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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 'Whistle-blowing: Changes to the Protected Disclosures Act'. The article discusses a recent SCA judgment dealing with an independent contractor who published an article critical of the SABC, that we have used as a case study on the application of the Act. We also discuss three other new cases: The first case deals with the fairness of existing employees having to apply for jobs in a restructuring exercise. The second case considers what may constitute bias and inconsistency on the part of an arbitrating commissioner. The third case asks whether illegal and invalid (as opposed to unfair) dismissals are covered by the LRA.

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


Applying for a job in a restructuring exercise

In the last 20 years an industrial relations trend has taken root in terms of which an employer, for operational reasons, wants to introduce a restructured organizational template, and in so doing redefines the requirements and competencies for jobs in the new structure. Existing staff are then told that all or some existing positions have become redundant and that if they want to continue in employment with the employer, they must apply for the 'new' positions. Those who fail to apply or who are not appointed, are considered to have resigned or been retrenched.

These are often retrenchments not primarily because of financial distress but because the employer wants greater efficiency and profits. Is dismissal in this context fair?

The starting-point must be the fact that the law imposes upon employers a specific duty to seek to avoid retrenchments because a dismissal for operational requirements is a no-fault dismissal. In the words of the Code of Good Practice: Operational Requirement Dismissals, 'this Act places particular obligations on an employer, most of which are directed towards ensuring that all possible alternatives to dismissal are explored and that those employees to be dismissed are treated fairly'.

The fairness of such a retrenchment arose in the recent LAC case of South African Breweries (Pty) Ltd v Louw (CA16/2016, C285/2014) [2017] ZALAC 63 (24 October 2017). The employee was employed by SAB as the sales manager, Southern Cape Region, based in George. Owing to a restructuring of the business in 2013, the employee's post became redundant. The functions formerly performed by him in the sales field were subsumed into a newly created post of area manager, based in George. The new post embraced other management functions in addition to managing sales. It included operations, which functions were to be integrated with sales in the new business model. The new post was also pitched at a higher level of management.

SAB invoked section 189 of the LRA when the planning for a wide-ranging restructuring programme identified his post for abolition and absorption into the new post. The employee was notified of possible posts for which he could apply. He applied for the restructured area manager post but declined to apply for a similar post in Aliwal North. In the selection process his performance record was taken into account. He was not successful in his application for the area manager post.

When the employee was retrenched, he was aggrieved and alleged unfair retrenchment. The Labour Court found he was unfairly retrenched and reinstated him retrospectively. The two key findings of the LC were:

  1. The retrenchment was substantively unfair because the employee should have been offered / appointed to the vacant post of area manager, based in Aliwal North, which would have discharged the employer's obligation to exhaust all reasonable measures to avoid a dismissal; and

  2. The retrenchment was procedurally unfair because objectively unfair selection criteria were chosen; in particular, the past performance ratings of the candidates interviewed to fill the newly created post of area manager were used, and the employee did not accept that his own rating as "2" was correct or fair, which factor prejudiced his prospects of selection.

On appeal to the LAC, the Court found that because the employee did not apply for the Aliwal North position, the employer could not be required to offer it or appoint him to it. On the fairness of the interview panel taking into account past performance ratings as selection criteria, the LAC found that under the circumstances this was not unfair. The person appointed had in any event been rated higher than what the aggrieved employee felt he should have been rated, and the ratings were in any event only one of several factors taken in to consideration and were not the determinative consideration.

The LAC found that an employer, who seeks to avoid the dismissal of a dislocated employee, and who invites the dislocated employee to compete for one or more new posts, does not act unfairly. In a corporate restructuring, requiring an employee to compete for a post is not a method of selecting for dismissal; rather it is a legitimate method of seeking to avoid the need to dismiss a dislocated employee. A competitive process to seek to avoid retrenchment is not unfair.

Arbitrator bias and inconsistency

When a party to an arbitration loses there are two allegations frequently made: 'The arbitrator was biased' and/or 'I've been treated inconsistently from others'. A recent case involved both allegations.

The employee, a driver of an articulated truck loaded with 8 vehicles, was driving to Walvis Bay on route C26. He realised along the way that he was driving on a gravel road. It was at night and it had been drizzling when he reached a "drift" or low-lying bridge with a heavy fast flowing creek traversing the road. He could not make a U-turn as the road was narrow and his carrier very long. He saw other vehicles passing through the drift. On the next morning, he took a calculated risk of crossing the drift but got stuck. This incident had serious consequences: out of the 8 vehicles that had been loaded on the hauler, 3 were salvaged and 5 were written-off. The repair costs of the hauler were approximately R1.2 million. The towing costs were in the amount of R204 014.

The employee was subjected to a disciplinary enquiry on two counts: (1) Unauthorised driving off-route and (2) Reckless and negligent driving. He was acquitted on Count 1 on the basis that he was not sufficiently briefed on the authorised route to Walvis Bay. He was found guilty of reckless and negligent driving and dismissed on 2 May 2012. At the CCMA the commissioner found that the employee had driven the truck in a reckless and negligent manner, and found that the employee failed to exercise the standard of care and skill that could be expected of an employee in his position. The commissioner rejected the union's argument that the employer had been inconsistent in the application of discipline. The dismissal was held to be fair.

On review at the Labour Court it was held that the approach adopted by the commissioner created a clear basis for the perception of bias by the union and the employee. This was so because the commissioner enquired from the employer's representative if he wished to call further witnesses after he had made it clear that he was closing his case. The commissioner adjourned the arbitration for a short period and on resumption, the employer's representative changed his mind and stated that he would call a further witness.

The Court held that the postponement of the arbitration, at the instance of the commissioner, was to give the employer the opportunity to arrange the attendance of a witness it never intended to call but for the commissioner's intervention. The commissioner had advanced the employer's case and gave it an unfair advantage. The court held that objectively the employee reasonably perceived or reasonably apprehended bias on the part of the commissioner and that on this point alone the arbitration award should be reviewed and set aside.

On the substantive issues, the Labour Court found that the commissioner had not properly applied his mind to the facts. He ought to have found that the employer failed to discharge its onus of showing that there was a rule prohibiting drivers from driving on gravel roads. The LC held that, even assuming that the rule existed, the rule was not consistently applied and therefore it was unfair to dismiss the employee. The Court further held that the commissioner did not take into account that the employer failed to produce evidence of its actual loss. The LC concluded that the decision by the commissioner is not one which a reasonable decision-maker could have reached, and set aside the award. The LC substituted the award with an order that the employee's dismissal was substantively unfair, and he was reinstated retrospectively from the date of his dismissal without loss of benefits and issued a final written warning valid for a period of six months.

On appeal the LAC in Grindrod Logistics (Pty) Ltd v SATAWU obo Kgwele and Others (JA53/16) [2017] ZALAC 60 (18 October 2017) , held that the LC was wrong in concluding that the employee reasonably perceived or reasonably apprehended bias on the part of the commissioner. The union and the employee did not discharge the burden resting on them to show their reasonable perception of bias on the part of the arbitrator. The test for bias is whether a reasonable, objective and informed person would, on the correct facts, reasonably apprehend bias. Mere apprehensiveness on the part of a litigant or even a strongly and honestly held anxiety would not be enough.

On the issue of inconsistency the LAC confirmed that a generalised allegation of inconsistency is not sufficient - a concrete allegation identifying who the persons are who were treated differently or preferentially and the basis upon which they ought not to have been so treated must be set out clearly. The employee had led this evidence, and the employer did not respond by leading evidence to substantiate why the circumstances of other employees who were not dismissed for reckless and negligent driving differed significantly from those in this case. The LAC concluded that the LC had been correct in finding the employer had been inconsistent.

In assessing the sanction for reckless driving the LAC held that the employer was partly to blame for the unfortunate circumstances. All the extenuating factors (including a clean disciplinary record) militated against the sanction of dismissal. The LC's order was confirmed.

The lessons of this case are that it is necessary to have more than a subjective feeling about bias. Regarding allegations of inconsistency, once an employer is challenged on this with precise examples of prior cases, the onus shifts to the employer to distinguish the prior cases from the particular case in question. The failure to do so is likely to lead to a finding of inconsistency.

Are illegal and invalid dismissals covered by the LRA?

The language of the LRA is about fairness - fair dismissals, fair labour practices and fair discrimination. When an allegation of unfairness is made, the CCMA and Labour Court have the jurisdiction to hear the dispute. But what happens if an employee decides to describe the dismissal as illegal and invalid rather than unfair? This mostly happens when a policy, procedure or law is not followed - ie aside from fair reasons for dismissal, it is argued that the way the decision to dismiss was reached was irregular. This happened in the recent case of James and Another v Eskom Holdings SOC Ltd and Others (2017) 38 ILJ 2269 (LAC) (13 June 2017).

Consider the facts of this case: 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.

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Bruce Robertson
November 2017
Copyright: Worklaw