments – being suspended, subjected to disciplinary action and ultimately dismissed – to which
she had been subjected by her employer, AMH, on account of having made the protected disclosure are
in violation of the provisions of s 3 of the PDA and unlawful.”

THE IMPORTANCE OF THIS JUDGMENT

We have touched on only three of the many issues that are dealt with in this judgment – all three issues serve as a powerful reminder that an employer must not discriminate or allow the abuse of practices and procedures, but must act in a fair and lawful manner by:

Not allowing racism at the workplace;
Not turning a blind eye to gender discrimination;
Not punishing an employee who exercises his/her right to lodge a grievance against any other employee regardless of seniority; and by
Not abusing and breaching established suspension practices.

Although stories in the media have suggested that Ms Chowan stands to make millions in damages, the actual damages to be awarded on both claims will, by agreement between the parties, only be determined at a later date. It is, however, quite probable that the employer might find in the final analysis that the words directed at the applicant by Messrs Lamberti and Janse van Rensburg, and Mr Gcabashe’s decision to turn the tables on the applicant, may have cost it much more than just money.

Written By: Dr. Hilda Grobler