Summary of Judgment

1. Introduction

The matter concerned an appeal to the Labour Appeal Court against the order of the Labour Court (per Coetzee AJ), which had dismissed a review application brought in terms of section 145 of the Labour Relations Act 66 of 1995. The review application sought to set aside an arbitration award issued under the auspices of the National Bargaining Council for the Wood & Paper Sector.

The appellant was Tzaneng Treated Timbers (Pty) Ltd (the employer). The first respondent was the National Bargaining Council for the Wood & Paper Sector (the bargaining council under whose auspices arbitration occurred). The second respondent was M N Masetla N.O. (the arbitrator). The third respondent was the Chemical, Energy, Paper, Printing Wood & Allied Workers Union, acting on behalf of S Malatji and 29 other employees (collectively, 30 employees).

Procedurally, the dispute arose after the 30 employees were dismissed following a disciplinary process. The union referred an unfair dismissal dispute to the bargaining council; after conciliation failed, the matter proceeded to arbitration, where the arbitrator found the dismissals procedurally fair but substantively unfair, and ordered reinstatement on limited terms. The employer then launched a section 145 review in the Labour Court, which was dismissed. Leave to appeal to the Labour Appeal Court was granted on petition.

The general subject-matter of the dispute was whether the employees’ dismissal for alleged fraudulent timekeeping (clocking), arising from their conduct on the first day of a protected strike, was substantively fair, and whether the arbitrator’s remedy (including the limited retrospectivity of reinstatement) was one a reasonable arbitrator could reach.

2. Material Facts

It was common cause that employees affiliated to the union, including the 30 employees in issue, embarked on a legal, protected strike on 4 August 2014. On the morning of that strike, the employees clocked in at the appellant’s workplace and then left to participate in the strike.

A critical fact relied upon by the court was that the employees were not given access to the workplace again on that day. As a result, they never clocked out, and the employer denied them access that would have enabled them to do so.

Upon returning to work the next day, each employee received a notice of suspension, pending an investigation into alleged misconduct connected to the clocking conduct on the day of the strike. Despite the union’s protestations, the employees were charged with misconduct.

The main charge alleged that the employees were guilty of fraudulent clocking in because they had clocked in for duty on 4 August 2014 and left the premises without clocking out. The charge characterised this as a “class 1” offence and therefore very serious under the employer’s disciplinary regime.

The employer relied on revised clocking instructions (July 2011), which required employees to clock in when coming on duty, clock out and back in for lunch, and clock out when leaving the premises. The instructions recorded that employees who left the premises without clocking out would face disciplinary action. The employer also relied on its disciplinary code, which treated class 1 offences as “very serious”, and included under “Fraudulent Timekeeping” conduct such as “clocking without actually working”.

The employees were found guilty at the disciplinary hearing and dismissed. The union referred an unfair dismissal dispute to the bargaining council. At arbitration, evidence was led by both parties, but the court noted that the basic, relevant facts were otherwise not in contention.

The arbitrator found the dismissals procedurally fair but substantively unfair, and ordered the employees’ reinstatement on terms no less favourable than those applicable prior to dismissal, effectively from 1 April 2015. The reinstatement was not made retrospective to the dismissal date, and the arbitrator did not order back pay.

In the review and subsequent appeal, the employer’s stance remained that the misconduct (fraudulent clocking) had been proved, that dismissal was fair given the seriousness assigned to the offence, and that the award should be set aside (with a remittal for a hearing de novo) because the employer contended it had not been afforded a fair opportunity to deal with the appropriateness of dismissal as a sanction for each employee. The employees’ position was that they could not be guilty of failing to clock out in circumstances where the employer denied access to do so, and that the conduct did not constitute fraud designed to obtain payment while on strike.

3. Legal Issues

The central question before the Labour Appeal Court was whether the Labour Court had erred in dismissing the review application, which in turn depended on whether the arbitrator’s award fell within the range of decisions a reasonable arbitrator could make.

Closely connected to that enquiry was whether the arbitrator reasonably concluded that the dismissals were substantively unfair, given the charge framed as fraudulent timekeeping/clocking and the employer’s reliance on a disciplinary code categorising the alleged offence as a very serious class 1 offence.

A further issue raised by the employer concerned procedural fairness in the arbitration process itself, framed as an alleged lack of opportunity to address the appropriateness of dismissal as a sanction in relation to each employee, and whether that justified setting aside the award and remitting the matter.

The dispute primarily concerned the application of established review principles to the facts, as well as an evaluative assessment of misconduct characterisation (fraud versus a lesser infraction) and sanction fairness, which necessarily involves a value judgment about proportionality and fairness.

4. Court’s Reasoning

The court approached the matter through the lens of the reasonableness standard for review of arbitration awards, as articulated in authority including Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2008 (2) SA 24 (CC). The question was not whether the court would have decided the matter differently, but whether the award was one a reasonable arbitrator could reach on the material before him.

On the substance, the court held that fraud in the conventional or ordinary sense had clearly not been proved. In particular, the employer did not prove that the employees clocked in with the dishonest purpose of creating a false impression that they were working while they were in fact on strike. The court reasoned that the employees started the day at the workplace and clocked in, then left as part of an open, group participation in a protected strike, and were thereafter prevented by the employer from re-entering the workplace.

The court emphasised that the employees participated in the strike openly, and the employer did not contend that it was unaware of who was striking. There was therefore no evidentiary foundation for a finding that the employees intended to mislead the employer into believing they were not on strike, or intended to present themselves as entitled to be paid while striking. The court also noted that none of the employees claimed payment, and the employer was not led to believe payment was due for strike time. The court further recorded that the clocking conduct, in context, caused no harm to the employer or others, and this formed part of the assessment of the nature and seriousness of the misconduct.

While fraud was not proved, the court accepted that the employees may have been guilty of a lesser form of misconduct, namely the failure to clock out when leaving to join the strike. The court linked this to the arbitrator’s remedy, interpreting the non-retrospective reinstatement and absence of back pay as reflecting that some consequence was imposed, even though dismissal was found disproportionate. The court treated the arbitrator’s approach as distinguishing between truly dishonest timekeeping, for which dismissal may be justified, and a less serious infraction, for which dismissal would be excessive.

The court also held it was unfair for the employer to equate the employees’ conduct with actual fraudsters, such as employees who have others clock in for them or otherwise engineer a deceitful impression of being at work to obtain payment while not working. The court considered that the arbitrator could reasonably reach the conclusion that the charge of fraudulent clocking, despite the heading in the disciplinary code, was not substantiated on the facts.

In relation to the complaint that the arbitrator did not fully articulate reasons for the limited retrospectivity of reinstatement, the court accepted that the arbitrator did not comprehensively explain that aspect, but held that this was not a sufficient basis to set aside the award.

On the employer’s contention that it had not been afforded an adequate opportunity to address sanction, the court held that sanction was integral to the dispute the employer had to meet at arbitration and that the employer had the opportunity to address it. The court considered that, on the evidence, it was open to the arbitrator to find that the employer failed to establish that it exercised its discretion fairly in dismissing the employees.

Overall, the court concluded that, on the totality of evidence, the arbitrator could reasonably find that the employees were not guilty of fraudulent clocking and that an appropriate outcome was reinstatement without retrospective effect or back pay, which the court viewed as fair to both sides. The Labour Court had therefore correctly dismissed the review.

Finally, on costs, the court took into account the facts, the law, and fairness, and concluded that a costs order was not appropriate.

5. Outcome and Relief

The Labour Appeal Court dismissed the appeal and upheld the Labour Court’s order dismissing the employer’s section 145 review application.

No order as to costs was made in respect of the appeal.

Cases Cited

Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2008 (2) SA 24 (CC).

Toyota South Africa Motors (Pty) Ltd v Radebe and Others [2000] 3 BLLR (LAC); (2000) 21 ILJ 340 (LAC).

Legislation Cited

Labour Relations Act 66 of 1995, section 145.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the Labour Court did not err in dismissing the employer’s review application. It held that the arbitrator’s finding of substantive unfairness and the remedy of reinstatement without retrospective effect or back pay fell within the range of outcomes a reasonable arbitrator could reach on the evidence. The court held that the employer did not prove fraud in the ordinary sense, particularly the required dishonest intent to mislead or obtain payment during a protected strike, and that treating the conduct as equivalent to serious fraudulent timekeeping was unfair. The appeal was dismissed with no costs order.

LEGAL PRINCIPLES

The judgment applied the principle that a section 145 review turns on whether the arbitration award is one that a reasonable arbitrator could make, as reflected in the reasonableness standard associated with Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2008 (2) SA 24 (CC).

It proceeded on the principle that fraudulent timekeeping (as a basis for dismissal) requires proof of dishonest conduct, including an intention to mislead the employer, and that the seriousness of misconduct must be assessed in context, including whether the employer was misled and whether harm resulted.

The judgment applied the principle that the fairness of dismissal includes scrutiny of the appropriateness of the sanction, and that an employer must show that dismissal was a fair exercise of discretion in the circumstances, with sanction being a matter ordinarily integral to the arbitration dispute.

It also reflected the principle that an arbitrator may determine that dismissal is disproportionate and order reinstatement with limited retrospectivity (including denying back pay), as a way of balancing fairness where some lesser misconduct may be present even though the employer has not proved the serious offence alleged.