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[2020] ZALAC 4
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Zeda Car Leasing (Pty) Ltd t/a Avis Fleet v Van Dyk (JA53/18) [2020] ZALAC 4; [2020] 6 BLLR 549 (LAC); (2020) 41 ILJ 1360 (LAC) (11 February 2020)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA 53/18
In
the matter between:
ZEDA
CAR LEASING (PTY) LTD T/A AVIS
FLEET Appellant
and
SUSAN
MARGARET VAN
DYK Respondent
Heard: 12
November 2019
Delivered:
11 February 2020
Summary:
Operational requirements- procedural unfairness – employer must
follow a fair procedure in dismissing employee for
operational
requirements – failure to do so exposes the employer to pay a
penalty in the form of a
solatium
– the determination of
the quantum of compensation requires the court to apply a discretion
taking into account the employee’s
length of service- the
anxiety suffered by the employee as a result of the employer’s
action and the extent of the deviation
from the procedure. Labour
Court finding that employer failed to agree to selection method,
upheld- court nevertheless reducing
amount of compensation to 7
months’ remuneration and to the extent that Labour Court failed
to consider employer’s
payment above the legally required
amount –Appeal partially upheld but costs awarded to employee.
Coram:
Sutherland JA, Murphy and Kathree-Setiloane AJJA
JUDGMENT
MURPHY
AJA
[1]
The appellant (“Avis”) appeals against the judgment of
the Labour Court
(Nkutha-Nkontwana J) which held that the dismissal
of the respondent (Van Dyk) for operational requirements was for a
fair reason
but was procedurally unfair and awarded her compensation
in the amount of 10 months’ remuneration and the costs of the
application.
[2]
The operational requirements dismissal did not stem from economic
issues or technological
changes at Avis. Rather, Avis decided to make
a structural change to deal primarily with the conflictual
relationship which had
arisen between Van Dyk and one of her
colleagues, Ms Laura Friebe (“Friebe”).The change led to
Van Dyk’s post
becoming redundant.
[3]
Avis contends that the Labour Court erred in finding that the
dismissal was procedurally
unfair on grounds of it being presented as
a
fait accompli
and Van Dyk not having been afforded an
opportunity to engage in a meaningful consultation process. It also
contends that the quantum
of compensation awarded to Van Dyk was
manifestly unreasonable in that the alleged procedural shortcomings
(if any) were of a minor
nature and were contributed to by the
conduct of Van Dyk. It, accordingly, appeals against the finding of
procedural unfairness
and the award of compensation. There is no
appeal against the Labour Court’s order of costs.
[4]
Van Dyk contends
that the appeal should fail because the
process followed was a sham and the compensation was reasonable in
the circumstances.
[5]
Van Dyk has not cross-appealed the Labour Court’s finding that
the dismissal
was for a fair reason and that the structural change to
address the conflict was appropriate.
The
factual background
[6]
Van Dyk commenced employment at Avis on 13 February 2006. She was
promoted to the
position of General Manager: Gauteng Key Accounts on
01 May 2013. Friebe was the General Manager: New Business
Acquisitions in
the same department. Both reported to the Business
Development Executive of Avis. Friebe managed what was referred to as
the “hunters”
portfolio – involving the canvassing
and pursuit of new business; while Van Dyk had all the “carers”
of existing
accounts reporting to her as well as some “hunters”.
[7]
The Business Development Executive was one of six executive director
positions. Van
Dyk, therefore, occupied a senior role in the
organisation.
[8]
Over time a conflictual relationship developed between Van Dyk and
Friebe requiring
the intervention of Edward Enslin, the erstwhile
Business Development Executive. Enslin was subsequently replaced by
Mr Albert
Geldenhuys (“Geldenhuys”) who was made aware of
the ongoing discord between the two managers.
[9]
When in June 2015, Van Dyk approached Geldenhuys with a complaint
against Friebe,
he decided to procure the services of an external
facilitator, Mr. Bruce Weyers, to undertake a conflict resolution
exercise between
the two managers. Prior to the facilitation,
Geldenhuys had a disagreement with Van Dyk over a trail of emails and
lost his temper
for which he later apologised.
[10]
On 15 July 2015, Weyers facilitated a two-day session between Van
Dyk, Friebe and Geldenhuys.
At the end of July, Weyers held
additional separate sessions with both Van Dyk and Friebe.
[11]
On 11 August 2015, Geldenhuys addressed separate letters to Van Dyk
and Friebe with identical
questions about their relationship. The
relevant part of the letter to Van Dyk read:
‘
1.
As you are aware, over the last while, we have been engaged in
certain sessions with
a view to addressing the discord and disharmony
which exists between yourself and Laura Friebe.
2.
The ongoing disharmony and confrontational relationship which exist
between the two
of you are manifesting itself in continued
unhappiness and impacting negatively on our business considerations
and, in consequence
thereof (and notwithstanding the recent
intervention of an external mediator) continues to cause disruption
in the office. This
is also impacting on the relationship between the
teams in which you are both involved and, as a result of this, it
becomes necessary
to take more formal steps and measures to address
this unsatisfactory state of affairs.
3.
I now require you to provide me with detailed and motivated
representations on the
following issues:
3.1
Precisely what is the nature, scope and ambit of the disharmony which
exists between the two
of you and, in your assessment, what is the
root cause thereof?
3.2
How, from your perspective, has this unhappy and undesirable state of
affairs impacted on your
ability to meaningfully work and how is
this, if at all in your assessment, impacting negatively on your team
and working environment?
3.3
Is this impacting at all on the Company’s operational demands
and requirements?
3.4
How do you believe that this particular situation may be
appropriately addressed?
3.5
Do you believe that there is any scope for an improved relationship
between yourself and Laura
and, if so, how do you believe that this
may be appropriately achieved?”
[12]
The letter concluded by stating that based on the responses provided,
decisions would be made
as to how the matter should be addressed from
the company’s perspective.
[13]
Both Van Dyk and Friebe responded to the questions on 13 and 14
August 2015 respectively.
[14]
Van Dyk’s responses are lacking in specificity and were
somewhat dismissive in tone. She
mentioned “certain behaviours”
which she believed were “unacceptable and not in line with the
Avis prescribed
values”. She was of the opinion that the
discord had no impact on business deliverables or operational
requirements, but
recommended that the disciplinary code and
procedure be followed and added that she and Friebe had held
discussions on ways to
improve their business relationship.
[15]
Friebe, on the other hand, provided a comprehensive and considered
account of the relationship.
She candidly described a situation in
which there was a lack of trust, accountability, mutual respect and
poor communication. She
complained that she felt undermined,
questioned and taken to task whenever she did not adhere to Van Dyk’s
way of thinking
about work issues. She pointed to a specific example
of how she had endeavoured to obtain Van Dyk’s co-operation on
a project
but that this was met with distrust and animosity, which
she assumed was born of Van Dyk’s desire for “full
control
of every element of the sales process and team environment”.
In her opinion, the problem did impact on the operational
requirements
of the company as the managers had not been able to
develop an appropriate long-term strategy for the sales team –
“instead
we are continuously defending wickets and being
territorial”. As a solution to the problem, she proposed a
change in structure
in which either she or Van Dyk moved into a
different portfolio. She concluded that she had no confidence that
Van Dyk would be
willing or able to let go of the past and thus that
a restructuring of roles was the best way forward.
[16]
At a meeting on 8 September 2015, Geldenhuys informed Van Dyk that he
was considering implementing
certain structural changes. A few days
later, on 10 September 2015, a planning process meeting was held
where the possibility of
the creation of one general manager position
was discussed. Both Van Dyk and Friebe were present at the meeting.
Geldenhuys put
forward his proposals and the various alternatives
relating to the proposed restructure of the sales division of the
company. On
14 September 2015, Geldenhuys held separate meetings with
Van Dyk and Friebe.
[17]
On 17 September 2015, Geldenhuys addressed identical letters to Van
Dyk and Friebe, which read
in relevant part as follows:
‘
RESTRUCTURE
OF THE SALES DEPARTMENT
1.
Over the preceding period we have given much thought to the operating
and functional
structure of our sales division, in particular, the
Hunting and Caring components thereof. We have, in addition,
considered the
ongoing and sustained difficulties which have been
experienced with regard to the lack of cohesion and interpersonal
communications
which have arisen and have continued to exist between
yourself and Laura which has filtered down to the respective
individuals
in each one of your teams.
2.
The original reservations which I had personally had were, once
again, reinforced
in the recent facilitation undertaken under the
auspices of an external mediator/facilitator and the correspondence
received during
the course of the past weeks in response to certain
queries which I had raised.
3.
In light of this, and after consultation with senior members of the
Manco, we have
come to the determination and conclusion, in
principle, that the two positions of General Manager of our Hunting
and Caring Portfolios
in the “inland regions” be
consolidated and integrated to the extent and with the effect that
there will be one General
Manager position. This individual would be
responsible for the supervision, management and control of both of
these portfolios
of our sales function and both teams would report
into the one individual concerned……
5.
By virtue of your detailed knowledge of the Company’s
operational requirements
and constraints coupled with the meaningful
contribution which you have made to our business it would follow that
you, in conjunction
with Laura be the only candidates for the
function concerned (sic). This role would simply envisage an
integration and consolidation
of the functions and duties which you
have both currently been occupying and undertaking save to the extent
that the Hunting and
Caring portfolios would now be unified.
6.
Naturally, in our ultimate assessment and determination as to the
suitable incumbent,
we would be required to make an informed and
proper decision in the interests of the Company and in fairness to
both of you as
to who should be appointed. To that end, I require you
to
6.1
advise me as to whether you would be interested in assuming the
position of General Manager
of the unified Portfolio,
6.2
if so, submit a detailed application for the position contemplated,
and
6.3
to the extent that, invariably, one position would be declared
redundant at this preliminary
stage (and without prejudice to any
rights which you may have) as to whether you would, in the
alternative, rather opt for applying
for a voluntary severance
package which would be calculated and quantified in accordance with
the Company’s standard severance
package payable in instances
of redundancy/retrenchment. This, of course, would not imply that the
Company has pre-empted the outcome
of the process.
7
In your application for the position you may, should you so wish,
record
any reservations or concerns which you have with regard to my
proposal set out above and I assure you that these will be duly
considered.
I remain of the firm belief, nonetheless, that this is a
meaningful and realistic suggestion and, to that end, attach hereto
for
your perusal and consideration, a draft organogram and Job Model
as to how I anticipate and perceive the job and structure to be
introduced and ultimately executed. Your contributions in this regard
would also be welcome….’
[18]
The letter imposed a deadline of 17h00 on 25 September 2015 for the
application for the new position
or the voluntary severance package.
[19]
Friebe applied for the position of General Manager Sales on 22
September 2015. On the same day
Geldenhuys phoned Van Dyk and asked
whether she was comfortable to give “a number” for a
severance package over the
phone. She replied that she was not. The
next day Geldenhuys again phoned Van Dyk (who was at home ill) and
pressed her for an
answer.
[20]
On 25 September 2015, Van Dyk’s attorneys sent a letter to Avis
raising concerns about
the restructuring process. The attorney
expressed the opinion that Avis’s conduct constituted an unfair
labour practice in
so far as it did not comply with the processes and
requirements of the Labour Relations Act
[1]
(“the LRA”). He also questioned whether there was a
genuine redundancy and a new position had been legitimately created.
He concluded by suggesting that a proper consultation process should
be embarked upon and requested documentation for that purpose.
[21]
On 1 October 2015, Van Dyk was given a notification purportedly in
terms of section 189(3) by
way of a letter from Geldenhuys dated 30
September 2015.
[22]
The letter set out the history of the matter and the rationale for
the proposed restructuring
and noted
inter alia
that in a
“further consultation” on 21 September 2015 Van Dyk
recorded her standpoint that Avis had already predetermined
who the
successful incumbent would be, stated that she would not be
interested in being appointed to the new position and proposed
that
her appointment be terminated by mutual agreement with a severance
package of one month’s remuneration for each year
of service.
Van Dyk claims that her willingness to enter into discussions at this
stage about a severance and options of settlement
did not relieve
Avis of its obligations to act in procedurally fair manner.
[23]
In the discussion of alternatives that the company considered before
proposing dismissal, Geldenhuys
stated in the letter that Van Dyk had
rejected making an application for the new position and Avis had
accepted her rejection and
her refusal to apply for the position. He
also recorded that Avis had “considered seeking employment
opportunities”
for her elsewhere in the company, but, as Van
Dyk had preferred not to be office-bound, intimated that this
possibility had not
been taken further.
[24]
Under the heading: “The proposed method for selecting which
employees to dismiss”,
Geldenhuys stated:
‘
Inasmuch
as you categorically recorded that you refused to be part of this
particular process and, to that end, did not believe
in same whilst
Laura embraced the process and believed that the ideas were not only
well-founded but, in fact, would lend to optimal
productivity at this
level of engagement, it is indisputable that Laura (should she apply)
would be the only meaningful candidate
to be appointed in this
portfolio.’
[25]
During her testimony, Van Dyk maintained that she was in fact
interested in the position but
had concerns about the process of
appointment and the possibility that the selection of Friebe was a
fait accompli
.
[26]
The letter of 1 October 2015 concluded with a request for a
consultation the following day.
[27]
The parties met on 2 October 2015. During the meeting, Van Dyk
presented written responses to
most of the issues raised in the
letter of 30 September 2015 in which she took issue with the need to
restructure and the fairness
of the process. She maintained that her
earlier engagement regarding severance pay was intended to obtain
clarity about what was
on offer. Most importantly, Van Dyk
specifically requested “clarity on the proposed method”
by which Avis intended
selecting her for dismissal. When asked under
cross-examination how he dealt with this request, Geldenhuys said:
‘
I
am not sure we explored this answer further in the consultation
meeting. I think the issue of severance came up before, before
we, I
do not think we delved into this in a great amount of detail in this,
in this consultation because the, the conversation
was ultimately
steered towards, the, the, the severance.” (sic)’
[28]
The minutes of the meeting on 02 October 2015 record Geldenhuys as
having said:
‘…
The
deadline given to [indistinct] please apply for the position and/or
the package, by the 25
th
, did not happen. So you did not
formally apply for it and the discussions that I thought we had in
terms of wanting to see the
value of what this package could be,
because I said okay, I will find out if it could be more than two
months and closer, or anything
towards the one month you asked for at
the time, when we received the legal letters that basically said
that, I would call it,
deselected yourself from that particular
process.
And that is the decision as to why you are the one that
has to be retrenched
.’
[29]
Another meeting took place on 8 October 2015 at which Avis presented
a letter including a severance
offer to Van Dyk. The letter stated
that Avis had consulted with Van Dyk as required in terms of section
189 of the LRA, various
alternatives were considered but had been
rejected as inappropriate, the issues raised by Van Dyk had been
taken into consideration,
both General Manager positions had become
redundant and that Van Dyk had declined to apply for the new position
within the deadline.
The letter recorded that in the circumstances
the only outstanding issues were the quantum of severance pay and the
termination
date. Avis proposed to pay R500 000 severance pay,
made up of one week’s remuneration per year of service (nine
week’s
pay) and an additional
ex gratia
payment over and
above the contractual entitlement. In addition, Van Dyk would receive
notice pay for the month of November, payment
of any unused annual
leave, use of the company car and petrol card (or its monetary value)
until the end of November 2015 and be
released from the applicable
restraint of trade agreement.
[30]
Van Dyk agreed to consider the proposal and revert by no later than
12 October 2015. However,
before she could do so, Avis later that day
(8 October 2015) circulated a notice to all staff titled “Restructure
of the
Avis Fleet Sales Department” which in relevant part
read:
‘
One of our top
imperatives for 2016 is “Profitable growth of RSA Corporate
Fleet” through provision of customised solutions
that change as
the needs of our customers change. We believe that this can best be
achieved through a coherent structure of hunters
and carers, improved
knowledge sharing and our ability to innovate and act in a flexible
manner.
To achieve this
objective, we have taken a decision to consolidate the hunter and
carer portfolios in the “Gauteng and Inland
regions”
under one General Manager. All the current Regional Sales Managers
will report into this new General Manager position.
Following this
restructuring decision, I am sad to announce that Susan van Dyk will
leave our employ with effect from 12 October
2015. Susan re-joined
the company in 2006 and since then held various positions, for the
last 2 years that of General Manager Key
Accounts. Please join me in
thanking Susan for her contributions over the last 9 years.’
[31]
Van Dyk did not revert to Avis concerning the draft settlement
agreement on 12 October 2015.
On 13 October 2015, Mr. Willie Van
Zijl, Executive: Human Resources, emailed Van Dyk confirming that in
light of her failure to
revert on the settlement proposal her
employment had been terminated “based on the operational
requirements of the Company”
with effect from 30 November 2015,
with her last working day being 9 October 2015, and her not being
required to work the notice
period. On 15 October 2015, Van Dyk
referred an alleged unfair dismissal dispute to the Commission for
Conciliation, Mediation
and Arbitration (“CCMA”),
claiming that she was unfairly dismissed on 8 October 2015.
The decision of the
Labour Court
[32]
The matter came before the Labour Court in terms of section 187(1) of
the LRA in that Van Dyk
alleged that the reason for the dismissal was
unfair discrimination or alternatively that the dismissal was unfair
in terms of
section 189 of the LRA as there was no
bona
fide
reason for her dismissal on
operational requirements grounds and Avis had not followed a fair
procedure.
[33]
The Labour Court held that Van Dyk had not discharged her onus to
prove that the reason for her
dismissal was discrimination as
contemplated in section 187(1)(f) of the LRA and thus that the
dismissal was automatically unfair.
It held also that the manner in
which the hunting and caring teams were constituted was the source of
the conflictual relationship
between the general managers and that
the structural solution of combining the positions and declaring one
of the posts redundant
was the only solution and “a rational
commercial or operational decision”. Although, it did not
explicitly state as
much, it, in effect, concluded on this basis that
the dismissal was substantively fair. As mentioned at the outset,
there is no
cross-appeal against these findings.
[34]
The Labour Court, however, found that the dismissal was procedurally
unfair principally because
it was presented as a
fait accompli
before proper consultation on the topics contemplated in section 189
of the LRA. Section 189 provides that when an employer contemplates
dismissal on operational requirement grounds, it must engage in a
“meaningful joint consensus-seeking process” and
attempt
to reach consensus on: i) appropriate measures to avoid the
dismissals, minimise the number of dismissals, change the timing
of
the dismissals and to mitigate the adverse effects; ii) the method
for selecting the employees to be dismissed; and iii) severance
pay.
The consultation must precede a final decision on retrenchment in
order not to forestall what might emerge in the consultation
process.
[35]
The Labour Court held that the decision to merge the two positions
and to declare one post redundant
was taken without any meaningful
consultation about appropriate measures to avoid the dismissal and
the method of selecting which
employee was to be dismissed. Neither
the letter of 17 September 2015 nor any other prior discussion
attempted to identify or reach
consensus on the method of selection.
The requirement of making an application (presumably to be considered
on its merits - skills
and experience) was imposed by Avis as the
method of selection without any consultation or consideration of
other methods or criteria
of selection. The letter of 17 September
2015 communicated the decision to implement the restructuring in
final terms and imposed
a deadline compelling the two managers to
apply for the consolidated post or a severance package by 25
September 2015. When Van
Dyk did not comply with that deadline, she
was excluded from consideration. In addition, the Labour Court held
that there was no
meaningful endeavour on the part of Avis to
accommodate Van Dyk in any alternative position. In the premises, the
Labour Court
concluded that the dismissal was procedurally unfair.
[36]
After receiving evidence from both parties about the amount of Van
Dyk’s salary for the
purpose of determining an amount of
compensation, the Labour Court accepted that Van Dyk’s salary
was R1 598 250
per annum. It awarded her compensation in
the amount of R1 331 875 being the equivalent of 10 months’
remuneration.
In awarding that amount, the Labour Court took into
account the gravity of the procedural unfairness and that she had
been without
employment for 10 months, had only secured a job paying
less than half her salary at Avis, and had exhausted her provident
fund
withdrawal benefit to finance the litigation.
[37]
Although it referred to the fact that an amount of R500 000
severance pay had been paid
into an attorney’s trust account
for the benefit of Van Dyk, it is not clear from the judgment if this
amount (and the fact
that it was significantly in excess of the
statutory minimum) was taken into account in determining a just and
equitable amount
of compensation. Likewise, no reference was made to
the fact that Van Dyk was offered an additional amount of notice pay
for the
seven week period 9 October 2015-30 November 2015 without
having to attend work.
The
appeal on the merits
[38]
Before turning to the merits of the issue of procedural fairness, it
may be helpful to comment
briefly upon the preferable approach to
deal with incompatibility in the workplace. Despite Avis ultimately
having framed the problem
it faced as an operational requirements
issue, it, in truth, was seized with incompatibility in the
workplace.
[39]
Incompatibility involves the inability on the part of an employee to
work in harmony either within
the corporate culture of the business
or with fellow employees.
[2]
There has been some difference of opinion in the past about whether
incompatibility is an operational requirements or an incapacity
issue. The prevailing view is that incompatibility is a species of
incapacity because it impacts on work performance. If an employee
is
unable to maintain an appropriate standard of relationship with his
or her peers, subordinates and superiors, as reasonably
required by
the employer, such failure or inability may constitute a
substantively fair reason for dismissal. Procedural fairness
in
incompatibility cases requires the employer to inform the employee of
the conduct allegedly causing the disharmony, to identify
the
relationship affected by it and to propose remedial action to remove
the incompatibility. The employee should be given a reasonable
opportunity to consider the allegations and proposed action, to reply
thereto and if appropriate to remove the cause for disharmony.
The
employer must then establish whether the employee is responsible for
or has contributed substantially to irresolvable disharmony
to the
extent that the relationship of trust and confidence can no longer be
maintained.
[3]
[40]
In the present case, Avis initially approached the difficulty in the
sales division as an incompatibility
problem, as is evident from the
attempted facilitation by Weyers and Geldenhuys’ s letter of 11
August 2015 seeking information
about the nature and causes of the
disharmony and identifying solutions to resolve the problem. However,
after receiving responses
from both managers, Avis opted to
restructure the division and to declare one position redundant.
Hence, Avis did not complete
a process establishing the cause, or
attributing any blame, for the disharmony. Nor did it put forward a
proposal to remedy the
problem of incompatibility on any basis other
than declaring one of the two posts redundant. This solution was
discussed first
in the meetings of 8 and 10 September and culminated
in the critical letter of 17 September 2015. In the result, absent
any cross-appeal
on the substantive issue, the primary question on
appeal is whether the operational requirements dismissal was
procedurally fair
in terms of section 189 of the LRA.
[41]
Despite Avis’s submissions to the contrary, it is clear from
the letter of 17 September
2015 that Avis contemplated the dismissal
of either Van Dyk or Friebe at that date. The letter said as much. In
it, Geldenhuys
stated that after consultation with senior members of
Avis management, it had been decided that the two positions would be
consolidated
and integrated into one and that Friebe and Van Dyk
would be the only candidates for the new position and “to the
extent
that, invariably, one position would be declared redundant at
this preliminary stage” they were invited to indicate whether
they would accept a severance package.
[42]
Having thus contemplated dismissal, it was incumbent on Avis at that
point to engage in a meaningful
joint consensus-seeking process to
avoid any dismissal etc. and to agree on the method for selecting the
employee to be dismissed.
As the Labour Court rightly found, it did
not do that.
[43]
The attitude of Avis that “invariably” one position would
be declared redundant suggests
that it may have prematurely closed
its mind to meaningful engagement about measures to avoid dismissal.
It saw dismissal of one
of the managers as inevitable, despite the
fact that there was no evidence of a reduction in workload or
functions, any work performance
problems (beyond incompatibility) or
a need for financial cut backs in the division. No possibility of
restructuring to change
lines of accountability or the like appears
to have been seriously mooted or considered. Dismissal was thus seen
as the only and
inevitable option and the manner in which Geldenhuys
sought to get Van Dyk to commit telephonically to a severance package
on 22
September 2015 and 23 September 2015 while she was ill at home,
intimates that he saw her as the likely candidate for dismissal
before any consultation process was embarked upon.
[4]
[44]
Moreover, and most importantly, there was no proper consultation
about the method for selecting
which employee would take the new
position and which would be dismissed. Avis invited the employees to
apply for the new post and
imposed the deadline of 25 September 2015
without identifying the criteria of selection. The requirement that
employees compete
for a post is not in itself a method of selecting
for dismissal.
[5]
More is
required. The competition for the post must proceed in accordance
with identified criteria of selection. A fair selection
method must
be chosen to decide who is to stay and who is to go. In the present
instance, it was not clear which criteria, (such
as skills,
qualifications, experience, length of service, productivity,
seniority, disciplinary record and the like), would be
applied and no
effort or attempt was made to engage with the employees to identify,
agree and rank such criteria.
[45]
When Van Dyk (through her attorney) sought to engage on these issues,
Avis took the view that
she had de-selected herself by not applying
in accordance with the unilateral deadline for application. That much
is evident in
Geldenhuys’s letter of 1 October 2015 and his
statement at the meeting of 2 October 2015 that Van Dyk had
de-selected herself
and all that remained was to negotiate a
severance package. In the letter he stated categorically that Friebe
was the only candidate
for the position at that point in time. His
approach was unquestionably procedurally unfair. Van Dyk did not
refuse to apply for
the position but sought more information about
the process before applying. She wanted to know what the method of
selection would
be.
[46]
Moreover, the manner in which non-compliance with the deadline was
seized upon adds support to
Van Dyk’s apprehension that her
non-selection was a
fait accompli
. Had Avis genuinely intended
to afford Van Dyk an opportunity to compete for the post, it would
not have rushed the selection and
could easily have delayed the
process until proper criteria of selection had been canvassed. In his
testimony, Geldenhuys admitted
that there had been no thought given
to selection criteria. The letter of 1 October 2015 and the meeting
of the following day left
no room at all for any consultation about
selection criteria. In her written response to that letter and at the
meeting of 2 October
2015, Van Dyk specifically challenged the
statement in the letter that Friebe was the only “meaningful”
candidate since
Van Dyk had de-selected herself (and by implication
there was no need for selection criteria) as indicating that her
dismissal
was a
fait accompli
. Added to that, Avis announced
Van Dyk’s dismissal in the circular to staff on 8 October 2015,
four days prior to the expiry
of the agreed period for her to
consider the settlement offer.
[47]
In the premises, the Labour Court did not err in its conclusion that
the dismissal was procedurally
unfair.
Compensation
and costs
[48]
As already mentioned, the Labour Court awarded Van Dyk compensation
in the amount of R1 331 875
being the equivalent of 10
months’ remuneration based on a salary of R1 598 250
per annum. In awarding that amount,
the Labour Court took into
account the gravity of the procedural unfairness, the fact that Van
Dyk had been without employment
for 10 months, had only secured a job
paying less than half her salary at Avis, and had exhausted her
provident fund withdrawal
benefit to finance the litigation. Avis
submits that the award of compensation is unreasonable and requests
this court to vary
the award and to order payment of a reduced
amount.
[49]
As the dismissal was found only to be procedurally unfair,
compensation is the appropriate remedy
in terms of section 193(2)(d)
of the LRA.
Section 194(1) of the LRA
provides the Labour Court (or CCMA commissioner) with a discretion to
determine the quantum of compensation.
It reads:
‘
The
compensation awarded to an employee whose dismissal is found to be
unfair either because the employer did not prove that the
reason for
dismissal was a fair reason relating to the employee’s conduct
or capacity or the employer’s operational
requirements or the
employer did not follow a fair procedure, or both, must be just and
equitable in all the circumstances, but
may not be more than the
equivalent of 12 months remuneration calculated at the employee’s
rate of remuneration on the date
of dismissal.’
[50]
The requirement that an award of compensation be “just and
equitable in all the circumstances”
envisages that the Labour
Court will be informed about all the circumstances which may bear
upon justice and equity.
[6]
The
starting point should be the injustice and harm suffered by the
employee and the conduct of the parties. Equity requires proper
consideration of the interests of both parties. When the dismissal is
unfair only on account of procedural unfairness, the patrimonial
loss
of the employee is irrelevant. In such instances, the award of
compensation is intended to be a
solatium
.
In
Johnson
& Johnson (Pty) Ltd v CWIU,
[7]
Froneman DJP put it as follows:
‘
The compensation
for the wrong in failing to give effect to an employee’s right
to fair procedure is not based on patrimonial
or actual loss. It is
in the nature of a
solatium
for the loss of the right, and is
punitive to the extent that an employer (who breached the right) must
pay a… penalty for
causing that loss. In the normal course a
legal wrong done by one person to another deserves some form of
redress.’
[51]
The key factors in the determination of compensation for procedural
unfairness, therefore, are:
i) the extent of the deviation from a
fair procedure; ii) the employee’s conduct; iii) the employee’s
length of service;
and iv) the anxiety and hurt caused to the
employee as a consequence of the employer not following a fair
procedure.
[8]
[52]
Awards of compensation, like awards of damages in civil matters, are
by their nature matters
of estimation and discretion, and hence
appellate courts should hesitate to interfere with such awards which
are necessarily “somewhat
rough and ready”.
[9]
An appellate court should not simply substitute its own award for
that of the trial court. However, an appellate court will interfere
where there has been an irregularity or misdirection such as
considering irrelevant facts or ignoring relevant ones; or where the
decision was based on totally inadequate facts resulting in there
being no sound or reasonable basis for the award. Where there
is a
substantial variation or a striking disparity between the award made
by the trial court and the award that the appeal court
considers
ought to have been made on its own assessment, the award will be
unreasonable and the appeal court is entitled and obliged
to
interfere.
[10]
[53]
The Labour Court took account of appropriate and relevant
considerations in making its award
of compensation. In particular,
the procedural unfairness was egregious in that the failure to
negotiate a selection method, and
the precipitate manner in which Van
Dyk was excluded from consideration for continued employment,
amounted to harsh injustice to
an employee with lengthy service, a
history of able performance and a clean disciplinary record. This
resulted in a lengthy period
of unemployment, an evident loss of
career prospects and the financial burden of seeking vindication,
which all have caused Van
Dyk considerable anxiety.
[54]
However, the Labour Court, in our view, erred in not taking into
account the fact that Van Dyk
received
ex gratia
payments in
addition to her statutory and contractual entitlements. Sometime
after Van Dyk’s dismissal, Avis paid R500 000
into an
attorney’s trust account as severance pay. We were told from
the bar that such amount had been paid to her or would
be paid
immediately. Van Dyk was contractually entitled to one week’s
severance pay per year of service, but, as stated in
the letter of 8
October 2015, Avis was willing to pay an additional amount as an
ex
gratia
payment. Accepting that Van Dyk earned R1 598 250
per annum, her weekly remuneration was R30 735. She was thus
entitled
to R276 615 as nine week’s severance pay. She
thus received an additional
ex gratia
payment of severance pay
in the amount of R223 385. In addition, a letter dated 17
November 2015 addressed by Geldenhuys to
Van Dyk’s attorney
indicates that Van Dyk was paid for seven weeks after the date of her
dismissal on 9 October 2015 without
having to tender her services.
The exact amount of this payment is unknown but would have been in
the region of R200 000.
Van Dyk was also permitted to use the
company car and petrol card for seven weeks after her dismissal. The
total value of such
additional benefits would have been approximately
R450 000, roughly equivalent to three and a half months
remuneration. If
the award of 10 months’ compensation is added
to the supplementary
ex gratia
severance benefits van Dyk
received on the termination of her employment, she would in effect be
paid 13 and a half months’
remuneration, which is more than the
maximum compensation provided for in section 194(1) of the LRA.
[55]
The Labour Court’s ignoring of these relevant factors resulted
in an unreasonable award
of compensation. There is a substantial
variation or a striking disparity between the award made by the trial
court and the award
that this court in its assessment considers ought
to have been made. While the procedural unfairness was severe, it was
not of
an order justifying maximum compensation in view of the
relatively generous approach taken by the employer to the severance
benefits.
[11]
In our view, an
award of seven months compensation will be just and equitable in all
the circumstances. The award of the Labour
Court must accordingly be
varied to reduce the amount of compensation from R 1 331 875,
30 to R 932 321,73.
[56]
Although Avis has had some measure of success on appeal, Van Dyk has
substantially succeeded
on appeal and should be awarded the costs of
the appeal.
The
order
[54]
In the premises, the following orders are issued:
54.1
The appeal succeeds to the limited extent reflected in this order.
54.2
The Labour Court’s order is set aside and substituted as
follows:
“
1. The dismissal
of the applicant was procedurally unfair.
2. The applicant is
awarded compensation in the amount of R 932 321,73.
3. The respondent is
ordered to pay the costs of the application.”
54.3 The
appellant is ordered to pay the costs of the appeal.
_________________________
JR Murphy
Acting
Judge of Appeal
I agree
_______________________
R Sutherland
Judge
of Appeal
I
agree
F Kathree-Setiloane
Acting
Judge of Appeal
APPEARANCES:
FOR THE APPELLANT:
Mr. DO Pretorius
Instructed by Fluxmans
Inc
FOR THE RESPONDENTS:
Adv T Venter
Instructed
by Bouwer Cardona Inc.
[1]
Act 66 of 1995.
[2]
Le Roux and Van Niekerk:
The
South African Law of Unfair Dismissal
(Juta 1994) 285.
[3]
Wright
v St Mary’s Hospital
(1992)
13
ILJ
987 (IC);
SA
Quilt Manufacturers (Pty) Ltd v Radebe
(1994) 15
ILJ
115 (LAC) at 124.
[4]
There appears to have been some consideration of alternatives
earlier in the discussions before dismissal was contemplated but
the
details in that regard are somewhat scanty. No alternatives were
presented by Avis at the critical juncture when dismissal
was
clearly under consideration. At the meeting of 2 October 2015, Van
Dyk specifically asked for information on other employment
opportunities but nothing was forthcoming.
[5]
SA
Breweries (Pty) Ltd v Louw
(2018)
39
ILJ
189 (LAC) para 22.
[6]
Northern
Province Local Government Association v CCMA and others
[2001] 5 BLLR 539
(LC) para 57.
[7]
[1998]
12 BLLR 1209
(LAC) para 41.
[8]
Alpha
Plant and Services (Pty) Ltd v Simmonds and others
[2001] 3 BLLR 261
(LAC) paras 107-116 and 128; and
Lorentzen
v Sanachem (Pty) Ltd
[1998] 8 BLLR 814
(LC) para 32.
[9]
Herbstein and Van Winsen:
The
Civil Practice of the High Courts of South Africa
(5
th
Ed) 1255.
[10]
Road
Accident Fund v Guedes
2006 (5) SA 583 (SCA) 586-587.
[11]
There is, of course, a difference between severance benefits and
compensation for procedural unfairness. It is nonetheless legitimate
to have regard to the amount paid as a severance benefit in
determining the justness of compensation
in
all the circumstances
awarded in terms of section 194(1) of the LRA.