Labour Arbitration Hearings – Fundamental Principles

Labour Arbitration Hearings – Fundamental Principles

The CCMA has been a part of the employment law landscape for approximately twenty three years and, as are Bargaining Councils, it is tasked with the adjudication of many employment disputes if and when conciliation fails, the vast majority of which are related to alleged unfair dismissal.  Approximately eighty percent of all labour disputes are resolved by way of conciliation, with the majority of unresolved labour disputes being referred to arbitration.

Arbitration hearings are conducted around the country on a daily basis in a growing number of CCMA offices countrywide.  It’s a win/lose process.

As much as labour arbitration is not conducted with quite the same degree of legality as is the case in Magistrate and High Courts, users will tell you that it is still a process which requires a keen understanding of such subjects as the law of evidence, the burden of proof, and even protocols, to a degree.  This has been the experience of our firm in representing parties in arbitration across the country, over many years.

Certain basic principles must be fully understood.

To begin with, arbitration cases are hearings de novo.  This means that the arbitration hearing hears the case afresh, and is not a review of the employer’s original decision.  Employers are not required to ensure that dismissal decisions are perfect, but they must be fair and reasonable.

Arbitrators are entitled to conduct arbitration hearings “in a manner that the Commissioner considers appropriate in order to determine the dispute fairly and quickly”.  As such, commissioners may, for example, depart from the normal rules of evidence (such as the admission of hearsay evidence).

In practice, Commissioners vary markedly in style; some will say very little, whilst others will assume a far more inquisitorial role.

Cases must be proved on the balance of probabilities which, put simply, means that it must be proved that the employee is probably guilty, versus the burden of proof in a criminal court, which is proof beyond reasonable doubt.  This means that the brden of proof in disciplinary an arbitration hearings is less than that in criminal cases.  Anotehr way to describe the burden of proof in disciplinary and arbitration hearings is that the probabilities that the employee is guilty must be grater than the probabilities that the employee is not guilty

The relationship between proof and evidence must be grasped.  Cases are proved utilising evidence such as eye witnesses, documents, photographs and CCTV footage.  Add to this the so-called argument (persuasive closing summary statements and submissions), and the ‘proof’ (evidence and argument) is complete.

All cases are, at least potentially, assessed on the basis of two types of fairness.  To begin with, the employer must prove that an employee was dismissed in a procedurally fair manner.  In short, this obligates the employer to comply, at the very least, with the Labour Relations Act’s Code of Good Practice: Misconduct & Incapacity (LRA Schedule 8), or the employer’ disciplinary procedure and code where applicable.

This includes granting the employee sufficient time to prepare for a disciplinary hearing normally no less than 48 hours) and granting the employee the right to an interpreter, the right to be represented and the right to call witnesses, in the course of presenting a defence.

Dismissals must also be substantively fair – fair reason, sufficient proof, consistently applied and an appropriate (ie: not unduly harsh) sanction.

Substantive fairness is invariably assessed by Commissioners in accordance with a factual inquiry into whether or not the employee contravened rule, was the rule in question valid/reasonable and was the employee aware of the rule, or could they be expected to have reasonably had knowledge of the rule?

Witnesses are subjected to an evidence-in-chief, cross-examination, re-examination line of questioning.

Labour Court rules on Constructive Dismissal

Labour Court rules on Constructive Dismissal

Earlier this month, the Labour Court passed judgment in a review application regarding a constructive dismissal case, between Agricultural Research Council v Silas Ramashowana and Others (Case number: JR1432/15).  Constructive dismissal cases are interesting for a number of reasons, and are specifically addressed in Section 186(1)(e) of the Labour Relations Act, which states that “dismissal means that an employee terminated employment with or without notice because the employer made continued employment intolerable for the employee”.

In this particular Labour Court case, the employee had been employed as a Divisional Human Resource Manager.  On commencing employment with the employer, he was issued a company laptop, and signed a Due Care Agreement, in which he undertook to exercise due care in safeguarding the laptop which had been placed in his possession.  In addition thereto, this agreement also made provision for the employee being liable for the monetary value of the replacement of the laptop, in the event that it was lost due to his negligence.

On 21 December 2012, the laptop allocated to him was stolen from his motor vehicle.  The insurer refused to pay a claim for the replacement of the laptop, as its investigations revealed no forced entry into the vehicle of the employee.

The employer, after having conducted its own investigation, held the employee liable for the loss of the laptop, as its investigation had led them to conclude that the employee had been negligent in regards the theft of the laptop from his motor vehicle.  As a result, the employer deducted the replacement cost of the laptop in three equal payments in October, November, and December 2013.

The employee was aggrieved by these deductions, as he was of the view that he had not been afforded an opportunity to state his side of the story.  The employee was of the view that he had simply been an unfortunate victim of crime, which was common in the area in which the laptop had been stolen from his motor vehicle.  It was further the view of the employee that criminals had jammed his vehicle’s car lock system, and had thereby gained access to his vehicle to steal certain of his personal belongings, as well as the company laptop.  The employee had reported this to the South African Police Services.

Subsequent thereto, the employee refused to attend an enquiry into the loss of the laptop, as he was of the view that the employer simply wanted to rubberstamp its deductions from his salary.  The employee then resigned on 1 March 2015, stating that “I hereby resign as a Divisional Human Resource Manager… albeit under duress because of the amount of R11 567.00 which was unlawfully deducted from my salary”.

The CCMA held that the employee was constructively dismissed, and the employer made application to the Labour Court in terms of Section 145 of the Labour Relations Act, seeking an order reviewing and setting aside the arbitration award made in favour of the employee.

The employer’s review was premised on its claim that the Commissioner had committed a material error in law, was that “the Commissioner had committed a material error in law when he wrongly applied the principles relating to constructive dismissal”.

The Labour Court judgment highlighted the three requirements in order for constructive dismissal to be established.  Authority was quoted confirming that “…the first is that the employee must have terminated the contract of employment.  The second is that the reason for termination of the contract must be that continued employment has become intolerable for the employee.  The third is that it must have been the employee’s employer who had made continued employment intolerable.  All these three requirements must be present if it is to be said that a constructive dismissal has been established.  If one of them is absent, constructive dismissal is not established”.

This principle was put differently in the Labour Appeal Court case of National Health Laboratory Service v Yon and Others (Case Number…), in which it was held that “… a constructive dismissal occurs when an employee resigns from employment under circumstances where he or she would not have resigned but for the unfair conduct on the part of the employer toward the employee, which rendered continued employment intolerable for the employee”.

The Labour Court judgment went on to quote the Constitutional Court finding in Strategic Liquor Services v Mvumbi and Others (Case number…) by noting that that in this case it was held that “the test for constructive dismissal does not require that the employee should have no choice but to resign, but only that the employer should have made continued employment intolerable.  Ultimately, the test remains whether it was reasonable to resign in order to escape the intolerable working environment”.  In the Labour Court judgment regarding the employee who resigned due to the employer having allegedly unlawfully deducted the replacement cost of the laptop from his salary, the court held otherwise.

The Labour Court in this case emphasized the fact that the employee had resigned some 15 months after the deductions he was complaining of were effected.  The Labour Court continued “also, as a senior Human Resources Manager with access to legal advice, he knew what recourse was available in a case of unlawful deduction”.  The Labour Court also reiterated that “the employer may recover loss incurred due to the fault or negligence of an employee in terms of Section 34(2) of the Basic Conditions of Employment Act”.

The Labour Court found it “very opportunistic” of the employee “to use the incident that took place 15 months prior to the date of his resignation to support a case of constructive dismissal”.  Unsurprisingly, the Labour Court held that there was no constructive dismissal, and that the employee had failed to prove that the employer had made his continued employment intolerable.  Furthermore “the Commissioner evidently misconstrued the nature of the enquiry”.

Moonlighting is not always lawful

Given the pressing economic times we live in, it’s not surprising that the so-called gig economy is evolving at the pace it is.  It is a gig economy in which many choose to hire themselves out on a project basis, from gig to gig.

Another way of making ends meet is to simply take on more than one job, in order to keep the family finances in shape.  But when does this become ‘moonlighting’, and is this even OK?  The notion of moonlighting was first coined as a phrase in the early 1950’s, and was used to refer to someone holding a second job, especially at night, “working by the light of the moon”.

The question arises as to whether, or not, an employer has any right to object to an employee holding down a second, and even a third, job, whilst being employed by them.

As a point of departure, it is important to understand that all employees have a duty of serve their employer in good faith.  This means a number of things, including an obligation to protect, further and enhance the interests of the employer.  It follows that, for example, an employee cannot do so if they work for employer A by day, and employer B at night.  Both employers would be faced with an employee who is exhausted.  It is for this reason that many employers forbid moonlighting, which, by and large, is conducted clandestinely by an employee.

In the Labour Appeal Court case of SAPPI Novoboard (Pty) ltd v Bolleurs (1998 – 19 ILJ 784), it was held that “If an employee does anything incompatible with the due or faithful discharge of his duty to his master, the latter has the right to dismiss him …”.

In the main, it is prudent for employers to prohibit moonlighting, unless of course the employee is not employed, and only working part-time (for example mornings only) or on certain days of the week.  If the employer elects to forbid moonlighting, it should be clearly incorporated in the employee’s contract of employment and, better still, reinforced in a company policy.

According to the Labour Court judgment in the Martin East judgment, the dismissal of the employee was fair.

An employment contract could include such a clause, declaring that “The employee undertakes during the period of his, or her, employment not to be directly or indirectly engaged in, or employed by, or otherwise associated with, either or on a full-time or part-time basis, any business or organisation or company or corporation or person, whether such activity is of the same or similar business interest as that of …………… (Pty) Ltd, or not”.  Such a clause in an employment contract would be valid, and enforceable, in the event that the employee is fully employed.

The Labour Court case of Martin East v Bullbring & others (Case number C1051.14) dealt with the question of moonlighting, amongst other things.

The employer had a clear rule prohibiting moonlighting, yet the employee had facilitated a training workshop for five days, for his own account, without having sought, or obtained, authorisation from the employer to do so. To make matters worse, he had been on duty for his employer for at least part of the time he had facilitated the workshop for his own personal benefit.

So there you have it.  Moonlighting cases in our courts are relatively few in number.  However, it is undoubtedly clearly understood that employees have a duty of good faith to their employers, and as such, must ensure that they do not act in a manner which undermines the interest of their employer.

On the other hand, if employers object to their staff moonlighting, it is of prime importance that this be recorded in a contract of employment, together with a policy on this prohibition.  In addition, there must be proof that the employee has prior knowledge of the rule prohibiting moonlighting.

Moonlighting will not always necessarily justify dismissal, and each case would need to be judged on its own merits.

Consistency in disciplinary hearings

Consistency relates to the requirement that like offences, or acts of misconduct, should be treated alike, and different cases treated differently.  This principle is also sometimes referred to as the parity principle.  Whilst it is important to be consistent, this should not be confused with being rigid.

Consistency is typically assessed in three ways.  Firstly, an employer may not suddenly discipline an employee for an act which was overlooked in the past. There is however nothing wrong with an employer becoming stricter, with regard to certain issues, as long as employees are informed of the Company’s intentions in this regard.

Secondly, all employees guilty of a breach in Company rules should be charged; this means that discipline should not be instituted selectively against employees.  Finally, all employees charged should be disciplined in the same way; put differently, generally speaking, if two employees are guilty of the same act of misconduct, they should, in theory, receive the same sanction.

In the  Labour Appeal Court case of Absa Bank v Naidu and Others,  it was held that “It is trite that the concept of parity, in the juristic sense, denotes a sense of fairness and equality before the law, which are fundamental pillars of the administration of justice. In the Australian decision, Green v The Queen, it was said that the parity principle is an aspect of the systemic objectives of consistency and equality before the law the treatment of like cases alike, and different cases differently”.

The concept of consistency (the parity principle) was also addressed in National Union of Metalworkers of SA and Others v Henred Fruehauf Trailers (Pty) Ltd (1994), where the court stated that  “Equity requires that the courts should have regard to the so-called parity principle. This has been described as the basic tenet of fairness which requires that like cases should be treated alike  …… it has been held by the English Court of Appeal that the word equity as used in the United Kingdom statute dealing with the fairness of dismissals, comprehends the concept that the employees who behave in much the same way should have meted out to them much the same punishment”.

Learned author Professor Grogan has also noted that “The parity principle should be applied with caution. It may well be that employees who thoroughly deserved to be dismissed profit from the fact that other employees happened not to have been dismissed for a similar offence in the past or because another employee involved in the same misconduct was not dismissed through some oversight by a disciplinary officer, or because different disciplinary officers had different views on the appropriate penalty”.

A word of caution in the application of consistency in disciplinary proceedings was made in SACCAWU and Others v Irvin and Johnson (Pty) Ltd 2002 (3) SA 250 (LAC) “In my view too great an emphasis is quite frequently sought to be placed on the principle of disciplinary consistency, also called the parity principle.  There is really no separate principle involved. consistency is simply an element of disciplinary fairness.  Every employee must be measured by the same standards.  Discipline must not be capricious. It is really the perception of bias inherent in selective discipline that makes it unfair. Where, however, one is faced with a large number of offending employees, the best one can hope for is reasonable consistency. Some inconsistency is the price to be paid for flexibility, which requires the exercise of a discretion in each individual case. If a chairperson conscientiously and honestly, but incorrectly, exercises his or her discretion in a particular case in a particular way, it would not mean that there was unfairness to the other employees. It would mean no more than his or her assessment of the gravity of the disciplinary offence was wrong. It cannot be fair that other employees profit from that kind of wrong decision. In a case of plurality of dismissals, a wrong decision can only be unfair if it is capricious, or induced by improper motives or, worse, by a discriminating management policy.  Even then I dare say that it might not be so unfair as to undo the outcome of other disciplinary enquiries. If, for example, one member of a group of employees who committed a serious offence against the employer is, for improper motives, not dismissed, it would not necessarily mean that the other miscreants should escape. Fairness is a value judgment”.