Category: In the Media

BCHC: Must employers hold a hearing before placing an employee on precautionary suspension?

Case review: Long v South African Breweries (Pty) Ltd and Others [2018] ZACC 7

On 19 February 2019 the Constitutional Court handed down judgement in the case of Long v South African Breweries (Pty) Ltd and Others in which the Court unanimously rejected the applicant’s submission that employees are entitled to a pre-suspension hearing.

Facts

From 2008, Long was employed by SAB as a district manager. His responsibilities included ensuring that the company complied with all legal requirements in respect of its operation in the Border District, including requirements relating to licensing and maintaining a fleet of vehicles. In late 2012, Long was informed about irregularities regarding the vehicle fleet including fraudulent activities. An investigation revealed discrepancies in fleet records, also that vehicles and trailers were unlicensed and not roadworthy. In May 2013, a trailer was involved in a fatal accident. Shortly thereafter Long was advised that he was being investigated for dereliction of duties and gross negligence. He was placed on precautionary suspension to ensure that the investigation could proceed unhindered.

In August 2013, three months after being placed on suspension, Long was given notice to attend a disciplinary enquiry for allegations of gross dereliction of duties, gross negligence, dishonesty, derivative misconduct and bringing the company’s name into disrepute.  The hearing commenced in late August.  In October 2013, Long was found guilty of three of the allegations and was dismissed.

Litigation history

Long took the matter to the CCMA in two separate disputes.  The first concerned his suspension pending disciplinary proceedings. The arbitrator held that his suspension amounted to an unfair labour practice because he had not been given a prior hearing and that the suspension was unreasonably long.  As a result, Long was awarded two months’ compensation. In the second dispute relating to Long’s dismissal, the arbitrator found that the illegalities regarding the maintenance and registration of vehicles did not fall within his responsibility and ordered SAB to reinstate him.

On review, the Labour Court set aside both awards.  Leave to appeal to the Labour Appeal Court was refused, but the Constitutional Court granted Long leave to appeal on the question of whether a pre-suspension hearing is required in the case of a precautionary suspension.

Precautionary suspension

Regarding suspension, the Labour Court held that, where a suspension is precautionary and with full salary, there is no requirement that the employee be allowed to make representations.  In the Constitutional Court, Long submitted that this finding went against existing case law and that the arbitrator’s finding that the length of the suspension was punitive meant that it was unfair.

The Court however held that when assessing whether a precautionary suspension is permissible, the presiding officer must determine whether there is a fair reason for the suspension and whether it prejudices the employee. But suspension for the purpose of an investigation is a fair reason, and where suspension is on full pay “cognisable prejudice will be ameliorated.” Even if the employee was not given an opportunity to make pre-suspension representations, under the circumstances, the suspension did not materially prejudice Long. As for the delay or length of the suspension, the court did not find it to be substantial.

Thus, the LRA’s requirements relating to fair disciplinary action do not apply when suspensions are instituted for precautionary as opposed to punitive reasons.  As the Court summarised, “[w]here the suspension is precautionary and not punitive, there is no requirement to afford the employee an opportunity to make representations.”

This judgement is good news for employers as it will speed up the overall disciplinary process and does away with the need to deal with unnecessary suspension disputes.

BCHC: What you need to know about the recent amendments to the CCMA rules

 

In this newsletter we look at the recent amendments to the CCMA Rules which came into effect on 1 January 2019. The need to amend the rules flows from practical issues that have been experienced by the CCMA and from the recent changes to legislation. Whilst most of the changes to the Rules may not appear to be substantial, it is still important for parties to ensure that they adhere to these new rules. 

The main amendments can be summarised as follows:

  • In terms of rule 11, the CCMA must give the parties at least 7 days’ notice of a conciliation (as opposed to 14 days) in relation to strikes, lockouts and major retrenchments. The 14-day notice rule continues to apply in respect of other disputes. A shorter notice period will be allowed if the parties agree to a shorter period or if reasonable circumstances require it.
  • Rule 14A now incorporates section 135(2A) of the Labour Relation Act, 66 1995 (the LRA) and provides for an extension of the conciliation period.
  • Rule 20 has been amended to make pre-arbitration conferences compulsory 14 days before the arbitration if both parties are represented by a trade union, employer’s organisation, legal practitioner or candidate attorney; both parties agree to hold a pre-trial conference; or the parties are directed to do so by the CCMA. If the pre-arbitration conference is not held, the commissioner may decide to continue with the arbitration but may consider awarding costs for the non-compliance.
  • In terms of rule 24 a conciliation or arbitration can now be held in the region where the dispute arose or the region where the employer’s principal place of business is located.
  • Candidate attorneys have specifically been included in rule 25 as being able to represent parties in arbitrations. This amended rule also provides that a commissioner may, on application in terms of Rule 31, rule that a person not contemplated in Rule 25(1) may represent a party at the arbitration after considering various factors. Legal representatives are also not allowed to represent parties in the facilitation of large-scale retrenchments.
  • The amended version of rule 29 requires parties to request disclosure of documents/evidence not less than 14 days prior to the date of hearing and the request must be answered within 5 days. The parties can however agree on a later disclosure and a commissioner may still rule that relevant documents/evidence be disclosed.
  • In terms of rule 31A parties can apply for picketing rules or ask for the determination of disputes relating thereto and such applications must now be set down within 2 days of receipt of the application, unless the parties agree otherwise.
  • Section 73A of the LRA came into effect on 1 January 2019 and provides that employees earning below the threshold of R 205 433.30 per annum may now refer disputes to the CCMA relating to employers’ failure to pay any amounts owing to that employee in terms of the Basic Conditions of Employment Act, 75 of 1997 or the National Minimum Wage Act, 2018, contracts of employment, a sectoral determination or a collective agreement. Employees who fall above the threshold can approach the Labour Court, High Court, Magistrates Court or Small Claims Court depending on the size of the claim. Previously employees had to wait for the Department of Labour to approach the Labour Court or sue their employers in the normal course.
  • Given the above amendment to the LRA, a new rule 31B has been added to the CCMA Rules in relation to what should be included in an application for an arbitration award in respect of a compliance order or written undertaking. The process regarding affidavits to be filed and the hearing that could follow are also included in this rule.
  • Rule 37 has been amended to provide for how a subpoena has to be served at least 7 days before the arbitration hearing.
  • Rule 40 deals with the certification and enforcement of arbitration awards and has been amended to explain that the amount of the award, costs, an arbitration fee, interest on the amount awarded and the sheriff’s costs can be enforced through execution by the Sheriff.
  • Rule 40A provides that if a commissioner awards arbitration fees in respect of a procedurally unfair dismissal, the fee must be paid by the employer to the CCMA within 14 days.

The amendments to the Rules will hopefully contribute to the more efficient and speedy resolution of disputes going forward.

BCHC: “A right to right a wrong?”

by Venolan Naidoo Senior Associate at BCHC and edited by Prof Darcy du Toit


Should an employer be liable to compensate an employee after it has attempted to remedy a wrong that was due to a mistake on the employer’s part?


From time to time, employers make mistakes (as opposed to deliberate acts) which infringe an employee’s rights under the Labour Relations Act of 1995 (the LRA) or other laws. But, if the employer is willing to remedy its mistake, will it remain liable to compensate the employee?

The question has arisen particularly in unfair dismissal disputes where employees refuse to accept the employer’s offer of remedial action but prefer to persist with their claims for compensation based on the employer’s mistake. The answers given by the courts in a number of leading cases are discussed below.


Johnson & Johnson (Pty) Ltd v Chemical Workers Industrial Union (CWIU).

The employer in this matter had dismissed 20 women workers due to operational requirements in terms of section 189 of the LRA. This was done after consultation with the workers’ union. However, the employer did not engage the union about selection criteria for the employees to be dismissed. Instead, only women were targeted because the employer assumed that they could not be offered alternative “male-type” jobs. The union then referred an unfair dismissal dispute on the basis there had been inadequate consultation.

However, four days after the decision to dismiss the employer realised its mistake and offered to re-employ the workers in alternative “male-type” jobs if they were willing and able to do them. The union did not respond and, although the offer was repeated at conciliation, there was again no response. Instead, the union referred the dispute to the Labour Court, which found that the dismissals had been procedurally unfair and ordered the employer to pay compensation.

On appeal, the Labour Appeal Court noted that the LRA does not require a mechanical “check-list” approach to determine whether section 189 had been complied with. The proper approach is to ascertain whether the purpose of the section – that is, a joint consensus-seeking process – has been achieved. Although the dismissals were procedurally unfair, the unfairness had lasted for only four days. To award compensation in such a case, the court held, “would be to reward the union and the employees for their unreasonable obstinacy, echoing their earlier refusal to discuss anything except the need to retrench”. The order of compensation was therefore set aside.


Mkhonto v B L Ford N.O & Others.

Again, the employee’s dismissal in this case was procedurally unfair. The employer then realised its mistake and offered the employee “unconditional reinstatement”. However, the employee refused the offer and referred an unfair dismissal dispute to the CCMA, where he obtained an order of compensation.

On review, this order was reversed. The Labour Court, noting that the employee was offered reinstatement (although she tried to deny it), found that her claim for compensation was insupportable. The employee then went on appeal. However, the LAC confirmed that her refusal to accept the offer of reinstatement was grossly unreasonable and upheld the judgment of the Labour Court. The court added:

“The appellant’s conduct in the litigation leaves much to be desired. Not only did she fail to proffer any reason for having refused the offer of reinstatement, but her evidence concerning the reinstatement offer, the only factual issue in the case, was patently false. I thus see no reason for interfering with the order of the court a quo that the appellant should pay the [employer’s] costs” (at para 12).


Kemp t/a Centralmed v Rawlins.

Once again, the employer had dismissed an employee for operational reasons without following procedure. The employee referred an unfair dismissal dispute to the CCMA. At conciliation, the employer offered to reinstate her or, alternatively, to pay a substantial amount in settlement. The employee rejected the offer, also when it was repeated a few days later, and instead referred an automatically unfair dismissal to the Labour Court. Again the employer repeated the offer of reinstatement, but to no avail.

The Labour Court found that her dismissal was both substantively and procedurally unfair and awarded her compensation equal to 12 months’ salary. The employer appealed. In its judgment, the Labour Appeal Court pointed out that, although every employee has the right not to be unfairly dismissed, the infringement of that right does not automatically entitle the employee to a remedy. On the question of compensation, the court explained the position as follows:

  • The LRA aims at striking a balance between the interests of employers and employees.
  • Once a finding is made that a dismissal is unfair, section 193(1) of the LRA states that an arbitrator or the Labour Court “may” order the employer to pay compensation.
  • This confirms that the arbitrator or court must exercise a discretion whether or not to order compensation.
  • This discretion must be exercised after considering all relevant factors (the court listed eight factors as important examples but emphasised that the list was not exhaustive). In contrast, section 194(1) of the LRA merely stipulates the maximum amount that may be ordered if compensation is awarded.

Applying this test, the Labour Appeal Court took into account all relevant factors, including the employer’s repeated offers of unconditional reinstatement and the employee’s rejection thereof. The rejection, it found, was based on the employee’s subjective belief that the employment relationship had broken down, but there was no evidence to support this belief. The court went on to hold that:

  • The employer had treated the employee unfairly in the manner of her dismissal but had a right to seek to correct the unfairness.
  • By refusing the employer’s offer of reinstatement, the employee undermined one of the primary objects of the LRA, namely the effective resolution of disputes.
  • If an employee fails to accept a genuine and reasonable offer of reinstatement for no valid reason, the employer has a strong case in support of an order denying the employee compensation.

The Labour Appeal Court therefore reversed the Labour Court’s decision and awarded the employee no compensation notwithstanding her unfair dismissal.


However….

It follows from what has been said that the employer’s offer must be “reasonable”; that is, it must offer substantial redress in relation to the wrong which the employee may have suffered. It must therefore not be arbitrary and should also not be conditional or “without prejudice”, unless conditionality can be objectively justified.

For example, an employee will be entitled to refuse an “ex gratia” payment in full and final settlement of an unfair dismissal claim if the court considers the offer to be inadequate.

The focus is on the reasonableness of the employee’s refusal of the employer’s offer. This means that the adequacy of the employer’s offer, given the unfairness of its conduct, will also come under scrutiny.


Conclusion

  • If an employee challenges a dismissal, the employer should not dig in its heels and prepare to fight it out. Rather, it should look carefully at its own actions in light of the requirements of the LRA – especially at the reason for dismissal and the procedure that was followed.
  • If it is reasonably possible that an arbitrator or court may find some substance in the employee’s complaint, it may be wise (if necessary after seeking legal advice) to offer to the employee to rectify the shortcoming as far as possible along the lines indicated in the cases discussed above.
  • The employer’s offer should be unconditional and reasonable in all the circumstances.
  • If the employee accepts reinstatement, the employer could at most be required to repeat the dismissal process in accordance with the LRA.
  • If the employee does not accept a reasonable offer, he/she will most probably forfeit the right to compensation.

Further case law

Other cases where employees had unreasonably refused employers’ offers to “right a wrong” include:

  • Burger v Alert Engine Parts (Pty) Ltd [1999] 1 BLLR 18 (LC) para 30
  • Fletcher v Elna Sewing Machine Centres Pty Ltd [2000] 3 BLLR 280 (LC) at para 43
  • La Vita v Boymans Clothiers (Pty) Ltd [2000] 10 BLLR 1179 (LC) at para 38
  • Maloba v Minaco Stone Germiston (Pty) Ltd [2000] 10 BLLR 1191 (LC) at para 42
  • Fourie v Iscor Ltd [2000] 11 BLLR 1269 (LC) para 10.7
  • Scholtz v Sacred Heart College [2001] 3 BLLR 368 (LC) paras 19-20
  • Technikon SA v Mojela & others [2003] 10 BLLR 1075 (LC) paras 22-24

Cases where it was found that employees had reasonably refused the employer’s offer include:

  • Scribante v Avgold Ltd (Hartebeesfontein Division) [2000] 11 BLLR 1342 (LC)
  • HM Liebowitz (Pty) Ltd t/a Auto Industrial Centre Group of Companies v Fernandes [2002] 4 BLLR 291 (LAC)