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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article which looks at 'Demotion as a disciplinary sanction'. In it we look at two recent cases which have highlighted obstacles to an employer's demotion options. We also discuss three new cases: The first case, in the context of the obligation to reinstate, decides the meaning of the employer's claim that 'it is not reasonably practicable' to do so. The second case considers the circumstances when compensation for procedural unfairness can be refused. The third case looks at the possible consequences of failing to issue a pre-retrenchment s189(3) notice.

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Not 'reasonably practicable' to reinstate

Does the aggressive conduct of an employee during an arbitration mean that an employer is justified in arguing 'it is not reasonably practicable' (the language of s193(2)(c) of the LRA) for the arbitrator to order the reinstatement of an unfairly dismissed employee? Does discourteous treatment of the employer prove that the trust relationship has broken down?

In the recent LAC judgment in Glencore Holdings (Pty) Ltd and Another v Sibeko and Others (JA16/2016, 2013/JR2189) [2017] ZALAC 65; [2018] 1 BLLR 1 (LAC) (1 November 2017), the employee was employed as a dozer driver, a hazardous job which required of him to wear protective safety gear, including protective ear muffs. An altercation took place in the course of which the employee refused to wear the usual muffs. He was charged with misconduct in which employer alleged a refusal to comply with a reasonable instruction, insubordination and dishonesty. His dismissal followed and he referred an unfair dismissal dispute to arbitration.

The arbitrator concluded that the employer had not proved misconduct and that dismissal was substantively unfair, but refused to order reinstatement as desired by the employee. The employee had accused the employer's representative of bribing witnesses, and accused not only the representative but the whole HR personnel in attendance and the Commissioner of 'talking to each other through legs' (ie nudging / signalling under the table). The commissioner had to stop the proceedings on numerous occasions due to the employee's 'unbecoming conduct'. The employee said in his own words that this was just the beginning of a bigger battle between him and the employer. The arbitrator concluded that the employee had behaved badly during the arbitration proceedings and that this behaviour demonstrated a breakdown in the employment relationship to such a degree that reinstatement was an inappropriate remedy.

On review, the Labour Court set the decision aside and substituted an order of reinstatement. The LC observed that CCMA arbitrations are litigious proceedings and can be adversarial in nature. During the course of such proceedings, it is not uncommon for parties to behave irrationally. This can manifest in the show of emotions, a personal attack on an opponent, wild and unsubstantiated allegations, paranoia and defensiveness. Even seasoned legal practitioners in the course of the fray are known to vent. More so, inexperienced lay litigants are caught up in litigious proceedings. It was apparent that both parties came out 'all guns blazing' in promoting their cases. The employer stated that it would like to prove that the employee was a 'habitual liar', whilst the employee submitted that all the allegations in the disciplinary process were a conspiracy against him.

The LC concluded that the employee's conduct, even if deserving of reproach, could not be construed to prevent his reinstatement as a dozer driver. His reinstatement was not, as imagined by the arbitrator, 'impracticable' in the sense meant in s193(2)(c) of the LRA. The LC found that the arbitrator's decision was one that a reasonable arbitrator could not have reached, and so ordered reinstatement.

On appeal, the LAC upheld the LC's judgment. It confirmed that the words 'it is not reasonably practicable for the employer to reinstate or re-employ the employee' in s 193(2) of the LRA refer to the core operational requirements of an employer and not to the conduct of the employee during the arbitration process.

This judgment recognises the adversarial nature of an arbitration and that, in defending oneself from allegations, an employee is entitled to do so in a spirited manner. Discourteous and rude behaviour by the employee (especially where this is provoked by the employer) will largely be irrelevant for purposes of deciding sanction. The key question to ask is if there are any operational reasons making reinstatement impracticable.

Compensation for procedural unfairness

Sections 193 and 194 of the LRA provide for compensation as one of the remedies for unfair dismissal. For example, even though an arbitrator finds a dismissal to be substantively fair, if there was procedural unfairness the arbitrator may award compensation that is 'just and equitable in the circumstances'. But when is it appropriate for an arbitrator to refuse to order compensation even though there was procedural unfairness in the disciplinary process?

In a recent case, seven employees had been subjected to a disciplinary enquiry. The enquiry was protracted and dragged along for several months. On the eighth occasion the enquiry had been convened before an independent chairman, the enquiry broke up amidst violence, the chairman being assaulted, the recording device disrupted, and the chairman's cell phone, with which he tried to record the fracas, being forcibly taken from him and thrown against a wall. As a result, the enquiry was abandoned. The employer then summarily dismissed all seven employees. Those who had physically engaged with the chair were reported to the police and a criminal charge laid.

An unfair dismissal dispute was referred to arbitration; it was held that the dismissal of an employee for participation in a violent disruption of a disciplinary enquiry was substantively fair, but because that dismissal was not preceded by an enquiry into the acts of disruptio, it was procedurally unfair. Because of the very serious conduct which justified the dismissal, in the exercise of a discretion, the arbitrator made no compensation order as contemplated by section 194(1) of the LRA.

One employee took the decision on review. The Labour Court concluded, on the basis that a collective agreement that was binding on the parties (which prescribed an enquiry before a dismissal could be effected) had not been observed, that the arbitrator had misdirected himself. The LC overturned the award and remitted the matter for a fresh arbitration.

On appeal to the LAC, the LC's order was set aside and the award confirmed. The LAC in Ekurhuleni Metropolitan Municipality v South African Municipal Workers Union and Others (JA56/2015, JR1676/2012) [2017] ZALAC 80 (18 December 2017) held that the collective agreement argument was a red herring because the dispute referred was an unfair dismissal case as contemplated by s186, not a dispute about a breach of a collective agreement, a species of dispute regulated by s24. The LAC held that on the facts the dismissal was plainly fair. The finding that the dismissal was procedurally unfair solely because there had been no prior hearing in the circumstances where the employee disrupted a disciplinary enquiry had to stand.

It was also held that the exercise of the arbitrator's discretion not to award any compensation was, on the facts, a wholly proper decision, fully consistent with the test in Sidumo- it could not be said that the decision was one to which a reasonable arbitrator could not come. This decision confirms that a decision of an arbitrator not to award compensation where there has been procedural unfairness is permissible in terms of s 194(1) of the LRA, which requires any compensation to be "just and equitable" in the circumstances.

Failing to issue a pre-retrenchment s 189(3) notice

A retrenchment process can be 'kick started' by the employer giving notice under s189(3) of the LRA. The language of the section is clear - "the employer must (our emphasis) issue a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information, including but not limited to the specified information provided in s189(3)(a) to (j). This includes the reasons for the proposed retrenchment, alternatives considered, reasons for rejecting each of those alternatives, the number of employees likely to be affected, and so on.

This section is integral to the obligations in s189(2) on the employer and the other consulting parties to consult and engage in a meaningful joint consensus-seeking process and attempt to reach consensus on appropriate measures to avoid the dismissals; to minimise the number of dismissals; to change the timing of the dismissals; and to mitigate the adverse effects of the dismissals; the method for selecting the employees to be dismissed; and the severance pay for dismissed employees.

A thorough application of s189(3) can however cause a problem: by giving all the information required by that section before the consultation process has meaningfully started, it inevitably looks like the employer has already decided to go ahead and that it doesn't have an open mind on the matter. For this reason, employers may delay issuing the s189(3) notice or go to great lengths to couch the notice in language that, whilst fulfilling the employer's obligations under the section, make it explicitly clear that the retrenchment has not been prejudged.

A recent case considered the consequences of an employer failing to give a s189(3) notice at all. After the retrenchment of the individual applicants, NUMSA launched an application for an order declaring the dismissal to be procedurally unfair. In the judgment handed down on 17 June 2009, the LC found the individual applicants' dismissal procedurally unfair due to the lack of the s189(3) notice. The LC left the determination of the amount of compensation that may be due to the individual applicants, to the court determining the substantive fairness of the individual applicants' retrenchments.

Eight years later the Labour Court has finally resolved the matter of compensation. The union had conceded that there was an economic reason behind the retrenchments and so the court did not have to consider the substantive fairness of the retrenchments. Although the employer argued that there was no prejudice in not issuing a s 189(3) notice, the Labour Court did not agree. The court in National Union of Metalworkers of South Africa (NUMSA) v General Motors South Africa (Pty) Ltd (P341/10) [2017] ZALCPE 26 (14 December 2017) outlined the important purposes of a s 189(3) notice and its role in empowering employees to consult and engage in a meaningful joint consensus - seeking process and attempt to reach consensus on a number of prescribed issues. The court held that being denied information robbed employees of the chance to influence important aspects of the retrenchment. The court ordered compensation of six months' remuneration to all applicants.

This case is a reminder to employers to issue a s189(3) notice at an appropriate time in retrenchment proceedings and to get the content of that notice right. The failure to issue such a notice is unlikely to be regarded by a court as merely an omission to follow a procedural step in a retrenchment exercise. It will more likely be regarded as a violation of the rights of employees to influence important aspects of a retrenchment through meaningful consultation.


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Bruce Robertson
January 2018
Copyright: Worklaw