Ethekwini Municipality v Hadebe and Others (DA17/14) [2016] ZALAC 14 (10 May 2016)

Principle:

  1. A dismissal may be substantively unfair due to an employer's inconsistent application of discipline. As a general rule, fairness requires that like cases are dealt with alike, whether in the consistent enforcement of a rule or in the imposition of a penalty.

  2. The unfair dismissal remedies of reinstatement and compensation in terms of s193(1)9a) of the LRA, are in the alternative and mutually exclusive.

  3. An order for costs on an attorney client scale is an extra-ordinary one that should be reserved for cases where there is clearly vexatious and reprehensible conduct on the part of a litigant.

Facts:

Ms H was a senior buyer, employed by Ethekwini Municipality in its Water and Sanitation unit. She was responsible for the procurement of goods from suppliers in accordance with the Municipality's supply chain management policy. Following an internal audit of the Sanitation unit's affairs that revealed several breaches of the supply chain management policy for the period July to October 2006, the auditors recommended disciplinary action against certain employees, including Ms H. She was suspended and charged with 9 alleged breaches of the supply chain management policy. She was convicted of 8 charges, and was dismissed on 27 March 2008.

Ms H referred an unfair dismissal dispute to the South African Local Government Bargaining Council. The arbitrator found her guilty on 3 charges, summarised as follows:

  • She was alleged to have purchased shade cloth from a supplier at a higher price than offered by another supplier and without a quotation having been obtained, resulting in an additional cost of R11 685.

  • She was alleged to have cancelled an order from one supplier, citing an over-supply of the commodity in stock, only to replace it with another supplier a day later, without obtaining the necessary quotations from other suppliers.

  • She was alleged to have unnecessarily increased orders of roof screws, plastic cups and wooden pegs, thereby creating an unnecessary over-supply of those goods.

In all 3 charges, Ms H was alleged to have failed to conduct herself with honesty and integrity, and to perform her tasks diligently.

At arbitration, she gave evidence that the Municipality had been inconsistent in its application of discipline. The internal audit report had also implicated another employee, Ms M, but she was the only one charged with misconduct. The auditors had recommended that action be taken against Ms M on suspicion of colluding with suppliers. The Municipality had lost R375 000 due to the "cover quoting" that Ms M was allegedly implicated in. No action was taken against Ms M and she was subsequently promoted to the senior buyer position vacated by Ms H when she was dismissed.

One of the Municipality's witnesses testified that a strategic decision was taken by the Municipality to first initiate criminal and civil proceedings against Ms H, and depending on the outcome thereof, revisit Ms M's position. Initially, it was thought that Ms H had influenced Ms M, or that there was collusion between them. It was only when preparing for the arbitration, and perusing the relevant files that it was discovered that nothing had been done regarding Ms M.

The arbitrator found that Ms H's dismissal was substantively unfair as a result of the Municipality's inconsistent application of discipline, and awarded her 9 months' remuneration as compensation amounting to R82 203. The arbitrator found that reinstatement would be inappropriate taking into account the following factors -

  • The nature of the offences she had been found guilty of;
  • She did not show any remorse for her conduct;
  • She conceded working relationships were 'not good';

Ms H instituted review proceedings in the Labour Court, alleging that the arbitrator was obliged to order her reinstatement once he found that her dismissal was substantively unfair, unless the factors referred to in s193(2) were applicable. This section requires reinstatement or re-employment unless -

  • this is not sought by the employee;
  • circumstances make a continued employment relationship intolerable;
  • it is not 'reasonably practicable'; or
  • the dismissal is only unfair for procedural reasons.

Ms H also submitted that the Municipality had not led any evidence that the trust relationship between the parties has irretrievably broken down, and (despite her earlier concessions) argued that she had a good relationship with her manager.

The LC overturned the arbitrator's award and reinstated Ms H 'without back pay', and also ordered that she be paid the compensation stated by the arbitrator, namely R82 203. The LC also awarded costs against the Municipality on an 'attorney and client' scale - a higher scale that is normally used by the courts to censure a party for vexatious or reprehensible conduct.

The Municipality appealed against the LC's decision, arguing that it erred in the following ways:

  • by ordering reinstatement;
  • granting reinstatement and compensation;
  • awarding costs on an attorney and client scale.

The LAC considered the standard test for review proceedings - namely 'whether the conclusion reached by the arbitrator is not one which a reasonable arbitrator could reach'. The LAC came to the conclusion that the arbitrator's award "fell within the band of decisions that a reasonable decision-maker could make on the facts available to him" and was therefore not reviewable. The LC accordingly overturned the LC's decision and confirmed that the arbitrator's award should stand.

Although it was not strictly necessary to do so, the LAC went on to clarify that, according to the Constitutional Court's decision in Equity Aviation Services (Pty) Ltd v CCMA & others [2008] 12 BLLR 1129 (CC), the LC did not have jurisdiction to award both reinstatement and compensation, these remedies being in the alternative and mutually exclusive.

The LAC was also highly critical of the LC for awarding costs against the Municipality on an attorney and client scale. It concluded that there was simply no basis at all in the judgment why a costs order was justified, and that it was undesirable for a party to be penalised in this way without being given the opportunity to make submissions on whether such an order should be granted.

Extract from the judgment:

(Makgoka AJA)

[11]   In his award, the arbitrator considered the collective agreement concluded between the municipality and its employees, which enjoins the municipality to act consistently and fairly with regard to matters of discipline. The arbitrator further made reference to the code of good practice dealing with dismissals, and observed that as a general rule, fairness required that like cases be dealt with alike, whether in the consistent enforcement of a rule or in the imposition of a penalty.

[12]   On the above considerations, the arbitrator concluded that there was nothing preventing the municipality from charging Ms Mkhize once it realised that she should have been disciplined. The arbitrator further observed that, instead, she had been promoted to the position initially held by Ms Hadebe, and thus benefitting by occupying a position she could not occupy on merit whilst Ms Hadebe was still employed. As a result, the arbitrator found Ms Hadebe's dismissal substantively unfair on the basis of this inconsistency. With regard to the procedural fairness of the dismissal, the arbitrator found no merit in the contentions by Ms Hadebe of bias on the part of the chairperson of the disciplinary hearing, and found that the dismissal was procedurally fair. Having made those findings, the arbitrator proceeded to consider what an appropriate remedy would be under the circumstances, regard being had to the provisions of s 193 of the LRA.

[13]   The arbitrator considered that the order of reinstatement would be inappropriate. In reaching that conclusion, the arbitrator took the following factors into consideration: the nature of the offences Ms Hadebe had been found guilty of; that she did not demonstrate any remorse for her conduct; that she had conceded that the relationship at work was no longer good, which point was further confirmed by her union representative at the appeal hearing; that the trust relationship had broken down in the buying section and that Ms Hadebe was prepared to accept reinstatement without back-pay to any other position. The arbitrator accordingly granted Ms Hadebe compensation in the amount equivalent to nine months' remuneration, calculated at her monthly salary of R9 133.72, which adds up to a sum of R82 203.48. The arbitrator considered this compensation to be just and equitable. The prayer for reinstatement was refused, and the arbitrator made no order as to costs.

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[29]   With respect to the learned Acting Judge, and as correctly argued on behalf of the municipality, this is a conflation of the factors relied on by the arbitrator to determine the quantum of compensation with those which militated against an order for reinstatement. The ultimate question is whether the conclusion reached by the arbitrator is not one which a reasonable arbitrator could reach. I am firmly of the view that the conclusion reached by the arbitrator "falls within the band of decisions that a reasonable decision-maker could make on the facts available to him" and therefore, not reviewable. The Labour Court accordingly misdirected itself in concluding the contrary, and therefore, on this basis alone, the appeal has to succeed.

[30]   Having reached this conclusion, it is not necessary to consider the other aspects argued on behalf of the municipality, namely whether it was competent for the Labour Court to order reinstatement and compensation in the same relief. In any event, that issue was authoritatively settled by the Constitutional Court in Equity Aviation Services v CCMA and Others where it was concluded that the remedies in s 193(1)(a) are in the alternative and mutually exclusive.

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[36]   The order of costs on a scale of attorney and client is an extra-ordinary one which should be reserved for cases where there is clearly and indubitably vexatious and reprehensible conduct on the part of a litigant. It is discernible from a consideration of the authorities that where the Labour Court has made a costs order, it has invariably considered that it was deviating from the general premise, and therefore carefully reasoned the basis of such an order. Unfortunately, in the present matter, the court did not even state its reasons for making the costs order. For all of the above reasons, the costs order made by the Labour Court falls to be set aside and replaced with one where no order is made with regard to the costs of the review application.