James and Another v Eskom Holdings SOC Ltd and Others (2017) 38 ILJ 2269 (LAC) (13 June 2017)

Principle:

  1. For an arbitrator to have jurisdiction, a dismissal should have been sufficiently established by facts placed before the arbitrator which when objectively considered confer jurisdiction to arbitrate the dispute.

  2. Sections 185& 186 of the LRA cover the right not to be unfairly (not unlawfully) dismissed.

Facts:

Employees who were senior technicians at Eskom deviated from the farm where they were supposed to work on electrical poles, and instead drove in their Eskom vehicle some 19 kilometres to a farm where they were caught red-handed by the owner stealing watermelons. They were found guilty by the chairperson of the disciplinary enquiry and were summarily dismissed. They did not tender any evidence. Their union, NUM, lodged an internal appeal against their dismissal. The chairperson of the appeal tribunal changed the sanction of dismissal to two weeks' unpaid suspension apparently on historical inconsistency. The employees resumed their duties on 5 October 2013 after serving the sanctions imposed by the appeal tribunal.

On 22 October 2013, the employees were informed that the General Manager had set aside the sanction imposed by the appeal tribunal and that they had been dismissed. They referred an unfair dismissal dispute to the CCMA. The commissioner found the employees to have lied throughout the investigation and at the arbitration; that although they were not charged with theft or attempted theft, their conduct satisfied all the elements of that charge. He concluded that the employer could not reasonably be expected to continue with the employment relationship under such circumstances. A sanction of dismissal was found to be fair.

The employees took this award on review to the Labour Court for a declaratory order to the effect that their dismissal was invalid and of no force and effect. In support of the order the employees contended that:

  • there existed a collective agreement between NUM and Eskom regulating the terms and procedures to be followed in all disciplinary enquiries.
  • The collective agreement formed part of their employment contract and were binding on Eskom.
  • The collective agreement granted the employees the right of appeal against their conviction and sanction by the chairperson of the disciplinary enquiry; it is nowhere stated in the collective agreement that the decision of the appeal tribunal had the effect or status of a recommendation to the General Manager.
  • By implication, the decision of the appeal tribunal is final and binding on the employer and its managers.
  • Therefore, they argued that the conduct of the General Manager was invalid/unlawful and of no force effect because he contravened the provisions of the collective agreement which had been incorporated into the contracts of employment.
  • That being the case, it was contended, there was no valid dismissal, and where there is no valid dismissal, the commissioner lacked jurisdiction to arbitrate the dispute.

The employees deliberately did not base their review application on the LRA - they solely relied on the breach of the collective agreement.

The Labour Court, relying on the LAC decision in Edcon v Steenkamp and Others (JS648/13, JS51/14, JS350/14) [2015] ZALAC 2 (3 March 2015) held that the commissioner had jurisdiction to arbitrate the dispute as they were dismissed for the purposes of the LRA, and dismissed the review application with costs. The judge also held that he could not grant any relief to the employees by virtue of the alleged breach of the collective agreement as the Labour Court had no jurisdiction to do so.

At the LAC the employees' appeal was dismissed. The Court confirmed that the Legislature deliberately provided in the LRA for unfair dismissals and automatically unfair dismissals to be outlawed but did not make any provision for unlawful or invalid dismissals. In this case the employees referred an unfair dismissal dispute to the CCMA. Once the basis of a claim is chosen, this cannot be converted to another basis, such as an illegal or invalid dismissal. The LAC held that for an arbitrator to have jurisdiction, a dismissal should have been sufficiently established by facts placed before the arbitrator which when objectively considered confer jurisdiction to arbitrate the dispute.

This case does not decide anything that was not decided by the Edcon case, but confirmed that Sections 185 & 186 of the LRA cover the right not to be unfairly (not unlawfully) dismissed.

Extract from the judgment:

Tlaletsi AJP

[14]   The appellants do not, in the current proceedings, dispute the allegations of misconduct against them as they view them irrelevant for purposes of determining the issues on appeal. Mr F Rautenbach, on behalf of the appellants, contends that the review of the award should have been granted for the following reasons:

  • Their dismissal was unlawful, invalid and of no force and effect as being in breach of the respondent's procedural code to which it was bound, as it was incorporated in the appellants' contracts of employment.
  • An invalid dismissal is in law deemed as no dismissal at all, also for purposes of the referral of an alleged unfair dismissal dispute under s191 of the LRA.
  • In the result, the CCMA had no jurisdiction to hear the dispute arising out of their dismissal, the facts grounding jurisdiction having to be determined objectively.

[15]   Mr F A Boda SC, on behalf of the respondent, contends that the appellants were dismissed for the purposes of the LRA definition of 'dismissal'. The challenged decision qualifies as a dismissal for the purposes of the LRA even though it may have been contrary to a collective agreement. Furthermore, he contends, the appellants accepted that the decision of the manager constituted a dismissal when they referred the dispute as a dismissal dispute and are not permitted to change course. Before the arbitrator, the dismissal was a common cause fact not placed in issue. He submitted that they should be restricted to their LRA remedies and not be allowed to now pursue a remedy outside the LRA. Counsel submitted that no common law remedy is, in fact, available as the source of their case lies in a collective agreement.

[16]   The issue to be determined is whether the arbitrator had jurisdiction to determine the dispute that was referred by the appellants to the CCMA. For the arbitrator to be clothed with jurisdiction, a dismissal of the appellants by their employer should have been established. The test applicable is whether the facts placed before the commissioner, objectively considered, clothed the commissioner with jurisdiction to arbitrate the dispute.

[17]   In Gcaba v Minister for Safety and Security and Others the Constitutional Court authoritatively held that:

"Jurisdiction is determined on the basis of the pleadings, as Langa CJ held in Chirwa,and not the substantive merits of the case.... While the pleadings - including in motion proceedings, not only the formal terminology of the notice of motion, but also the contents of the supporting affidavits - must be interpreted to establish what the legal basis of the applicant's claim is, it is not for the court to say that the facts asserted by the applicant would also sustain another claim, cognisable only in another court. If however the pleadings, properly interpreted, establish that the applicant is asserting a claim under the LRA, one that is to be determined exclusively by the Labour Court, the High Court would lack jurisdiction."

The same approach should apply to consideration of the jurisdiction of the CCMA in disputes referred to it.

[17]   The starting point would be to investigate what was in fact referred to the CCMA. Put differently, one should establish what the appellants' pleaded case at the CCMA is. In the LRA Form 7.11 for referral of disputes to the CCMA, the appellants indicated their dispute as "unfair dismissal". As summary of the dispute, they wrote that "members were dismissed for [alleged stealing] of [watermelons]' and that the dispute arose on 4 October 2013. The outcome they desired is reinstatement. On the part to be additionally completed for dismissal disputes only, the appellants indicated that they were dismissed for misconduct, that their 'dismissal' was procedurally "unfair" because "procedures were not followed" and that the dismissal was substantively unfair because of an "inappropriate sanction". There is no doubt from the information on the referral form that the appellants referred a substantively and procedurally unfair dismissal dispute to the CCMA. To them there was no doubt that they had been dismissed and they accepted such state of affairs as fact.

[18]   An arbitrator faced with the information referred to above is, in my view, entitled to proceed with the arbitration of the dispute. It would be remiss of the arbitrator to ignore the factual material placed before him or her and doubt that he or she has jurisdiction to arbitrate the dispute. There was nothing that suggested, at this stage, that dismissal could be a contentious issue when all the parties agreed that there had been a dismissal. Furthermore, the evidence tendered by the parties supported their view that there had been a dismissal and what was required of the commissioner was to determine the fairness or otherwise of the dismissal. At no stage during the proceedings was any evidence tendered that could have created doubt that the commissioner lacked jurisdiction. If such evidence was tendered it would have been required of the commissioner to reconsider the jurisdictional issue and to stop the proceedings for lack of jurisdiction.

[19]   Section 186 of the LRA defines dismissal to mean, inter alia, that an employer has terminated a contract of employment with or without notice. The ordinary meaning of "termination" is to bring to an end. In this case, the respondent has through the action of the General Manager brought the contracts of employment of the appellants to an end. It does not matter that the General Manager did so contrary to the collective agreement. The appellants were in the circumstances entitled to approach the CCMA to challenge the fairness of the conduct of the respondent as they did. Having done so, it is not open to them to abandon their arbitrated referred dispute, and claim that they had not been dismissed. Nothing barred the appellants from approaching the CCMA for relief. It all depended on how they pleaded their case to the CCMA. Termination of the contracts of employment of the appellants was a factual phenomenon which they themselves found to constitute a dismissal that was unfair. In Gcaba (supra) the Constitutional Court warned that "Once a litigant has chosen a particular cause of action and system of remedies (for example, the structures provided for by the LRA) she or he should not be allowed to abandon that cause as soon as a negative decision or event is encountered".

[20]   For the above reasons, I am satisfied that the facts that objectively clothed the commissioner with jurisdiction had been established and on this basis alone the ground of appeal challenging the jurisdiction of the CCMA cannot be sustained. Since there was no challenge to the merits on review in the Court a quo and in this Court, the award as well as the order of the Court a quo should stand.

[21]   Section 23(1) of the Bill of Rights in the Constitution of the Republic of South Africa, 1996 guarantees everyone the right to fair labour practices. Section 185 of the LRA which is enacted to give effect to the rights in the Constitution provides that every employee has the right not to be (a) unfairly dismissed; and (b) subjected to unfair labour practice. By following the procedure provided for in s 191 of Chapter VIII of the LRA dealing with Unfair dismissals and Unfair labour practices, the appellants were asserting their Constitutional and LRA rights and were seeking redress under the LRA. That was, in fact, their cause of action at the CCMA. In Steenkamp and Others v Edcon Limited,Zondo J writing for the majority authoritatively held that:..................

'[106]   Section 189A falls within Chapter VIII of the LRA. That is the chapter that deals with unfair dismissals. Its heading is: UNFAIR DISMISSAL AND UNFAIR LABOUR PRACTICE. Under the heading appears an indication of which sections fall under the chapter. The sections are reflected as "ss 185-197B". The chapter starts off with section 185. Section 185 reads:

"Every employee has the right not to be-

  1. unfairly dismissed; and
  2. subjected to unfair labour practice."

Conspicuous by its absence here is a paragraph (c) to the effect that every employee has a right not to be dismissed unlawfully. If this right had been provided for in section 185 or anywhere else in the LRA, it would have enabled an employee who showed that she had been dismissed unlawfully to ask for an order declaring her dismissal invalid. Since a finding that a dismissal is unlawful would be foundational to a declaratory order that the dismissal is invalid, the absence of a provision in the LRA for a right not to be dismissed unlawfully is an indication that the LRA does not contemplate an invalid dismissal as a consequence of a dismissal effected in breach of a provision of the LRA.

[107]   This indication is reinforced when one has regard to the definition of "dismissal" in section 186(1). It starts with what would ordinarily be understood as a dismissal, namely, a termination of employment with or without notice. That encompasses the ordinary situation of the employer giving notice under the contract of employment and a summary dismissal. But then in five further paragraphs it extends the concept of dismissal far beyond its ordinary meaning. Once again the absence of any reference to an unlawful dismissal is telling. It suggests that, if a dismissed employee wishes to raise the unlawfulness of their dismissal, they must categorise it as unfair if they are to obtain relief under the LRA.

[108]   Another indication that the LRA does not contemplate an invalid dismissal is this. In section 187 the LRA created a new category of dismissals. It called them "automatically unfair dismissals". This is a special category of dismissals. What makes this category of dismissals special is that the dismissals in this category are all based on reasons that we, as society, regard as especially egregious. They include cases where an employee is dismissed for his or her race, gender, sex, ethnic origin, religion, marital status, political opinion, membership of a trade union, participation in a protected strike, exercise of rights provided for in the LRA and other such arbitrary reasons. Another factor that makes this category of dismissals special is that for those cases where an employee's dismissal has been found to be automatically unfair, the LRA provides the Labour Court with power to order the employer to pay double the maximum compensation that the Labour Court would have had the power to order if the dismissal had not been found to be automatically unfair but was found to simply lack a fair reason or was found to have been effected without compliance with a fair procedure.

[109]   Most, if not all, of the reasons for dismissal that render a dismissal automatically unfair as contemplated in section 187 are reasons that would ordinarily render a dismissal unlawful and invalid. If the Legislature had intended that under the LRA there would be a category of invalid dismissals, it would have been the automatically unfair dismissals. The Legislature must have deliberately decided that the LRA would not provide for invalid dismissals but rather for automatically unfair dismissals instead. Put differently, the Legislature deliberately provided in the LRA for unfair dismissals and automatically unfair dismissals to be outlawed and to attract a remedy but did not make any provision for unlawful or invalid dismissals. To understand this choice by the Legislature, it is necessary to look back at the legal position before the passing of the current LRA.' [Footnote omitted] ............

[23]   In light of my finding that the appellants knowingly referred an unfair dismissal dispute to the CCMA, having accepted that that tribunal had jurisdiction to assert their Constitutional and LRA rights, that they cannot at this stage after the process has run its course abandon that process and raise a new cause of action, it is not necessary in these proceedings to decide the validity or otherwise of the appellants' dismissal and what the majority could have meant in the paragraphs referred to above. However, one must also take note of the fact that the majority was clearly responding to the view in the minority judgment that dismissals effected in breach of the procedural requirements of s 189A(8) of the LRA are invalid because, inter alia, the grant of an order of reinstatement in the case of an invalid dismissal is not automatic but discretionary. What the majority seem to have said is that one cannot talk of reinstatement if there has not been a dismissal. The majority judgment was not necessarily stating that the LRA recognises an invalid or unlawful dismissal.

[24]   It is also significant that the majority judgment does not seem to have, either expressly or by implication rejected the LAC's conclusions in the Edcon v Steenkamp and Others matter at paragraphs [40] and [41] where it held that:

'[40]   The implicit acceptance by the Appellate Division in Schierhout v Minister of Justice that a wrongful or "invalid" termination can in effect bring a contract of employment to an end has however persisted in our labour law. The notion is comprehended in the definition of "dismissal" in section 186 of the LRA which defines a dismissal to mean inter alia "an employer has terminated a contract of employment with or without notice". The statutory concept of a "dismissal" is not the equivalent of a lawful cancellation of a contract of employment. It encompasses much more. Besides the termination of a contract of employment with or without notice, it includes the failure to renew a fixed term contract in certain circumstances, the refusal to allow an employee to resume work after taking maternity leave, selective non re-employment and a resignation by an employee where the continuation of the relationship has been rendered intolerable by the employer. The statutory concept of dismissal is therefore not restricted to the contractual notion of lawful cancellation and recognises that contract law is an insufficient instrument to regulate the modern employment relationship. The purpose of the wide definition of "dismissal" is to extend the LRA's scope to cover the effective dismissal of employees, whether or not by due termination of their contracts of employment. A wrongful termination without notice which does not constitute a lawful cancellation or rescission of the contract may therefore still constitute a dismissal in terms of the LRA.

[41]   The definition of dismissal is thus wide enough to include a wrongful or "invalid" termination in violation of contractual or statutory notice periods within its ambit. The word "terminated" in section 186(1)(a) of the LRA should be given its ordinary meaning of "bringing to an end". The ordinary meaning is not coloured by the lawfulness, fairness or otherwise of the action. The fact that a remedy may exist to redress any wrongfulness or unfairness does not per se alter the consequence of an ending brought about by the employer's action. As a rule, a wrongful or unfair termination will only be reversed (and the contractual rights and obligations restored) by the grant of the remedy of specific performance or an award of retrospective reinstatement at the discretion of the court. The resultant legal position is not unlike that prevailing in administrative law where a declaration of illegality will not have the inevitable consequence that wrongful action will be declared invalid and set aside.' [footnotes omitted] [Emphasis provided]

[25]   The above conclusion by the LAC that, inter alia, the purpose of the wide definition of "dismissal" is to extend the LRA's scope to cover the effective dismissal of employees, whether or not by due termination of their contracts of employment should therefore remain the default position in this Court. Having found that the employees were indeed dismissed and that the CCMA had jurisdiction to entertain the appellants' dispute with the respondent, it is not necessary to deal in any detail with the contention that the appellants did not waive their rights to challenge the jurisdiction of the CCMA in circumstances where they failed to do so during the arbitration proceedings; and whether there was a tacit agreement breached by the respondent rendering the appellants' dismissal invalid and unlawful at the stage when they were served with dismissal letters.

[26]   In the result, the appeal falls to be dismissed. Regarding costs, it shall be in accordance with the requirements of the law and fairness that there be no order as to costs.

Order.

The appeal is dismissed.