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 about how employers can avoid large damages awards for workplace sexual harassment. We also look at two new cases, one dealing with suspension pending disciplinary action, and the other with the approach the Labour Court is taking regarding fines for ignoring the requirements of the Employment Equity Act.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
Where does the right to suspend an employee come from?
You might think this is a really stupid question. Suspension pending a disciplinary enquiry is so common that we take it for granted. But in a recent case it was argued (and accepted by the Labour Court) that it is not part of the common law. In Annadale v Pasdech Resources (SA) Ltd (2007) 28 ILJ 849 (LC) the employee, the company's joint managing director employed on a 3-year fixed-term contract, was suspended on full pay pending an investigation into alleged irregularities. He was notified that it would take 5 to 6 weeks to complete the investigation. He regarded this as a fundamental breach which entitled him to cancel his contract. Before the period of suspension was up, he resigned.
A few weeks after resigning the employee sought to be reinstated into his position. He sought damages arising from alleged unlawful repudiation or breach of contract of employment. The employee contended that there was no common law right to suspend an employee and that unless this was specifically provided for in the employment contract, the employer could not lawfully suspend him.
The court held that the right to suspend is inherent in the principles of fairness which underlie labour law. Suspension on full pay, with reasons given why he was being suspended, was not a violation of the principle of fairness. The court noted that it was a common practice for an informal investigation to precede a disciplinary hearing to see if there was merit in the allegations, and to suspend an employee during this period of investigation.
The court did not regard the company's conduct a breach or repudiation of the contract. The employee was accordingly not entitled to cancel his contract.
Are there any lessons to be drawn from this case? We see two at least. The first is for the employer: if you have not already done so, it may be wise to include in the contract of employment (or in the disciplinary procedure which usually forms part of that contract) an express right for the employer to suspend employees while an investigation is being conducted. The second lesson is for employees: if you are suspended and decide to resign to avoid a disciplinary enquiry, a court is very unlikely to regard that as justified and is unlikely to find there was constructive dismissal.
The Department of Labour gets tough
The latest Report of the Commission for Employment Equity reports a decline (from 13 000 to 7 000) in the number of employers who submitted equity plans in terms of the Employment Equity Act, as they are obliged to do. The department's frustration over this widespread avoidance is seen in the recent case of Director-General of the Department of Labour v Jinghua Garments (Pty) Ltd (2007) 28 ILJ 880 (LC). The employer had failed to comply with requirements in terms of the EEA. When it failed to comply with a written undertaking made to a labour inspector, the inspector issued a compliance order. When the company failed to comply with this order, the Department applied to the Labour Court to have the order made an order of court and for the imposition of a fine on the employer. The violations of the EEA were admitted and the only issue before the court was the issue of the fine.
The dispute centred on whether the maximum fine of R500 000 was for contravention of the compliance order or for each individual contravention of a provision of the Act. Imposing a fine on individual contraventions would yield a completely different result to imposing a fine for contravening the compliance order.
The court found that as there were conflicting provisions in the EEA, the interpretation more lenient to the person to be fined had to be preferred. An appropriate fine therefore had to be considered on the basis of the violation of the compliance order, with the contraventions of the particular provisions to be taken into consideration as factors relevant to the determination of the appropriate fine. The court agreed that to ensure compliance with the Act, the fine had to have a punitive element and a preventative element, and not be characterised by an element of retribution.
The court made the compliance order an order of court and ordered the employer to pay a fine of R200 000, half of which was suspended for a period of three years on condition the employer was not found guilty of contravening the same provisions of the Act during that period. You have been warned!
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