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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This month’s newsletter looks at what is required for procedural fairness in disciplinary action involving a sanction less than dismissal. We also look at new decisions dealing with constructive dismissal and suspension without pay.

This public newsletter is a free edited version of the subscriber newsletter, and does not contain all the information contained in the subscriber newsletter.


Constructive dismissal?

Section 186(e) of the LRA includes in the definition of dismissal the concept that dismissal includes the situation where an employee terminates a contract of employment with or without notice because the employer made continued employment intolerable for the employee.  What this means is that what appears to be a resignation is actually a dismissal. It has always been difficult to assess this if an employee, having resigned in a moment of anger or pique, later tries to dress the resignation up as a constructive dismissal. Another variation is where an employee resigns in the heat of the moment under pressure from the employer. Cases have held that, in the absence of any normal reasons for resignation (eg going to a better job, retiring or taking a rest), this kind of resignation may not be effective.

The issue arose again recently in Bhana and Columbus Stainless Steel (Pty) Ltd (2005) 26 ILJ 1793 (BCA). The employee had been employed by the employer for 30 years, finally being appointed as shipping manager. On his return from leave he was advised that a new shipping manager had been appointed to whom he should report. Alternatively, other positions were offered to him. The employee was shocked and resigned, feeling that he could no longer trust the employer. He subsequently claimed constructive dismissal. He did not use the grievance procedure prior to resignation. At the arbitration the employer’s evidence was that after his promotion to shipping manager the employee had not coped, and it was decided to appoint another person to the post. The employee was offered but refused two alternative positions with no difference in remuneration and benefits. The employer argued that it was unreasonable to refuse these alternatives.

The arbitrator recognised that courts have upheld a change in conditions of employment if there is a commercial rationale for doing so. However this change has to be done procedurally, for example in terms of a policy on poor work performance or after consultation. The arbitrator rejected the employer’s argument that there can be no constructive dismissal if the grievance procedure is not utilized prior to resignation.

The arbitrator found that the offers made to the employee were unreasonable and affected his status in the company. This made continued employment intolerable and the resignation constituted a constructive dismissal.

This decision confirms that the basic principle to establish constructive dismissal is whether the employer, without reasonable proper cause, conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. It is not necessary to show that the employer intended any repudiation of the contract; the court’s function is to look at the employer’s conduct as a whole and to determine whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it.

What is interesting about the decision is that it qualifies the principle that before an employee can resign, there must be an attempt to explore alternatives prior to resignation (eg using the grievance procedure). In Kruger v CCMA & another (2002) 23 ILJ 2069 (LC) the court said that an employee may not choose constructive dismissal while other options are available. But in the Bhana decision the arbitrator said : "Whilst the respondent is correct that a failure to utilize the grievance procedure may be fatal to an employee’s claim,... this test should not be applied too strictly and would be generally applicable where an employee has resigned without informing the employer of the reasons for the resignation...[I]t would have been unnecessary to invoke the formal grievance procedure when all the relevant persons were aware of the reasons for the applicant’s unhappiness and his intention to resign."

Suspension without pay

In s 186(2) of the LRA the definition of an unfair labour practice includes ‘the unfair suspension of an employee or any other unfair disciplinary action short of dismissal in respect of an employee".  Usually an employee is suspended with full pay pending the disciplinary hearing.  This is because, at common law, suspension without pay is a breach of the employment contract.  The Labour Court has decided in the past that suspension without pay may be a permissible disciplinary penalty, particularly where dismissal would have been the appropriate sanction but for mitigating factors. Eg Koka v Director-General: Provincial Administration North West Government (1997) 18 ILJ 1018 (LC), which found that  suspension could be pending an enquiry or a disciplinary measure in its own right, if allowed by statute or the employment contract.

But what if there is suspension without pay pending the disciplinary hearing? This situation arose in CEIWU on behalf of Khumalo and SHM Engineering CC (2005) 26 ILJ 1803 (BCA). An employee was suspended without pay from late February until his disciplinary hearing in early April. He was found guilty of gross insubordination and dismissed. He challenged the fairness of the dismissal and claimed that suspension without pay amounted to a double sanction.

The arbitrator found the dismissal to be fair. In considering the fairness of the suspension the arbitrator found the delay was unreasonably long and had a disciplinary effect, unfairly prejudicing the employee. The suspension was unduly punitive. The arbitrator ordered that the employee be paid for the duration of the suspension. The arbitrator appears to have accepted that the employer has a discretion whether to pay or not during the suspension (perhaps overlooking that this right must stem from the employment contract or some applicable statute, as in the Koka judgement) This case seems to have been primarily decided not on the basis of whether the suspension was paid or not, but due to the arbitrator`s view that the suspension was unreasonably long in the circumstances.


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Bruce Robertson
November 2005
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