Worklaw is a subscription based labour law service developed by leading South African labour lawyers and arbitrators. Worklaw gives you all you need to manage labour law at the workplace. Go to www.worklaw.co.za
Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article on ‘Representing a fellow employee at a disciplinary hearing: what are the limits? What is the protection?’
We also look at three cases: the first deals with whether an employer can claim compensation where an employee resigns without giving notice. The second looks at whether an employer can review the sanction in its own disciplinary enquiry. The third looks at a case where dishonesty did not result in dismissal.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
When the employee doesn’t give notice: can the employer claim damages?
An employer claimed damages from the alleged breach of the contract of employment by the employee because she resigned without giving proper notice. The employer also claimed that the employee should be ordered to refund it the sum of R40 000 for training of the employee by the employer. The employer was relying on a previous case in which the court had said this:
“Where the employee has resigned without giving notice in circumstances where he was obliged to give notice, usually the employer does not even sue the employee for damages which in law he would be entitled to and the damages would be the equivalent of the notice pay. However, if an employer wants to sue an employee in such a situation, he does have a right to do so both at common law and in terms of the BCEA. Employers hardly use even this right.”
In Labournet Payment Solutions (Pty) Ltd v Vosloo (LC Case No: J1086/08) the employer did attempt to use the right. The court set down the following principles: First, where an employee gives less than the agreed or statutory notice period this amounts to a breach of the employment contract. The employer is accordingly entitled as a matter of principle and law to claim for damages arising from the breach of the contract by the employee. Second, the connection between the breach and the damages the employer suffered as result of the breach must be established. In investigating the relationship between the breach of contract and the damages suffered by the employer, a two stage investigation is conducted to determine whether the damages were caused by the breach.
The first stage is about factual causation, showing that “but-for” the breach the employer would not have suffered the loss. The employer is required to show no more than the probability that it would not have suffered loss but for the failure by the employee to comply with the terms of the contract by failing to give a proper notice. The second stage is whether the wrongful act is linked sufficiently closely or directly to the loss for legal liability to ensue, or whether it is too remote.
Applying this two-stage test to the facts of the case, the court said that the employer had not established that the loss was sufficiently linked to the breach of contract. On the issue of training costs, the court had insufficient evidence to show that R40 000 of training had in fact been provided to the employee before her early resignation.
What does this case teach us? However frustrated an employer is about an employee resigning without giving the required notice, it is difficult to establish damages that are sufficiently closely linked to the early departure as opposed to a departure on proper notice. It could be that the employer has to pay a temporary employee, but this cost is off-set against not having to pay the resigned employee’s salary. It is probable that the employer will have to incur recruitment costs, but it would have to do that if there wasn’t a breach of contract. An employer will have to be very sure that it can calculate its loss and that loss is directly linked to the breach of contract. (You can read more on this topic in our July 2006 newsletter, which is archived on www.worklaw.co.za under ‘newsletters’.)
Can a state department take its own disciplinary sanction on review?
An employee was charged and convicted of twelve counts of misconduct, involving wilful or negligent mismanagement of the State's finances and of abusing his authority. Facts found to support these charges indicated the unauthorised awarding of bursaries to various students amounting to approximately R1m and the unauthorised purchase of goods exceeding R500 000. It also transpired that the employer suffered a loss of R200 000 from the transaction.
After considering some evidence tendered both in aggravation and mitigation of sentence, the chair of the disciplinary hearing decided that the imposition of a final written warning would be an appropriate sentence. The employer found that sanction inappropriate. In its view the employee should have been dismissed. It therefore brought a review application in the Labour Court for the proposed sanction to be set aside and replaced with the sanction of dismissal. This application was unsuccessful. However, on appeal to the Labour Appeal Court, the decision of the Labour Court was set aside and the employer's review application was granted. The Labour Appeal Court set aside the sanction imposed on the employee by the Chairperson of the enquiry, and replaced it with a sanction of dismissal with immediate effect.
The employee in Ntshangase v MEC: Finance Kwa-Zulu Natal and Another 402/08  ZASCA 123 (28 September 2009) appealed against the judgment of the Labour Appeal Court to the Supreme Court of Appeals.
The SCA first made a finding on whether a Chairperson performs an administrative act when deciding a sanction. The court held that where a person is appointed by an organ of state to chair a disciplinary hearing, that person, in making a decision, is acting for the state and the decision is therefore administrative action. The second finding of the SCA was that when a disciplinary sanction, measured against the charges, appears to be grossly unreasonable giving rise to the inescapable conclusion that the Chairperson of the disciplinary enquiry did not apply his/her mind properly or at all to the issue of an appropriate sanction, that fails to pass the test of rationality or reasonableness. The employer is then entitled to take such a decision on review in terms of s 158(1)(h) of the LRA, and have it set aside.
The SCA noted that ordinarily a court will refer a matter back to the administrative functionary for reconsideration rather than substitute its own decision for that of the functionary (who is generally best equipped by its composition, experience, and its access to sources of relevant information and expertise to make the right decision). However, this principle is not inflexible. The facts of each case will determine whether it is fair and practical to remit the matter to the original functionary, or for the court to substitute its own decision for that of the original functionary.
In this case the SCA upheld the LAC’s substitution of the sanction of dismissal for the final written warning. The lesson of this case is that in state, provincial and municipal sectors, the employer is able to take a finding and sanction on review where it believes the chairperson has acted irrationally. Whilst this case applies to the public sector, there are also ways in which a Chairperson’s decision in the private sector can be overruled in appropriate circumstances. Refer to the article in our March 2007 newsletter for more on this.
When does dishonesty not destroy the employment relationship?
The employee was the beneficial user of a company vehicle. The vehicle was involved in a collision with another vehicle whilst driven by the employee’s son; the employee was not in the vehicle at the time. In terms of the company policy the employee was obliged to report the accident to the employer, the South African Police Service and the relevant insurance company within 24 hours and not carry out repairs to the vehicle without the approval of the insurance company. The employee did none of the above, arranging instead for her husband to repair the car at his panel beating shop at her own cost.
The employer came to know of the collision some six months later. On being confronted, the employee initially denied that the car had been involved in a collision but later admitted this, stating that the collision had occurred whilst she was driving it at a time when she was still employed by a company that had later merged with the employer. She repeated her lie that she was the driver when the collision took place, stating that a minibus taxi had crashed into her. She did admit that she had given the car to her husband to repair at his panel beating shop. It was recommended that the employee be suspended on full pay pending finalisation of the investigation.
At the employer’s request for a further statement the employee changed her version, this time stating that the collision had occurred whilst her son was driving, but that she was a passenger. Her final statement was when she came clean and told the truth with an offer to repay the costs.
In due course the employer convened a disciplinary enquiry to look into the matter. The charge levelled against the employee was: ‘failure to be honest and act with integrity …and this resulted in a breach of trust between yourself and the company’. The employee pleaded guilty to the charge at the commencement of the enquiry, stating that her ignorance of the policy rule that her son was entitled to drive the car had driven her to be deceitful as an attempt to protect him. She was found guilty and dismissed from her employment. She appealed her dismissal but the dismissal was confirmed.
Contending that her dismissal was unfair the employee referred a dispute to the CCMA where the commissioner made an award in which she concluded that the employee’s dismissal was substantively unfair and ordered the employer to reinstate her but without arrear salary. At the CCMA the commissioner found that no direct evidence had been led by the employer to show that the trust relationship had been destroyed by the employee’s misconduct and lack of candour. She further found that for a decision to dismiss a person with the employee’s track record of 43 years unblemished employment with Edcon and related companies, the misconduct committed had to be gross and evidence was necessary to show that the trust relationship had in fact been destroyed. She went on to find that the employee’s long and unblemished track record militated against a decision to dismiss her under the circumstances. She also found that the views expressed by other witnesses were an indication that dismissal in those circumstances was not an inevitable result. She consequently concluded that the employer had failed to prove that dismissal was a fair sanction.
Unhappy with the award the employer launched review proceedings in the Labour Court. The LC declined to set the award aside. The employer then appealed to the Labour Appeal Court (LAC) but that effort again came unstuck when the LAC dismissed the appeal, concluding that the award was unassailable. The employer appealed to the SCA in the case of Edcon v Pillemer (191/2008)  ZA SCA 135 (5 October 2009)
The SCA applied the test of rationality to the CCMA’s arbitration decision and found it satisfied that test. It went on to say that the seriousness of dishonesty – ie whether it can be stigmatized as gross or not – depends not only, or even mainly, on the act of dishonesty itself but on the way it impacts on the employer’s business. Evidence showing adverse impact, if any, on the ‘business’ is critical. In the absence of evidence showing the damage an employer asserts in its trust relationship with an employee, the decision to dismiss will be unfair.
Many, on seeing the extent of the dishonesty, would assume that dismissal was the appropriate sanction. What did the employer do wrong? The employer failed to lead evidence of the impact of the dishonesty. It led no witness to say that the relationship of trust had broken down because of the dishonesty. In fact there was evidence to the contrary – that the impact was not great. The CCMA was entitled to balance the mitigating factors (long unblemished service) with the aggravating factors. In this case, because of the lack of evidence of aggravating factors, the dishonesty did not justify dismissal. The lesson here is that the evidence led by an employer has to establish not only the misconduct but the impact of it on the on-going employment relationship.
INFORMATION ABOUT WORKLAW
Worklaw is a comprehensive labour law advice and information service, developed by some of South Africa`s most experienced labour arbitrators. Worklaw subscribers get free advice from experienced arbitrators via e-mail, can research the law and leading cases, are updated monthly on new cases, trends etc, and can use excellent training material, to name a few of these services. Subscribers are invited to an annual labour law workshop covering the key cases and trends from the past year.
Contact us for more information:
Telephone: 031-561 5004
Fax: 031- 561 6906