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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 on the alternatives to retrenchment - perhaps very relevant to the situation many organisations find themselves in at present. We look at two new cases in this newsletter: the first deals with the test for constructive dismissal. The second looks at the question of the onus and the burden of proof.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
The test for constructive dismissal
- An employee was given a choice between resigning (with one month’s salary and a good reference), and being warned and placed on a poor work performance programme with training. The employee accepted management’s “offer” that he should resign “because what is the point of staying if I’m gonna get fired anyway.” Shortly after, he initiated proceedings for unfair dismissal.
- At the CCMA it was held that the employee had been constructively dismissed, and, notwithstanding his short period of employment (5 months), granted him compensation equivalent to ten months’ salary (R121 500).
The main purpose of reporting this case - Strategic Liquor Services v CCMA & others Case (CCT 33/09 ZACC 17 - is to highlight what the Constitutional Court said about the test for constructive dismissal. But in passing it is worth thinking about the costs the employer incurred in taking this matter right up to the Constitutional Court. The costs obviously far exceeded the amount of compensation which admittedly seemed excessive.
- The Constitutional Court held that the test for constructive dismissal in s 186(1)(e) of the LRA is not that the employee has no choice but to resign, but only that the employer made continued employment intolerable. So the offer to resign or to have a warning with further training was not the only thing that one must look at. The fact that there was a choice has to be viewed against the wider circumstances – had the employer made continued employment intolerable. If that question is answered in the affirmative, then the fact that the employee had a choice is irrelevant.
- This case highlights the dangers in saying to an employee - “resign or face disciplinary action”. But we still believe it may be appropriate, and not unfair, to spell out the options open to an employee in some circumstances. For example, if an organisation is facing a potentially damaging (to either or both parties) disciplinary process, it would not in itself be unfair to offer to the employee to settle the matter on some agreed basis – which may include the employee leaving the organisation – rather than proceeding with the disciplinary action. To safeguard itself however, management should ensure it is clearly communicated to the employee that if the disciplinary action is pursued, it will be done fairly on its merits and that it has not been prejudged. In such circumstances, we believe there would not be a basis to find that the employer has ‘made continued employment intolerable’.
- Employers considering this route, need to act (and speak) carefully, to ensure the correct message is conveyed.
An employee argued that his dismissal was procedurally and substantively unfair. The employer relied on the existence of a mutual agreement between them to terminate his employment for operational reasons, and contended that there was no need for compliance with section 189 of the LRA. The employer argued that where there is mutual agreement to terminate there cannot be a dismissal, and therefore there can be no finding of unfairness of any kind. The employer submitted further that a mutual agreement to terminate is thus a complete defence to an unfair dismissal claim. Previous cases have indeed found that where such an agreement exists, it would constitute such a defence.
The problem was that the employee denied this agreement. The court in Theron v Norkim Construction and Mining Services CC (LC JS380\06) started with the issue of who bore the onus. Following section 192 of the LRA, the court said that the onus rested on the employee to prove he was dismissed and on the employer to prove that the dismissal was substantively and procedurally fair. So this case basically turned on the employee’s version of events as opposed to the employer’s version. If the employee had the onus to prove a dismissal, what did he have to prove to do so? - The fact of dismissal, or refuting the existence of an agreement to terminate? The court held that because the employer relied in its version on the existence of the mutual agreement as a defence to the claim of unfair dismissal, it bore the onus in this regard.
The court, following previous cases, held that where there are two mutually destructive versions on the existence of a mutual agreement to terminate, the employer bears the onus of proving the parties’ common intention to enter into the agreement, and this issue is decided on the probabilities. In this case the employer, based on its confused version, was unable to establish that there was a mutual agreement and the court held that there was a dismissal and that it was unfair. The employer conceded there had been no consultation in terms of section 189, as it had based its case on the existence of the agreement. The court found the dismissal to be procedurally and substantively unfair.
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