Employment law update

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg. 

Must discipline be consistently applied?

While there is a general rule that discipline must be consistently applied, the Labour Appeal Court (per Waglay JP, Ndlovu JA and Coppin AJA) held in ABSA Bank Ltd v Naidu [2015] 1 BLLR 1 (LAC) that the mere fact that another employee was previously not dismissed for similar misconduct did not mean that the employer condoned such behaviour and that it would be unfair to dismiss another employee for similar misconduct.

In this case, Naidu was an investment banker at ABSA and was dismissed after switching funds from one portfolio to another without the client’s knowledge or consent. She had tried to obtain consent from the client to move his funds to another fund but allegedly could not get hold of him because he was out of the country. She nevertheless switched his investment from the Money Market to the Property Market as she thought it would be in his best interest to do so. In order to do this, she relied on the client’s signature from a previous switch form. This was done in violation of ABSA’s Rules and Codes of Conduct and was in breach of Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS) legislation. Naidu later informed her employer that she had done this and was dismissed following a disciplinary inquiry into her misconduct.

After an internal appeal was dismissed, Naidu referred an unfair dismissal claim to the Commission for Conciliation, Mediation and Arbitration (CCMA) alleging that her dismissal was substantively unfair as another employee had previously committed similar misconduct but received a final warning. The outcome at the CCMA was that the dismissal was substantively unfair and reinstatement was ordered. According to the CCMA commissioner, the sanction of dismissal was too harsh in the circumstances, especially when regard was had to the following factors –
• ABSA had previously not dismissed an employee for similar misconduct and thus had demonstrated that not all transgressions of this nature are dismissable; 
• Naidu had 20 years’ service with ABSA; 
• Naidu had thought that she was acting in the best interest of the client and ABSA; 
• she did not gain personally from her actions; and 
• she seemed remorseful and thus it was unlikely that Naidu would commit similar misconduct again. 

Furthermore, Naidu had actually come clean about her actions and raised the issue before ABSA found out about it. The CCMA commissioner concluded that the act of dishonesty and breach of FAIS legislation was not sufficient to warrant dismissal. 

On review the Labour Court dismissed the review application on the basis that the dismissal was substantively unfair as another employee had received a final written warning for similar misconduct and thus that the commissioner’s award was reasonable in the circumstances.

ABSA then appealed to the Labour Appeal Court (LAC). At the LAC Naidu argued that ABSA did not apply the parity principle as another employee who had committed similar misconduct was not dismissed and thus Naidu’s dismissal was substantively unfair. Ndlovu JA considered the parity principle and found that the concept of parity requires fairness and equality before the law. This requires like cases to be treated alike. Ndlovu JA, however, found that the parity principle must be applied with caution and the fact that another employee was not dismissed for similar misconduct did not mean that the employer condoned dishonesty. It would not make sense for an employee who commits serious misconduct to get off lightly because a previous employee was not dismissed because of a technicality or differing views of presiding officers. Thus, there needs to be a degree of flexibility so that discretion can be exercised in each case. 

Ndlovu JA concluded that there was no justification to condone Naidu’s conduct based on one single instance of misconduct by another employee. Furthermore, Ndlovu JA was of the view that the cases were not exactly alike as the other employee’s case did not involve a financial transaction but a quotation. In addition, the other employee had committed the act in the spur of the moment while it seemed that Naidu had had time to reflect on the potential gravity of her actions and her conduct was premeditated. Thus, these two cases were not identical. Furthermore, they were presided over by different chairpersons. The LAC held that while the issue of parity is an important factor, it is only one factor and is not decisive. One still needs to consider all the facts of the case.

A mitigating factor that was considered was that Naidu’s conduct was not for personal gain but in the best interest of the client. However, Ndlovu JA was of the view that this was not entirely true as prior to this event, Naidu had given the client some bad financial advice and there was a threat that she would be held personally liable for a previous loss of R 40 000. Thus, the switch was probably motivated by a desire to recoup the perceived financial loss. Another mitigating factor that the LAC considered was Naidu’s alleged remorse. The LAC considered the fact that she did not take responsibility for her actions in the internal appeal and was accordingly of the view that the remorse she subsequently showed was not true remorse. It was held further, that even if there had been genuine remorse, this did not constitute an absolute immunity to the sanction of dismissal as remorse is merely one factor to be taken into account. 

The LAC held that there are varying degrees of dishonesty and thus each case must be decided on its own facts. Whether the dishonesty in a particular case was gross or not depended on the impact it had on the employer’s business. Naidu’s conduct severely affected the business and ABSA’s reputation. She also occupied a senior position and was involved in significant transactions where a high level of trust was placed in her. 
It was held that the trust relationship was irreparably broken down and the remorse, whether genuine or not, was not likely to restore the trust relationship. In the circumstances, the LAC held that the commissioner did not reach a decision that a reasonable decision maker could make and the appeal was upheld.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

Joinder v Jurisdiction

National Union of Metalworkers of South Africa v Intervalve (Pty) Ltd and Others (CC) (unreported case no CCT 72/14, 12-12-2014) (Cameron J) 

Can an employee who alleges his dismissal was automatically unfair, join another employer, which had not been cited in the initial referral to the Conciliation, Mediation and Arbitration (CCMA) or bargaining council, nor was a part of the conciliation process; to proceedings at the Labour Court?

This was the question before the Constitutional Court.

204 National Union of Metalworkers of South Africa (Numsa) members were dismissed for allegedly participating in an unprotected strike. Acting on behalf of its members, Numsa referred a dismissal dispute to the bargaining council citing the third respondent (Steinmüller Africa (Pty) Ltd) as the employer. At conciliation the representatives of Steinmüller disputed that it was the employer of all 204 employees. The matter remained unresolved and a certificate of non-resolution was issued.

Three months after their members were dismissed Numsa referred a second dismissal dispute, together with condonation, on behalf of the same members but this time cited Steinmüller, alternatively Intervalve (Pty) Ltd, alternatively BHR Piping Systems (Pty) Ltd as the employer. The bargaining council refused condonation.

On the strength of the certificate of outcome (consequential to the initial referral), Numsa filed a statement of claim at the Labour Court and then made an application, in terms of r 22 of the Labour Court Rules, to join Intervalve and BHR as employers.

It was not disputed that Steinmüller, Intervalve and BHR were subsidiaries of the same holding company, had common directors and shareholders, operated from the same site and shared a common human resources service and legal representative.

Litigation

The Labour Court, in National Union of Metalworkers of South Africa obo its Members v Steinmüller Africa (Pty) Ltd and Others [2012] 7 BLLR 733 (LC), as per Steenkamp J, granted joinder having found that Intervalve and BHR had a substantial as well as a sufficient legal interest in the subject matter of proceedings. The court held that the rule permitting joinder would serve little purpose if Numsa was required to refer disputes against the individual employers and then later consolidate proceedings at court.

LAC

On appeal in Intervalve (Pty) Ltd and Another v National Union of Metalworkers of South Africa obo Members (LAC) (unreported case no JA 24/2012, 26-3-2014) Waglay JP (with Francis AJA and Dlodlo AJA concurring) held that s 191(5) of the Labour Relations Act 66 of 1995 imposes, as a jurisdictional precondition, that an employee refer a dispute to conciliation before such dispute can be adjudicated by the Labour Court. In this case the court a quo did not have jurisdiction to hear any claim against BHP or Intervalve because no dispute had been conciliated wherein either of these two entities were cited as the employer. The Labour Appeal Court (LAC) went onto say that ‘the discretion to join parties to proceedings cannot trump the clear jurisdictional requirements of the LRA’.

The Constitutional Court

In the majority judgment penned by Cameron J (Mogoeng CJ, Moseneke DCJ, Khampepe J, Leeuw AJ and Zondo J concurring), the court began by confirming the legal position, (as held in the majority decision in National Union of Metalworkers of South Africa and Others v Driveline Technologies (Pty) Ltd and Another 2000 (4) SA 645 (LAC)), that as a jurisdictional precondition to the Labour Court adjudicating an unfair dismissal dispute, was that the dispute must first be referred to conciliation and either a certificate of non-resolution be issued or a 30 day lapse from when the dispute was referred.

Having arrived at this conclusion the next question was whether it could be argued that by sending the referral to the shared human resources department, the referral to conciliation against Steinmüller encompassed both Intervalve and BHR.

In answering this question the court turned its attention to s 191 of the LRA, in particular s 191(3) which stipulates that when an employee refers a dispute for conciliation, the employee must satisfy the CCMA or bargaining council that a copy of the referral has been served on the employer.

Was this statutory requirement fulfilled?

When dealing with an issue of this nature a court will firstly ascertain, among other things, the purpose for the statutory requirement and then examine whether such purpose has been fulfilled – in casu whether the referral against Steinmüller to the shared human resources services, fulfilled the requirement of s 191(3) in respect of Intervalve and BHP.
Applying this principle and dealing firstly with the purpose of s 191(3), the court held:

‘The objective cannot be just to let the employer know that a dispute, related to the dispute that affects it, is being conciliated.  It must be to put each employer party individually on notice that it may be liable to legal consequences if the dispute involving it is not effectively conciliated. Those consequences may be severe.  They may include enterprise-threatening implications: trial proceedings, reinstatement orders, back pay and costs orders.  So the notice must be directly targeted.’

The next question was whether this purpose had been fulfilled. The court’s view can be gleaned from the following extract of the judgment:

‘So the purpose of the statutory provision – to tell those on the line that the impending legal process might make them liable to adverse consequences – was not fulfilled.  That the three companies’ shared HR services, and the companies’ attorney, knew about the referral against Steinmüller did not mean that they knew, or should have concluded, that the dispute against Intervalve and BHR had also been referred for conciliation.  On the contrary, the referral against Steinmüller alone told them the opposite.  Intervalve and BHR were left out.  The ensuing legal process did not encompass them.’

The appeal was dismissed with no order as to costs.

In a dissenting judgment by Nkabinde J (Froneman J, Jafta J, Madlanga J and Van der Westhuizen J concurring), the minority agreed with the importance of conciliation but differed in regard to whether there had been substantial compliance with s 191.

Relevant to the matter were the following factors; all the employees were collectively dismissed over the same strike action by the three entities shared human resources services and received identical dismissal letters, a representative from the shared human resources services and the same attorney representing all three entities both attended the conciliation, the conciliated dispute involved Intervalve and BHR.

When interpreting these factors purposively (having regard to the primary purpose to the LRA, the constitutional right to fair labour practice (s 23), the right to have a dispute resolved by a court or tribunal (34) and the s 39(2) of the Bill of Rights, which obliges a court to interpret legislation having regard to the spirit and purpose of that legislation); the minority found that there had been substantial compliance with s 191.

Nkabinde J held:
‘I agree that conciliation requires the referral of a dispute and that parties to the dispute should be granted the opportunity to represent themselves.  Driveline confirms this position when it distils the components of a dispute.  The facts of this case are in conformity with this position.  Intervalve and BHR rely on the lack of initial service and their citation.  However, the three companies must have been aware of the dispute.  I find it difficult to maintain that with the shared HR services and legal representation, Intervalve and BHR were unaware of the referred dispute.  The three companies’ argument regarding non-service is a technical one based on the formal requirement to cite and serve employer companies with the referral form.  This, in my view, elevates form over substance.’

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