Z Sidumo & Congress of South African Trade Unions v Rustenburg Platinum Mines & Others

Readers will recall that the Supreme Court of Appeal, in a carefully reasoned (and fully supported) decision, had determined two issues of immense import to those engaged in the labour law field.

In the first instance, the SCA determined that commissioners must exercise caution in determining whether a disciplinary sanction imposed by an employer is fair. Arbitrators must apply "a measure of deference" to the employer's sanction because it is primarily the function of the employer to determine the proper sanction. This was widely interpreted as cementing a "reasonable employer" test into our law. In terms of which, it was only those decisions that fell beyond a broad range (or "band") of possible reasonable decisions that could be interfered with.

In the second instance, the SCA found that the Promotion of Administrative Justice Act, No 3 of 2000 (PAJA), applied to a review of decisions of CCMA commissioners. The importance of this element was that the PAJA provides far more extended grounds of review.

In its outcome delivered this morning, the Constitutional Court has rejected the "fair employer test" determined in the Rustenburg case, and reverted back to the test that the plain wording of the LRA itself seems to imply - the commissioner decides.

The Constitutional Court has determined that in approaching a dismissal dispute, a commissioner must do so impartially. The commissioner must take account of "the totality of circumstances". But, in terms of the LRA, it is the commissioner who must 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 or not. 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." (our emphasis)

The Constitutional Court also determined that the Promotion of Administrative Justice Act did not apply to the review of arbitration awards made in terms of the Labour Relations Act.

The Constitutional Court outcome does have implications for employers. In terms of the earlier Supreme Court of Appeal decision, which was rapidly interpreted as a restatement of the reasonable employer test within South African labour law, employers were comforted by a broad test that contemplated a range (or "band") within which their decisions might fall, before a CCMA commissioner could interfere. By the same token, the Constitutional Court outcome does not signal a reversion to administrative terror for employers. Whilst the CCMA commissioner will now be required to determine whether employers decision was fair, he or she must do so against a proper consideration of relevant circumstances and as an "impartial adjudicator". The Constitutional Court judgment will provide some guidance in this regard, as will a more focused consideration of both the terms (and stated purpose) of the Labour Relations Act and the Code of Good Practice on Dismissal.

So ultimately, it is the commissioner's sense of fairness that will now prevail, not the employers view. We are back to the third umpire, in keeping with the quick and easy process that forms the cornerstone of dispute resolution under the "new" Labour Relations Act.

By Rob Perrott of Perrott Van Niekerk Woodhouse Matyolo Inc.

To read this case online, click here

Decided on 28 November 2007

Media Summary

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This matter deals with issues that had long divided courts and legal opinion concerning the jurisdiction of the Labour Court and the High Court to hear certain disputes involving employment and labour relations. It arose from the dismissal of the applicant, Ms Chirwa, on 22 November 2002. At the time she was employed by Transnet Limited in the capacity of human resources executive manager of the Transnet Pension Fund Business Unit. The dismissal was preceded by an enquiry held by her supervisor, on the grounds of inadequate performance, incompetence and poor employee relations. Ms Chirwa first challenged her dismissal in the Commission for Conciliation, Mediation and Arbitration on the basis that it was procedurally unfair. After conciliation failed, she did not pursue the labour relations mechanisms further, but rather approached the High Court on the basis that the dismissal violated her constitutional right to just administrative action, as given effect to by the Promotion of Administrative Justice Act (PAJA).

The High Court applied the principles of natural justice and found that the dismissal of Ms Chirwa was unfair and granted the order for her reinstatement. Transnet appealed the order to the Supreme Court of Appeal. The majority of the court upheld the appeal on the basis that the dismissal of Ms Chirwa did not fall to be reviewed under the provisions of PAJA.

Ms Chirwa approached the Constitutional Court, seeking leave to appeal against the decision of the Supreme Court of Appeal. In this Court she relies on her right to procedurally fair administrative action. The claim is based on the proposition that since Transnet is an organ of state, the dismissal of its employee necessarily amounts to an exercise of public power, which is reviewable under sections 3 and 6 of PAJA. In the alternative Ms Chirwa relies on section 195 of the Constitution, which sets out the principles that must guide public administration in the carrying out of its functions. These include accountability, professional ethics, fairness and objectivity. This case illustrates that a dismissal of a public sector employee has given rise to two causes of action, one under the labour law regime and the other under the administrative justice regime. Therefore, an additional issue before this Court is whether the High Court has concurrent jurisdiction with the Labour Court in matters that arise out of an employment dispute, such as in the present case.

Skweyiya J decided this matter on the basis of jurisdiction alone. He held that Ms Chirwa's claim is based on an allegation of an unfair dismissal for alleged poor work performance and should therefore have followed to the end the procedures and remedies under the Labour Relations Act (LRA), which specifically regulate this type of labour dispute. He found that the High Court did not have concurrent jurisdiction with the Labour Court in this matter. First, Ms Chirwa had expressly relied on provisions of the LRA in formulating her claim in the lower courts as well as in this Court. Second, an applicant cannot be in a preferential position, having access to multiple forums, simply because of her or his status as a public sector employee. He concluded that if Ms Chirwa were to be allowed to depart from the finely-tuned dispute resolution mechanisms created by the LRA, a dual system of law would be perpetuated, one applicable in the civil courts and the other in the forums established by the LRA. Therefore, to the extent that PAJA and the LRA overlap, Skweyiya J urges the legislature to revisit the applicable provisions.

Skweyiya J found that it was unnecessary to decide the question whether the dismissal amounted to administrative action. If however, this determination needed to be made, he agreed with the conclusion reached by Ngcobo J that the dismissal of Ms Chirwa by Transnet does not amount to administrative action. Finally, Skweyiya J held that Ms Chirwa's reliance on section 195 of the Constitution was misplaced. He found that although the section provides valuable interpretative assistance it does not found a right to bring an action.

Ngcobo J concurred in the judgment of Skweyiya J, and considered two further issues. The first was whether the Labour Court had concurrent jurisdiction with the High Court in the dispute in question; and the second was whether the conduct of Transnet in dismissing Ms Chirwa constituted administrative action under the Constitution.

He noted that prior to the enactment of the LRA there were different statutes governing labour and employment relations. These multiple pieces of legislation created inconsistency and unnecessary duplication of resources as well as jurisdictional problems. He held that one of the primary objects of the LRA is to create a comprehensive framework of law governing the collective relations between employers and trade unions in all sectors of the economy. Consistently with this objective the LRA brings all employees whether employed in the public sector or private sector under it, except those it specifically excludes.

The other problem associated with the old labour relations regime was of overlapping and competing jurisdictions and the use of different courts to adjudicate labour and employment issues. This invariably led to forum-shopping. A declared purpose of the LRA is to establish the Labour Court and the Labour Appeal Court as specialised superior courts with exclusive jurisdiction to deal with matters arising from the LRA.

He further held that the primary purpose of section 157(2) was not so much to confer jurisdiction on the High Court to deal with labour and employment relations disputes, but rather to empower the Labour Court to deal with disputes founded on the provisions of the Bill of Rights that arise from employment and labour relations. In order to reconcile the relevant provisions of the LRA and the primary objects of the LRA the provisions of section 157(2) must be confined to those instances where a party relies directly on the provisions of the Bill of Rights. In the present case he found that Ms Chirwa relied upon a breach of the provisions of the LRA and that therefore the Labour Court had exclusive jurisdiction.

Ngcobo J held that the conduct of Transnet in dismissing Ms Chirwa did not constitute administrative action. He therefore concluded that the dispute between the applicant and Transnet falls within the exclusive jurisdiction of the Labour Court, and that the High Court did not have jurisdiction in respect of the applicant's claim.While previously administrative law was used to protect labour rights of employees who were not covered by the LRA, this was no longer necessary as the LRA now protects all employees including public sector employees and codifies the right to fair labour practices.

Moseneke DCJ, Madala J, Navsa AJ, Nkabinde J, Sachs J and Van der Westhuizen J concur in the judgments of Skweyiya and Ngcobo JJ.

Chief Justice Langa, with whom Justices O'Regan and Mokgoro concur, wrote a separate judgment agreeing with the outcome, but disagreeing with the reasoning. He did not accept the finding of both Skweyiya J and Ngcobo J that the High Court did not have jurisdiction. In his view, the issue had already been decided by the Constitutional Court in an earlier case and there was no way to distinguish Ms Chirwa's claim from the earlier matter. He also found that the various policy concerns expressed in the majority judgments could not justify departing from the clear wording of the LRA. The Chief Justice also considered whether Ms Chirwa's dismissal amounted to administrative action. He held that it did not both because there was no legislative source for the decision and because the dismissal was not the exercise of a public power or the performance of a public function. For these reasons he agreed that the appeal should be dismissed.

Read the judgment online

In Zietsman and others v Transnet Limited the employees claimed that Transnet had breached section 41 of the BCEA by failing to include in their severance pay the value of "dealer bonuses" to which they were entitled in terms of a company scheme.

The Company's defence was that it had paid the applicants 2 weeks' remuneration per year of service and that since this amount exceeded the statutory requirement of one week per completed year of service, the Company had more than complied with the Act. Section 41(2) (recall that section 41) of the BCEA establishes the statutory minimum of one week's remuneration per completed year of continuous service payable when an employee is dismissed for reasons related to the employer's operational requirements. Government Notice 691 published on 23 May 2003 lists all the payments that must be brought into account when calculating severance pay.

The Court held that if an employer pays more than the statutory minimum of one week's remuneration for each completed year of service, then the calculation method set out in terms of section 35(5) of the BCEA read with the Government Notice does not apply. It is always open for the parties to agree otherwise, but in this case, there was no such agreement. In the present case, because the employer's severance package was more favourable than the statutory minimum, the Court could not entertain the applicant's claim that their severance packages had been incorrectly calculated in terms of the Act. The application was therefore dismissed.
 

 

In a judgment handed down on 15 November 2007, the Labour Appeal Court dealt with the interpretation of the Public Holidays Act 1994 and in particular, section 2 of the Act, which provides that whenever a public holiday falls on a Sunday, the following Monday shall be a public holiday.

In Randfontein Estates Ltd v National Union of Mineworkers, the Union and the Mine had concluded a continuous operation agreement in terms of which production in a continuous operation would take place "seven days a week on all days of the year, excluding public holidays." A dispute arose when a public holiday designated in terms of the Act fell on a Sunday. The Union argued that in terms of the agreement, workers were not obliged to work and should be paid not only in respect of the Sunday but also the Monday, since the effect of section 2 was to declare both days as public holidays. The Mine argued that the Act did not intend that both the Sunday and the Monday should be public holidays when a public holiday falls on a Sunday. In other words, when a public holiday falls on a Sunday the following Monday is substituted as a public holiday and is not to be regarded as an additional public holiday.

The Court disagreed with the Mine's argument and held that the intention of the legislature was not that the number of paid public holidays should be limited to the twelve contained in the Schedule to the Public Holidays Act. Rather, the Act provided that there should be at least twelve public holidays in a calendar year. In this case, the Mine had "hitched its continuous operations agreement to the provisions of the Act" and was therefore obliged to give its employees a paid public holiday on both the Sunday on which the holiday fell, and the following Monday.

 

To read this case online, click here

On 27 September 2007, the Supreme Court of Appeal handed down a judgment that has important implications for unfair dismissal disputes.

The company had retrenched about 150 workers in September 1999. The union contested the fairness of their dismissal and claimed reinstatement. On 3 November 1999, the conciliation failed and in February 2000, a statement of claim was filed in the Labour Court. For various reasons, the matter only came to trial in September 2005. The Labour Court found that 28 of the employees had been unfairly selected for retrenchment and reinstated them, about 6 years after their dismissal.

The employer was refused leave to appeal to the Labour Appeal Court. In an appeal to the Supreme Court of Appeal, the Court held that it was entitled, in terms of the Constitution, to hear an appeal on the merits of the case. At issue was a previous decision by the Labour Appeal Court in CWIU v Latex Surgical Products (Pty) Ltd. In that case, the Labour Appeal Court held that when an order of reinstatement is made, it is not competent to order the retrospective operation of that order for a period in excess of 12 months. In other words, relying on the Latex case, the employer argued that any order of reinstatement could only be made retrospective for a maximum period of one year.

The Supreme Court of Appeal disagreed and held that the Latex case was wrongly decided. The Court noted that an order for reinstatement effectively restores the former contract and any amount payable to the worker under that contract becomes due on those ground alone. A proper reading of the LRA did not limit the remedy of retrospective reinstatement as suggested in the Latex judgment. Although the drafters of the Act had no doubt assumed that labour disputes would be expeditiously brought before the Courts, that assumption was not relevant. On that basis, the 6 year retrospective reinstatement ordered by the Labour Court was legally competent.

However, it did not necessarily follow that the order made by the Labour Court was proper. In the present case, the failure by the union to pursue the claim expeditiously (the major reason for the delay in the case being finalised) was sufficient in itself for the Court to find that it was not reasonably practicable for an order of reinstatement to be granted. The proper remedy was one of compensation.

The appeal succeeded, the reinstatement orders were set aside and the company was ordered to pay compensation of 12 months' remuneration to each of the applicants.
 

The judgment highlights three important points:

 There is no 12 month limit on the retrospective application of reinstatement orders, as previously held by the Labour Appeal Court. A reinstatement order may be made retrospective to the date of dismissal, however long before the dismissal was effected.

 Where there is a lengthy delay in the adjudication process, reinstatement becomes a less appropriate remedy, especially where dismissed employees or their representatives are responsible for the delay. In these circumstances, a Court ought to award compensation only.

 Finally, the case confirms a trend in which the Supreme Court of Appeal is clearly asserting its authority in labour disputes.

We will keep subscribers advised of important judgments.

In the course of restructuring its business, Telkom selected employees as potential candidates for retrenchment. Those so identified were given an option to take a voluntary severance package, or join what was referred to as a "redeployment pool". For those employees who found themselves in the pool, the Company said that it would try to find alternative employment for all or as many of them as possible. Mr Oosthuizen applied for a total of 22 positions. He had 30 years service, with a clean disciplinary record. He was prepared to accept any position even if it was at a lower grade, and he was prepared to move to any part of the country to take up an alternative position. Despite being short-listed for a number of positions, Oosthuizen was not appointed to any of them, and he was ultimately retrenched. After his retrenchment, he applied for a further 4 positions, with the same result.

In upholding his appeal and reinstating him retrospectively into Telkom's employ, the Labour Appeal Court made a number of important observations on an employer's obligations in a restructuring exercise. The Court noted that Telkom had failed to explain the basis on which it had chosen to retain those employees who were not ultimately dismissed. It had undertaken to try to accommodate the employees in the redeployment pool, and to give them appropriate training. The Court found that it was "highly unlikely" that of all of the positions for which Oosthuizen applied, that there was not even one position in which he could be accommodated. In more general terms, the Court observed that "an employer has an obligation not to retrench an employee if the Company has work which the employee can perform either without any additional training, or with minimal training". In relation to the remedy granted, the Court stated that the purpose of reinstatment was to give Telkom an opportunity to offer Oosthuizen a specific position in its employ, or to enable all the parties to reach an agreement about Oosthuizen's future employment. The Court specifically noted that the order did not prejudice Telkom's right to dismiss Oosthuizen for valid reasons relating to its operational requirements at any future stage.

Mr Charlton was employed by Parliament until his dismissal for misconduct. Charlton claimed that he had been dismissed following disclosures relating to improper travel benefits claimed by members of Parliament and that his disclosure was protected under the Protected Disclosures Act. That being so, his dismissal was automatically unfair. Parliament argued that Charlton was not an "employee" as defined in the Labour Relations Act, nor was Parliament his employer. The importance of this contention is that the Protected Disclosures Act protects an employee against occupational detriments following the disclosure of information regarding any conduct of any employer or an employee of that employer. In essence, the argument was that members of Parliament, about whom the disclosures were made, were not Charlton's employer, nor were they employees of Parliament for the purposes of the Protected Disclosures Act. Therefore the protections granted by the Act could not apply.

The Court rejected this argument and held that there was no acceptable reason for excluding members of Parliament from the definition of "employer" for the purposes of the Protected Disclosures Act. (The Court did not find it necessary to decide whether members of Parliament are "employees" for the purposes of the LRA). The Court noted that the purpose of the Protected Disclosures Act was to root out corruption. To hold that Charlton was not an employee of Parliament and therefore entitled to protection under the Act "would deal a blow to the government intention and would be a national embarrassment". The preliminary point raised by Parliament was dismissed, and the case will no doubt continue on the merits.

The Applicants were senior executives employed Coco-Cola South Africa. They brought an urgent application in the Labour Court to interdict the Company from retrenching them on the basis that the Company had not followed the procedures prescribed by Section 189 of the Labour Relations Act.

After the 2002 amendments to the LRA, challenges to the fairness of larger retrenchments must be bought in two phases. If procedural fairness is challenged, it must be done by way of application under Section 189A(13). Disputes about substantive fairness must be referred to the Labour Court, after conciliation by the CCMA.

In this case, all of the complaints made by the Applicants related to events that had taken place between November 2006 and the end of March 2007. They filed their application at the end of May 2007. The Court noted that in these circumstances, the remedy of an interdict was not appropriate. If there was any procedural unfairness, this could only be remedied by an award of compensation. However, it was not possible on the papers before the Court to make any judgment on the fairness of the procedure that the Company had adopted. The Court therefore postponed the matter and ordered that it be enrolled for hearing simultaneously with any dispute concerning substantive unfairness that may be referred to the Court.

The judgment highlights the point that the remedy of an interdict against a retrenchment, or reinstatement for the purpose of the employer conducting a proper consultation process, is one that ought to be invoked expeditiously. The judgment also highlights the difficulty, in practice, of separating substantive and procedural issues in a retrenchment dispute.