[8]
This matter raises the question of whether the Labour Court, or, an arbitrator in the case of arbitration
proceedings, has a discretion to refuse to award compensation to an employee whose dismissal it has found to be unfair by reason
of the fact that the employer has failed to prove that there was a fair reason for the dismissal and in respect of which it has found
that the employer did not follow a fair procedure. If the Court has such a discretion, the next question that this case raises is
that of what factors are relevant to the exercise of that discretion. This Court has not previously had occasion to pronounce on
this issue. The decision of this Court in Johnson and Johnson(Pty) Ltd v Chemical Workers Industrial Union (1999) 20 ILJ 89 (LAC) did not deal with such a case. It dealt with a case where the only reason why the dismissal had been found unfair was that the employer
had not followed any fair procedure in dismissing the employees. The same applies to the two other decisions of this Court referred
to in Page AJA’s judgement, namely, Lorentzen v Sanachem (Pty) Ltd (2000) 21 ILJ 1075 (LAC) and Alpha Plant & Services (Pty) Ltd v Simmonds & Others (2001) 22 ILJ 357 (LAC). The decisions of the Labour Court that are referred to in Page AJA’s judgement, namely Whall v Brandadd Marketing (Pty) Ltd (1999) 20 ILJ 1314 (LC), Auy der Hein v University of Cape Town (2000) 21 ILJ 178 (LC) and Scribante v Avgold Ltd (2000) 21 ILJ 1864 (LC), also dealt with the same type of case.
[9]
The question that arises in this matter is: under which subsection of s194 does a case fall where
the dismissal is unfair both because the employer has failed to prove a fair reason to dismiss related to the employee’s conduct
or capacity or based on the employer’s operational requirements and where no fair procedure was followed? Obviously such a
case does not fall under ss(1) because, for a case to fall under ss(1) the position must be that there is only one reason why the
dismissal is unfair and it must be that the employer did not follow a fair procedure. Where there are two or more reasons rendering
the dismissal unfair, ss(1) is not applicable. That is because of the use of the word “only” in the subsection.
[10]
Does such a case fall under ss (2) or ss(3) or both? I think that only a case where the dismissal is
an automatically unfair dismissal falls under ss (3) despite the fact that the reason for such dismissal also constitutes no fair
reason to dismiss. This is because a special category has been provided for such cases, namely, ss (3). Neither ss(1) nor ss(2) applies
to such a case. In my view a case such as this one, where the dismissal is unfair both because the employer has failed to prove the
existence of a fair reason to dismiss and because the employer has failed to follow a fair procedure falls under the provisions of
ss(2). The language used in ss(1) excludes a case where there are two or more reasons rendering the dismissal unfair. It also excludes
those cases where, although there is one reason why the dismissal is unfair, such reason is not the employer’s failure to follow
a fair procedure. There is no exclusion in ss(2) of a case where the absence of a fair reason to dismiss is not the only reason rendering
the dismissal unfair. This is, in my judgement, the significance of the absence of the word “only” in ss(2) which is
present in ss(1).
[11]
This matter was argued on the basis that the Court a quo had a discretion to refuse to award compensation.
I am prepared to deal with the matter on that basis, too. In passing I mention that it seems to me that it will be very difficult
to find a case where, after finding a dismissal to have been unfair both because there was no fair reason to dismiss the employee
and because the employer failed to follow a fair procedure, the Court or an arbitrator would nevertheless consider it appropriate
to exercise its discretion against awarding the employee compensation or reinstatement.
[12]
Subsections (1) and (2) of sec194 deal with different situations and there are fundamental differences
between the two subsections. The differences between the two subsections are the following:-
(a)
ss(1) deals with a case where the employer had a fair reason to dismiss but has failed to follow
a fair procedure whereas ss(2) deals with a case where the employer has no fair reason to dismiss; this means that in the case of
ss (1), if the reason for the dismissal is misconduct, the employee has been proved to be guilty of misconduct of sufficient seriousness
to justify his dismissal but the employer failed to follow a fair procedure, whereas, in the case of ss(2), where, for example, the
reason for dismissal was based on the employee’s alleged misconduct, it means that the employee is innocent of any misconduct
of so serious a nature as to justify his dismissal;
(b)
whereas ss(1) is limited to a case where the unfairness of the dismissal is due to the employer’s failure to follow a fair procedure,
ss(2) is not limited to cases where the unfairness relates only to the absence of a fair reason to dismiss;
(c)
whereas ss(1) is limited to cases where the unfairness is based on a single reason and it is the one specified therein, there is no
such limitation in ss(2);
(d)
whereas ss(1) specifies one formula that ensures that, if the Court or the arbitrator exercises its discretion in favour of awarding
compensation, the amount to be awarded is certain, this is not the case with ss(2).
(e)
in a ss(1) situation the remedy of reinstatement is not competent (see Mzeku & Others v Volkswagen SA (Pty) Ltd & Other 2001 (4) SA 1009 (LAC par 79 at 1037F) whereas in a ss(2) situation reinstalment is not only competent but it is the primary remedy (see s 193(2)) and Mzeku’s case,
supra, at paras 72 - 78;)
(f)
whereas ss(1) does not contain any express requirement that compensation awarded to an employee under it must be “just and equitable in all the circumstances”, ss(2) contains such a requirement;
(g)
whereas in ss(1) an express provision is made to the effect that compensation may not be awarded in respect of any unreasonable period
of delay that is caused by the employee in initiating or prosecuting a claim, there is no express provision to such effect in ss(2);
of course, this does not mean that under ss(2) an employee may be awarded compensation for an unreasonable period of delay caused
by him because, subject to the minimum prescribed in the subsection, the employee could be deprived of compensation for such period
on the basis that to award him compensation for such period would offend the requirement of the subsection that compensation must
be “ just and equitable in all the circumstances”.
[13]
In considering whether the factors relied upon by the appellant for its contention that the Court a quo
should have refused to award compensation are relevant and what weight, if any, should be given to them, the Court must, in my judgement,
consider the above fundamental differences between the two subsections and, make its decision on a full appreciation of their role
in ss(2). What may have been said in decisions dealing with ss(1) is of very limited assistance, if any, in making such a decision,
although, quite obviously, one cannot deal with any one of the three subsections without bearing the others in mind.
[14]
One of the grounds on which the appellant relies to contend that the Court a quo should have exercised
its discretion against awarding any compensation to the respondent is the duration of the respondent’s employment with the
appellant at the time of his dismissal. The respondent had been employed for about a year when he was dismissed. I think the appellant’s
point is that, if it appears that the compensation that must be awarded, if any is to be awarded, is a large amount, the Court must
bear in mind that the respondent had been in the appellant’s employ for a limited period and, should rather not be awarded
any compensation at all. Is the length of service relevant to such a question?
[15]
Although length of service may be relevant to a case where the only reason why the dismissal is unfair
is that the employer failed to follow a fair procedure, I can see no reason why it would be relevant in a case where there existed
no fair reason for the employer to dismiss the employee in the first place. The illogicality of the proposition in a case to which
ss(2) applies is obvious. To regard length of service as relevant would amount to letting the employer benefit from his own unacceptable
conduct because the employer would dismiss the employee for no fair reason before he can acquire a long service that may be taken
into account to the employer’s prejudice if the employee is dismissed later rather than sooner. In a case where the dismissal
is unfair only because the employer did not follow a fair procedure, one is dealing with an employee who did not deserve to continue
in the employ of the employer in any event because there was a fair reason to dismiss such a employee and the employer only got the
procedure wrong whereas in a ss(2) case one is dealing with an employee who should not have been dismissed in the first place and
who should have been allowed to continue in the employer’s employ. I therefore conclude that in this case the respondent’s
length of service was irrelevant and the Court a quo was correct in not taking it into account.
[16]
Another ground on which the appellant relied for its contention that the Court a quo should have refused
to award compensation is that the respondent obtained alternative employment within two months of dismissal which means that he was
unemployed only for two months. It is this contention that raises the question of the relevance of patrimonial loss to the question
whether the Court a quo should have refused to award compensation.
[17]
Page AJA expresses the view that the reasoning which has led the Labour Court and this Court to the conclusions
that they have reached in the decisions he refers to “is helpful in determining the circumstances under which the Court should exercise its discretion in favour of, or against,
awarding compensation”. I am unable to agree with this view - at least not without qualification. As I have already said, those decisions relate to ss(1)
situations and not ss(2) situations and, for that reason, the reasoning in those decisions is, in my view, of very limited assistance,
if any.
[18]
The view is also expressed that “ the ruling by this Court that patrimonial loss is irrelevant to the exercise of this Court’s discretion has enjoyed almost general acceptance
and has never been reversed”. It is also suggested that that ruling “ remains binding on this Court unless it is shown to be clearly wrong which has not even been contended by the appellant”. I am also unable to share the view that the ruling of this Court in Johnson and Johnson that patrimonial loss is irrelevant to the exercise of the discretion to award or not to award compensation is binding on this Court
in this matter before us. In Johnson and Johnson this Court was dealing with a ss(1) situation whereas in the case before us ss(1) has no application. I have been unable to find
any decisions where this Court has made a ruling on the relevance or otherwise of patrimonial loss in a ss(2) situation. Obviously,
in dealing with a ss(2) situation, one cannot disregard the provisions of ss(1) altogether but that is very different from saying
that a ruling made in relation to ss(1) is binding on us when we deal with a ss(2) situation.
[19]
It has also been said that, although the ruling that patrimonial loss is irrelevant to the exercise of
the discretion whether or not to award compensation was enunciated with reference to procedural unfairness as contemplated by s194(1), “it must apply a fortiori to substantive unfairness contemplated in s 194(2) which incorporates the minimum criterion laid down by ss(1)”. As already indicated, I am unable to share this view. In my view the question whether or not patrimonial loss is relevant to the
exercise of the discretion to award or not to award compensation in a ss(2) situation cannot be decided on the basis of the provisions
of ss(1) and the decisions of courts relating to that subsection with little or no regard being had to the provisions of ss(2). Indeed,
the provisions of ss(2) are pivotal to such a decision, particularly in the light of the fundamental differences that exist between
the two subsections as already shown above.
[20]
I have previously had occasion, sitting in the Labour Court, to deal with the provisions of s194(1),(2)
and (3) extensively. This was in Adams & Others v Coin Security Group (Pty) Ltd (1999) 20 ILJ 1192 (LC) at paras 91 (p 1218) to 100 (p 1220), in particular at paras 94 to 100. The main concern about s194(1) is that the only discretion
that the Court has is whether to award or not to award compensation and that, if it exercises its discretion in favour of awarding
compensation, it has no power to determine the amount but must award the amount of compensation that the statutory formula dictates
should be awarded to the employee even if such amount is much higher than the employee’s actual loss or is much higher than
the amount that the Court would have considered just and equitable to award in the particular circumstances.
[21]
In dealing with the question of the discretion whether to award or not to award compensation in a ss(2)
situation, three scenarios are contemplated in ss(2). The first scenario is where the period that has lapsed from the date of dismissal
to the last day of the hearing is less than 12 months e.g. if it is one month. In such a case the minimum compensation that is awardable
to the employee is one month’s remuneration and the maximum awardable is 12 months remuneration. If, in such a case, the employee
seeks the minimum compensation or if the Court is seeking to award the minimum compensation, the requirement in ss(2) that compensation
that is awarded must be “ just and equitable in all the circumstances” is of no relevance because a lesser amount than that cannot be awarded.
[22]
The second scenario is where the period from the date of dismissal to the last day of the hearing is
less than 12 months and the compensation claimed or sought to be awarded is above the minimum but less than the maximum. In such
a case it seems to me that patrimonial loss is relevant because, if no patrimonial loss was suffered, an award of compensation exceeding
the minimum may offend the requirement of the subsection that compensation awarded must be “just and equitable in all the circumstances”. This does not necessarily mean that the absence of patrimonial loss would operate as a bar to the Court awarding compensation exceeding
the minimum. Indeed, there may well be circumstances which satisfy the Court that, despite the absence of patrimonial loss, it would
be “just and equitable in all the circumstances” for the Court to award the employee compensation that goes beyond the minimum - even upto the maximum.
[23]
The third scenario is where the period that has lapsed from the date of dismissal to the last day of
hearing is 12 months or more. In such a case the only compensation that can be awarded, if compensation is awarded, constitutes both
the minimum and the maximum. In that case, which is the same as the case before us, the application of ss(2) will produce the same
result, namely, the same amount of compensation. Whether one regards that amount of compensation as the minimum or as the maximum
makes no difference. In that case patrimonial loss is irrelevant. In the light of all this I conclude that, on the facts of this
case, the fact that the respondent only suffered loss of income of two months is irrelevant. The appellant’s contention that
the Court a quo should have taken this into account falls to be rejected.
[24]
The appellant also contended that the Court a quo should have taken into account the fact that attempts
to resolve the dispute had taken more than 12 months. This contention was not directed at blaming the delay on the respondent. That
being the case, I can see no reason why it can be said that the delay should operate so as to prejudice the respondent only. The
appellant also contended that the Court a quo should have taken into account that there was no suitable post available for the respondent
and, as a result, the appellant could not offer the respondent reinstatement if it sought to avoid the payment of the amount of R180
000,00. This contention is inconsistent with the finding of the Court a quo that the appellant had no fair reason to dismiss the
respondent. If the Court a quo had been satisfied that the appellant had no suitable post in which it could have continued to employ
the respondent, it would not have held that the appellant had failed to show the existence of a fair reason to dismiss the respondent.
As the correctness of this finding of the Court a quo was not challenged on appeal, the appeal must be decided on the basis that
the appellant had no fair reason to dismiss the respondent and that the respondent could have continued in the appellant’s
employ.
[25]
The appellant also referred to the fact that it made the tender of R75 000,00 to the respondent at the
commencement of the trial in the Court a quo. In this regard the appellant made two submissions. The one was that such amount was
more than adequate compensation not only for the patrimonial loss suffered by the respondent but also as a solatium for whatever
injury the respondent may have suffered. The second was that in refusing such “tender”, the respondent acted so unreasonably that the Court should have refused to award him any compensation. As I have found that, on the
facts of this matter, patrimonial loss was irrelevant, the fact that the amount of the “tender” was more than the patrimonial loss suffered by the respondent is also irrelevant and could not have been relied upon by the Court
a quo to refuse to award the respondent compensation.
[26]
I also do not agree that the respondent acted unreasonably in rejecting the so called “tender”
of R75 000,00. In the first place the appellant had had no fair reason to dismiss the respondent. In any event by its very conduct
of offering the respondent some money, the appellant was, in my view, intimating both to the respondent and the Court a quo that
it did not think that this was a case where the respondent deserved no compensation at all. If the position (which the appellant
seems by its conduct to have shared) was that the respondent did deserve compensation, then, on the facts of this matter, the amount
he was entitled to was R180 000,00. Neither less nor more. If he had sufficient confidence in his case, as he obviously had, he was
entitled in those circumstances to reject the so - called “tender” and pursue his claim in court. In these circumstances
I agree with the order made by Page AJA that the appeal be dismissed with costs.
RMM Zondo
Judge President
I agree.
C.R. Nicholson
Judge of Appeal
Appearance:
For Appellant:
Adv. M. Pillemer SC
Instructed by:
Sheptone & Wylie Attorneys
For Respondent:
Adv. M.J.D. Wallis SC
Instructed by:
Deneys Reitz Attorneys Inc
Date of Judgement:
1 February 2002
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