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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 a very recent Constitutional Court decision dealing with whether an employer during industrial action can legally lock out all employees, whether they are union members or not? We also look at three new cases: The first case looks at a recent judgment where an employee tried to overturn a settlement agreement on the basis that it was a result of duress. The second case challenges a long-standing requirement that an employer must prove that the trust relationship has broken down for a dismissal to be fair. The third case looks at wage discrimination, showing that this is not easy to prove.

This public newsletter is a free edited version of the subscriber newsletter.


What kind of duress results in an agreement being cancelled?

An employee, a regional human resources director, was approached by a recruitment consultant regarding a work opportunity in South Africa, when he was at the time employed by Unilever in Dubai. The employee subsequently left Unilever to take up employment with Standard Chartered Bank in Dubai. Shortly thereafter he contacted the recruitment agent to enquire about the South African work opportunity previously mentioned. In his cv the employee did not record that he was no longer employed at Unilever, or that he was employed at Standard Chartered Bank. In fact, when interviewed, he indicated that he remained employed at Unilever and it was on this basis that his remuneration package with the new employer was negotiated. As a result, the new employer agreed to pay the employee US $40 000 as a sign-on bonus for Unilever shares/share options he purportedly held and which he represented to the employer he would forego on termination of his employment with Unilever.

When the truth emerged, the employee admitted that "...there is really nothing that I am going to say to justify actions..." and acknowledged he had breached the trust relationship. On the same day, the employee's employment was terminated with immediate effect on the basis of the misrepresentations he made. The employee immediately thereafter requested that the employer afford him a "softer exit". Further negotiations took place and a further letter was prepared which required the employee to agree to the repayment of the $40 000. The employee agreed.

A week after the termination of his employment, the employee approached the Labour Court on an urgent basis, contending that he was coerced into signing the separation agreement against his will and under duress, after having been threatened with the immediate revocation of his work permit and cessation of his salary, payments towards his housing, medical aid and school fees and repatriation costs. The employer opposed the application on the basis that the employee had signed the separation agreement voluntarily, in full and final settlement, without duress and that he had neither been coerced, nor forced to sign the agreement.

The Labour Court approached the matter on the basis that the employer was entitled to terminate the contract of employment with the employee on grounds of misconduct. The facts were found not to support the employee's contention that he had been coerced to sign the separation agreement, and that he did so under duress, after he had refused to sign the first draft of the agreement and had, on his version, requested that he be "afforded a softer exit - having acknowledged that the 40,000 USD had been paid to him in error". The separation agreement was therefore found to constitute a valid compromise entered into between the parties and the application for urgent relief was dismissed with costs.

The employee took the matter on appeal to the LAC in Gbenga-Oluwatoye v Reckitt Benkiser South Africa (Pty) Limited and Another (JA 95/2014) [2016] ZALAC 2 (3 February 2016). The LAC said that the burden of proving the existence of duress rests on the party raising it. If it can be proved, a contract may be vitiated by duress. But this can only happen where intimidation or improper pressure renders the consent of the party to not be true consent. Compulsion may be exercised by way of physical force, or indirectly, by way of a threat of harm. Actual violence or reasonable fear must be shown.

The LAC, in rejecting the appeal, placed emphasis on the fact that the employee was in a senior management position and had a history of prior work experience at a senior level. From a consideration of the relative position of parties, nothing indicated that their bargaining power was such that the employee did not understand the settlement agreement which he signed.

Proof of the breakdown in the trust relationship

It is now 7 years since the SCA in Edcon v Pillemer (191/2008) [2009] ZA SCA 135 (5 October 2009) confirmed that in the absence of evidence showing the breakdown in the trust relationship with an employee, the decision to dismiss will be unfair. We have always had reservations about this judgment because it seemed to us that there were some forms of misconduct which are so serious that a breakdown in the trust relationship can be assumed. The fact that disciplinary action is taken shows that there has been a breakdown in the relationship. Besides, the evidence of the breakdown in trust is inevitably opinion evidence.

Our reservations are reflected in the recent LAC judgment of Woolworths (Pty) Ltd v Mabija and Others (PA3/14) [2016] ZALAC 5 (19 February 2016). The employee in this case was in charge of the offloading process from a truck of supplies. When his other colleagues arrived the next morning, they saw that 'cold chain products' to the value of R3675.00 had been left unattended and not put in the refrigerator. The employee was found guilty of gross misconduct in that he failed to comply with the employer's cold chain policy and procedure by leaving cold chain products unattended. He was also convicted of leaving a pallet of long life products on the delivery truck despite indicating that he received it. He was dismissed.

Dissatisfied with the dismissal, he referred a dispute to arbitration at the CCMA which found that the employee had committed both acts of misconduct but that the sanction of dismissal was too harsh. The employer was ordered to reinstate the employee. The employer launched review proceedings in the Labour Court which found that the commissioner gave no less that nine reasons why the sanction was too harsh.

The employer appealed to the LAC which ruled in favour of the employer, finding that dismissal need not depend on evidence of the breakdown in the trust relationship. The principle established by this case - a variation of the Edcon ruling - is this: The fact that the employer did not lead evidence as to the breakdown of the trust relationship does not necessarily mean that the conduct of the employee, regardless of its obvious gross seriousness or dishonestly, cannot be visited with dismissal without any evidence as to the impact of the misconduct.

Because the SCA's judgment in Edcon is from a more senior court, we recommend this new LAC judgment should be viewed with some caution and an employer should, where appropriate, still lead evidence of the impact of the misconduct on the trust relationship.

Difficulties in proving wage discrimination

Do you think the following facts are enough to justify an allegation of unfair wage discrimination?

An employee was appointed as Assistant Director: Planning and Co-ordination at grade 15. She was the only female assistant director - the remaining four assistant directors were male. Save for one of them, who was employed at grade 16, these assistant directors, including the employee, were appointed at grade 15. Two of them were appointed at the same time as the employee.

The employee's complaint was that (a) she was remunerated at a lower salary notch than the two men appointed at the same time as she was; and (b) one of the assistant directors was on grade 16 and remunerated at that same grade while she was on grade 15.

Reading these facts, there seems to be a justifiable complaint. The EEA (the pre-2014 amendment version applied) required the employer, against whom the allegation is made, to establish that the discrimination is fair. So how did the employer try to say that the differences were fair? It blamed administrative chaos. And it said the two males appointed at the same time were existing employees and this justified the difference in pay. If you (like us) think these reasons would be inadequate to persuade the court to accept a deviation from the 'equal pay for equal work' principle, you are wrong!

In South African Municipal Workers Union and Another v Nelson Mandela Bay Municipality (P483/11) [2015] ZALCPE 70 (24 November 2015) the Labour Court held that in a wage discrimination claim an employee must demonstrate is that there is a causal nexus (a connection between two things which causes the event) between the differentiation on the basis of gender and the treatment accorded to her in respect of the grading of her post and the concomitant remuneration. The court said that where other reasonable inferences can be drawn from the facts, this causal nexus will not be established. It accepted that the administrative chaos (which the court said was "gender neutral"!) and prior employment with the same employer may have been the real causal nexus, and that it could not be inferred that it was because the employee was female.

If one steps back, here was a woman who asked to court to order the employer to pay her the same as male employees doing the same job. The basis of the request was that there was discrimination because of her gender. Instead of leaning towards this plausible interpretation, the complainant was sent away empty handed, and this case again shows how difficult it is to succeed in a wage discrimination dispute.

It may be that the outcome of the case may have been different, had it been based on the new section 6 of the EEA, which now explicitly provides for equal pay for equal work claims and adds "or any other arbitrary grounds" to the listed grounds for unfair discrimination under section 6(1). But despite these new provisions, it appears some arbitrators in applying these new sections are still requiring applicants to establish the causal link between the alleged ground for discrimination and the discrimination itself. They appear not to accept the logic we think is correct, namely that if something is arbitrary - ie for no good reason - that it should be found to be unfair, whether or not you can prove the specific reason why the employer discriminated against you.


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Bruce Robertson
March 2016
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