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THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not reportable

Case no: JR2079/2016

 

MPACT OPERATIONS (PTY) LTD t/a MPACT PLASTICS WADEVILLE	Applicant
and
METAL AND ENGINEERING BARGAINING COUNCIL	First Respondent

D MANZANA N.O                                                                                Second Respondent

SOUTH AFRICAN CHEMICAL WORKERS UNION                               Third Respondent

SUZANNA BOWES                                                                              Fourth Respondent

Heard: 7 November 2018  

Delivered: 12 December 2018

Summary: Review application. Reinstatement inappropriate where employee committed acts of gross dishonesty.

JUDGMENT

PRINSLOO, J

Introduction

[1] The Applicant seeks to review and set aside an arbitration award issued on 30 April 2017 wherein the Second Respondent (the arbitrator) found the Fourth Respondent’s (the employee) dismissal substantively unfair and ordered her reinstatement. The reinstatement was not retrospective and the employee was to be issued with a final written warning valid for twelve months.

[2] The Third and Fourth Respondents (collectively referred to as the Respondents) filed a notice to oppose the review application, but did not file an answering affidavit. In the heads of argument filed on behalf of the Respondents, it was explained that the answering affidavit was not filed because of internal conflict within the South African Chemical Workers Union (SACWU) which led to the withdrawal of instructions to the Respondents’ attorneys. The Respondents filed heads of argument and instructed counsel to argue the matter in Court.

Background facts

[3] The Applicant employed the employee as a laboratory technician since May 1994. The employee was responsible, inter alia, to conduct a series of quality tests of closures (caps for bottles etc). During February 2016, a SABS audit was conducted and one of the findings of the audit was that the results of removal torque tests on a specific closure were not available in respect of the night shift of 3 February 2016. The employee was the night shift technician on 3 February 2016 and she was requested to enter the results of 3 February 2016. She entered the results, but it was later discovered that the results the employee entered did not match the type of closure that was tested on 3 February 2016, but were in fact results obtained by another lab technician on a different date. The employee was charged with four counts of misconduct and she was dismissed in March 2016 after being found guilty of the following charges of misconduct:

‘1. Gross negligence in performing duties of handling company property or equipment (where harm is caused to the company as a result) in that on 4 February 2016 where SABS audit (Ozayr Moosa) requested the line 1 blue closures, night shift removal torque test results as per CM-QA-Spec 002 document, the results were not available, which resulted in a major non-conformance (finding) in the ISO 9001:2008 rectification audit;

2. Fraud in that the employee falsified evidence for removal torque on 3 February 2016;

3. False evidence (deliberately giving untrue, erroneous or misleading information or testimony whether orally or in writing);

4. Dishonesty (any form of dishonest conduct which irreparable damages the trust relationship) by being dishonest about doing removal torque to the employee’s superior. ‘

[4] In summary, the charges the employee was dismissed for were a charge of having failed to perform certain quality tests on closures (bottle caps) amounting to gross negligence and charges relating to dishonesty, inclusive of fraud and the falsification of the records of the quality tests she had failed to perform. 

[5] The Respondents subsequently referred an unfair dismissal dispute to the First Respondent and the dispute was arbitrated on 6 April 2017.

The arbitration proceedings and the findings:

[6] The issue to be decided by the arbitrator was whether the employee’s dismissal was fair. The arbitrator found her dismissal procedurally fair and the Applicant took no issue with that and the findings on procedural fairness require no further consideration as it is not subject to review.

[7] The issue of substantive fairness was challenged on the ground that the employee did not breach the rules and even if there was a breach, the Applicant suffered no harm and the sanction of dismissal was too harsh. It is evident from this that the arbitrator had to consider firstly whether the employee committed the misconduct she was dismissed for and secondly, whether the sanction of dismissal was appropriate.

[8] The evidence adduced was that the employee was the laboratory technician in charge on 3 February 2016 and the machines were properly operating on the said date. The employee was responsible to do torque tests and to submit the results, but she failed to do so. The Applicant’s case was that when the auditor requested the results of 3 February 2016, the employee fraudulently submitted the results of 18 January 2016, as she had not done the tests on 3 February 2016. According to the production plan, the colour for 3 February 2016 was white and instead of white], the employee submitted blue closure results. The employee did not conduct the test on 3 February 2016 and captured the results of 18 January 2016 as if they were the results of 3 February 2016.

[9] The employee’s case was that she indeed conducted the tests as required on 3 February 2016 but she failed to record them due to her workload. She disputed the Applicant’s version that she used the test results of 18 January 2016 as if they were the results of 3 February 2016.

[10] In her analysis of the evidence, the arbitrator considered the provisions of Schedule 8 of the Code of Good Practice on Dismissals and found that the employee knew the rules relating to testing as it is part of her job requirements and that the rules were valid and reasonable to promote and protect the Applicant’s business.

[11] The arbitrator considered the two versions presented. On the one hand the Applicant’s version is that the employee was not only grossly negligent when she failed to produce the test results of 3 February 2016, but that she was also dishonest as she submitted falsified results to mislead her supervisor. On the other hand the employee’s version was that she was unable to record the results of 3 February 2016 on time due to her workload and she disputed that she submitted the results of 18 January 2016 as if they were the results of 3 February 2016.

[12] The arbitrator concluded that, based on the evidence presented, the Applicant had proved on a balance of probabilities that the employee did not conduct the tests on 3 February 2016, that she was previously warned about her failure to conduct the tests and that she had breached the rules.

[13] In my view it follows that if the employee did not conduct the tests on 3 February 2016, she could not produce the actual results and the results she entered, had to be false and she was indeed dishonest when she submitted results as if she had indeed conducted the tests. This is in my view, the reason why the arbitrator held that the employee was guilty of gross negligence, fraud, dishonesty and submitting false evidence, which charges were interlinked.

[14] Having found that the employee was guilty of the misconduct she was dismissed for, the only remaining issue to be decided by the arbitrator was the issue of sanction. The employee challenged the sanction of dismissal as being a sanction too harsh.

[15] As a general observation, the arbitrator recorded that the Code of Good Practice promotes progressive discipline, but also recognises that some offences warrant dismissal at first instance, but each case has to be decided on its own merits.

[16] In considering the issue of sanction, the arbitrator held that the Applicant did not lead evidence to prove that dismissal was an appropriate sanction in terms of its disciplinary code or to show that the misconduct has destroyed the trust between the parties. The arbitrator considered the fact that the employee had long service with the Applicant, that the Applicant has not suffered financial harm in the form of losing customers or financial claims from customers.

[17] The arbitrator concluded that absent evidence to prove that dismissal was appropriate in terms of the disciplinary code, that misconduct destroyed the prospects of a continued employment relationship and that the employee could not be trusted, the Applicant has failed to prove that dismissal was an appropriate sanction and the employee was reinstated.

The grounds for review

[18] This review application is directed against the arbitrator’s finding on the appropriateness of the sanction.

[19] I have to deal with the merits of the review application within the context of the test that this Court must apply in deciding whether the arbitrator's decision is reviewable. The test has been set out in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others[1] as whether the decision reached by the commissioner is one that a reasonable decision maker could not reach. The Constitutional Court very clearly held that the arbitrator's conclusion must fall within a range of decisions that a reasonable decision maker could make.

[20] The test is thus whether the decision reached by the arbitrator is one that a reasonable decision maker could have reached based on the material and evidence placed before him or her during the arbitration proceedings.

[21] The Applicant’s complaint in respect of the arbitrator’s finding on sanction, is that the arbitrator failed to consider and appreciate the seriousness of the employee’s misconduct. The employee was guilty of gross negligence as well as dishonesty, inclusive of fraud and the falsification of the records. This obviated the need for an enquiry into the appropriateness of the relief, as the employee’s dispute should have been dismissed on account of her dismissal being fair.

[22] The arbitrator found the sanction of dismissal inappropriate for the following reasons: no evidence was adduced to prove that dismissal was appropriate in terms of the disciplinary code, no evidence was presented to show that the employee’s misconduct destroyed the trust relationship, the employee had long service and the Applicant suffered no financial harm.

[23] These findings are at the centre of this application and the Applicant’s case is that the arbitrator, in making these findings, failed to apply her mind to the evidence before her.

[24] The Applicant’s case is that the arbitrator’s finding that no evidence was led on the trust relationship, is indicative of the arbitrator’s failure to consider the evidence that was before her. The arbitrator committed a gross irregularity by failing to consider the gravity of the misconduct.

[25] In my view there is merit in the Applicant’s ground for review.

[26] The evidence presented by the Applicant during the arbitration proceedings was that it was standard practice to conduct the tests and to record the results, from which a report is compiled. This serves as the Applicant’s defence in the event of a customer complaint or claim in respect of a specific closure and it is thus a crucial requirement in the Applicant’s business operations. A substantial claim was once received from a customer in respect of a closure complaint and the absence of the records puts the Applicant at risk for claims.

[27] Furthermore, the test results are also required to enable the Applicant to obtain an ISO certificate following a SABS audit. Many customers insist on an ISO certificate before buying the Applicant’s products and without the correct test results, such certificate would not be awarded to the Applicant.

[28] It was undisputed that the employee knew that she had to conduct the tests and that she was previously warned to do the tests. Notwithstanding the employee’s knowledge and the previous warning, she did not do the tests on 3 February 2016 and instead entered the test results of a test conducted at another date to mislead the Applicant into believing that the tests were conducted.

[29] The minutes of the disciplinary hearing was evidence before the arbitrator and in terms of those it is evident that the Applicant’s case was that when the employee was caught out for not doing her job, she had to come clean and admit that she had not done the testing, but instead she provided incorrect and false information, whilst insisting that it was correct and insisting that she had conducted the test, when she had not done so. The employee deliberately undermined the Applicant’s systems and continued to do so after it was discovered and because of that the trust relationship has deteriorated to the extent that it could not be repaired. The employee’s length of service was an aggravating rather than a mitigating factor.

[30] Even if there was no specific evidence about the effect of the employee’s misconduct on the trust relationship, the seriousness of the misconduct and the employee’s attempt to mislead her employer by submitting falsified records, is in itself indicative of the fact that the trust relationship had been destroyed. Throughout the arbitration proceedings the employee maintained that she performed the tests on 3 February 2016. The arbitrator found that the employee did not conduct the tests on 3 February 2016, thus the arbitrator found, by implication, that the employee lied about her version of events. Yet, the arbitrator did not consider the employee’s dishonesty at all when determining the appropriateness of the sanction. The arbitrator’s failure to do so had a distorting effect on her consideration of the sanction and renders the award liable to be set aside.

[31] The arbitrator attached far too much weight to the fact that no evidence was adduced to show that dismissal was the appropriate sanction in terms of the Applicant’s disciplinary code. The Code of Good Practice provides that dismissal may be appropriate for a first offence where the misconduct is serious and of such gravity that it makes a continued employment relationship intolerable, for instance in the case of gross dishonesty.

[32] The dishonest conduct of the employee served to destroy the trust relationship, without the necessity for the Applicant to lead specific evidence pertaining to a breakdown in the trust relationship[2].

[33] In ABSA Bank Ltd v Naidu and Others[3] the Labour Appeal Court (LAC) has held that:

‘On the issue of the breakdown in the trust relationship occasioned by an employee's dishonest misconduct, this court (per Davis JA) in Shoprite Checkers (Pty) Ltd v CCMA & others, stated the following:

'[T]his court has consistently followed an approach, laid out early in the jurisprudence of the Labour Court in Standard Bank SA Ltd v CCMA & others (1998) 19 ILJ 903 (LC); [1998] 6 BLLR 622 (LC) at paras 38-41 where Tip AJ said:

"It was one of the fundamentals of the employment relationship that the employer should be able to place trust in the employee. … A breach of this trust in the form of conduct involving dishonesty is one that goes to the heart of the employment relationship and is destructive of it."'

I am satisfied that, on the basis of her dishonest and fraudulent misbehaviour in relation to Mr Khan's matter, Ms Naidu's trust relationship with the appellant was, indeed, irreparably broken down. In my view, any plea of remorse, genuine or otherwise, was, in the circumstances of this case, most unlikely to bring back that trust, which was the cornerstone of her employment relationship with the appellant.’

[34] In Toyota SA Motors (Pty) Ltd v Radebe and Others[4] the Constitutional Court considered a case where an employee was dismissed for fraudulent and dishonest conduct and was reinstated by an arbitrator and held that:

‘Where an employer has dismissed an employee for such indefensible misconduct and the commissioner accepts that the employee is guilty of such misconduct but nevertheless concludes that the employer acted unfairly in dismissing such employee (and such finding is not based on procedural grounds) then, in my judgment, the inference is irresistible that the commissioner completely misconceived his functions. Otherwise his conclusion is completely inexplicable. When a commissioner has misconceived his functions in that way, it can be said that the unsuccessful party has not been afforded a fair hearing and that, therefore, a gross irregularity has been committed justifying the reviewing and setting aside of the commissioner's award.’

[35] The Constitutional Court in Sidumo[5] has set out the factors to be considered in determining the fairness of the sanction. Those are as follows:

‘In approaching the dismissal dispute impartially a commissioner will take into account the totality of circumstances. He or she will necessarily take into account the importance of the rule that had been breached. The commissioner must of course consider the reason the employer imposed the sanction of dismissal, as he or she must take into account the basis of the employee's challenge to the dismissal.  There are other factors that will require consideration. For example, the harm caused by the employee's conduct, whether additional training and instruction may result in the employee not repeating the misconduct, the effect of dismissal on the employee and his or her long-service record. This is not an exhaustive list. 

To sum up. In terms of the LRA, a commissioner has to determine whether a dismissal is fair or not. A commissioner is not given the power to consider afresh what he or she would do, but simply to decide whether what the employer did was fair. In arriving at a decision a commissioner is not required to defer to the decision of the employer. What is required is that he or she must consider all relevant circumstances.’

[36] A consideration of these factors is glaringly absent from the arbitration award.

[37] It is evident that the arbitrator dismally failed to consider any of the factors as set out in Sidumo and she equally failed to consider all the relevant circumstances to decide whether dismissal was an appropriate and fair sanction.

[38] Had the arbitrator considered the factors she was supposed to consider, the only reasonable conclusion that she could have arrived at was that the employee committed acts of gross dishonesty and therefore dismissal was an appropriate sanction. Reinstatement should not have entered the mind of the arbitrator on the facts placed before her.

[39] The arbitrator’s reliance on the fact that the Applicant had not suffered an actual loss is misplaced.

[40] The issue was rather whether the Applicant could reasonably be expected to employ a dishonest person. This was a factor to be considered by the arbitrator in deciding the appropriate relief and in applying section 193 of the Labour Relations Act[6] (LRA), which she ignored and failed to consider at all.

[41] In view of the evidence that was placed before the arbitrator and the applicable principles, the arbitrator’s decision that the sanction of dismissal was not appropriate, is not a decision that a reasonable decision maker could have reached.

[42] Accordingly, the arbitrator's award did not, in my view, constitute a decision which fell within the range of decisions which a reasonable decision maker could have made, given the material presented to her. Hence, the award falls to be set aside and replaced with an order that the employee’s dismissal was both substantively and procedurally fair.

Costs

[43] The Court has a broad discretion to make orders for costs according to the requirements of the law and fairness.

[44] In my view this is a matter where the interest of justice would be best served by making no order as to costs.

[45] In the premises I make the following order:

Order:

1. The arbitration award issued on 30 April 2017 under case number GAEK 2997-16 is reviewed and set aside;

2. The arbitration award is substituted with an order that the Fourth Respondent’s dismissal was procedurally and substantively fair; 

3. There is no order as to costs.

Connie Prinsloo

Judge of the Labour Court of South Africa

Appearances:

For the Applicant:                                        Advocate R Itzkin

Instructed by:                                              Thomson Wilks Inc Attorneys

For the Third and Fourth Respondents: Advocate Mosala

Instructed by:                                         Matlatle Attorneys 

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