Air Liquide (Pty) Ltd v Nkgoeng NN.O (Arbitrator) and Others (JA 8/21) [2022] ZALAC 10; (2022) 43 ILJ 1266 (LAC); [2022] 7 BLLR 636 (LAC) (22 March 2022)

80 Reportability

Labour Law

Brief Summary

Labour Law — Unfair Dismissal — Review of arbitration award — Employee dismissed for gross dishonesty and insubordination — Arbitrator found dismissal substantively unfair and ordered reinstatement — Labour Court upheld arbitrator’s decision — Appeal court found that the arbitrator's decision was not rationally connected to the evidence, particularly regarding the employee's presence at work on the day in question — Appeal upheld, review application granted, and dismissal declared procedurally and substantively fair.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings were an appeal in the Labour Appeal Court against a judgment of the Labour Court which had dismissed an employer’s application to review and set aside an arbitration award.

The appellant was Air Liquide (Pty) Ltd, the employer. The first respondent was Nkgoeng N N.O, cited in his capacity as the arbitrator. The second respondent was the National Bargaining Council for the Chemical Industry. The third respondent was Mr Jan Brits Mdluli, the dismissed employee.

The procedural history was that Mr Mdluli was dismissed on 28 June 2016, referred an unfair dismissal dispute for conciliation at the CCMA (as described in the judgment), and thereafter to arbitration. The arbitrator found the dismissal substantively unfair and ordered reinstatement with retrospective effect and payment of arrear wages. Air Liquide then brought review proceedings in the Labour Court, which were dismissed. The Labour Court granted leave to appeal, leading to the present appeal.

The general subject-matter of the dispute concerned whether the arbitrator’s conclusion that the dismissal was substantively unfair (and the consequent reinstatement order) was sustainable on the evidence, particularly in relation to alleged gross dishonesty (lying about being at work) and insubordination (failing to obey an instruction to meet with a manager).

Material Facts

Air Liquide supplied cylinder gases and operated, among other locations, a depot at eMalahleni situated at the Eskom Kusile power station. At the depot, two employees were stationed on site: Mr Mdluli and Mr Robert Mashia. They worked under the supervision of Mr Mohamed Kazim, the branch manager, who was not resident on site. The two employees were required to be on site so that they could assist each other with loading heavy cylinders.

On 7 June 2016, Mr Kazim visited the depot after 11h00. He found Mr Mashia present, but Mr Mdluli was not. Mr Kazim asked Mr Mashia about Mr Mdluli’s whereabouts. Mr Mashia reported that he had not seen Mr Mdluli at work that morning. Mr Kazim sent an SMS to Mr Mdluli asking where he was. Mr Mdluli responded that he was at boiler 4. Mr Kazim and Mr Mashia went via boiler 4 to look for him but did not find him there. Mr Kazim later testified that the depot yard was small and that if Mr Mdluli were at work, he would have been seen.

After attending to a customer at NA Engineering and returning towards the depot, Mr Kazim called Mr Mdluli and requested that he come to see him at the depot. Mr Mdluli responded that he could not hear properly, and Mr Kazim asked him to call back, reiterating that he should come to see him. Mr Kazim testified that he did not see Mr Mdluli that day until he left at around 14h30.

Mr Mdluli accepted that he received and responded to Mr Kazim’s message. However, he maintained that he had reported for duty and was present at work on 7 June 2016. He testified about times at which he entered a kitchen and received messages, and stated that he told Mr Kazim he was “packing cylinders” at boiler 4. He also stated that when he went to the office, he could not find Mr Kazim because he had already left.

On 12 June 2016, Mr Mdluli was served with a disciplinary notice and charged with two counts: gross dishonesty, in that he lied about being present at work when he was not, and gross insubordination, in that he failed to obey a reasonable instruction to meet his manager when instructed to do so on 7 June 2016. He was found guilty on both and dismissed on 28 June 2016.

At arbitration, Mr Mdluli relied on a printout from the canteen as proof that he had clocked at lunchtime. He also asserted that the practice was to sign the attendance register the following day, and that he signed the register the day after 7 June 2016 because the register was kept in Mr Mashia’s car on 7 June 2016.

As to what was disputed and how it was treated by the court, the critical disputed fact was whether Mr Mdluli was present at work at the depot on 7 June 2016. The arbitrator accepted Mr Mdluli’s version and treated the canteen printout as authentic and supportive of his presence at work. The Labour Court similarly treated the printout as sufficient in circumstances where, in its view, the parties had not led evidence challenging its veracity.

The Labour Appeal Court, however, emphasised that Mr Mdluli conceded under cross-examination that the depot was so small that, if he were at work, he could not have gone unnoticed. It further noted that the printout related to the canteen rather than the worksite, and that no evidence was led about the proximity of the canteen to the depot.

Legal Issues

The central legal question was whether the arbitrator’s award (finding the dismissal substantively unfair and ordering reinstatement) was unreasonable because it was not rationally connected to the evidence placed before the arbitrator.

A related question was whether the arbitrator’s credibility findings—particularly his acceptance of Mr Mdluli as “credible” and rejection of the employer’s witnesses—were sustainable where the arbitrator had laid no basis for that credibility assessment, and whether this justified appellate interference and a re-evaluation of the record.

The dispute primarily concerned the application of legal standards of review and rationality to the factual record, including an evaluative judgment regarding the weight to be attached to the canteen printout and the coherence of the versions given by the witnesses. It also concerned factual findings about Mr Mdluli’s alleged dishonesty and insubordination, assessed through the lens of review reasonableness.

Court’s Reasoning

The Labour Appeal Court approached the matter on the basis that the arbitrator had found the employer’s witnesses not credible and Mr Mdluli credible, while relying materially on a canteen printout to support the conclusion that Mr Mdluli had been at work. The Court considered that the arbitrator’s conclusion, and the Labour Court’s endorsement of it, rested on an inference that the canteen printout proved presence at work.

The Court held that it was not reasonable, on the evidence, to treat the canteen printout as proof of presence at the depot. The printout was for the canteen and not for the worksite, and there was no evidence about the canteen’s proximity to the depot. Importantly, Mr Mdluli had conceded that the depot was so small that, if he were present, he could not have gone unseen. In those circumstances, the Court concluded that no reasonable arbitrator could have inferred from the canteen printout that Mr Mdluli was at work at the depot on the day in question.

On credibility and appellate interference, the Court referred to the established principle that appellate courts are generally slow to interfere with credibility findings based on oral evidence (with reference to R v Dhlumayo and Another 1948 (2) SA 677 (A) and further authorities). However, it emphasised that the arbitrator had labelled Mr Mdluli “credible” without laying any basis for that finding. In that situation, the Court regarded itself as “at large” to evaluate the evidence as it stood on the record.

Having evaluated the record, the Court found the employer’s evidence cogent and reliable. It considered that the arbitrator’s finding that the evidence of Mr Kazim and Mr Mashia was unreliable disregarded that Mr Mdluli’s own evidence corroborated the employer’s version in material respects. The Court highlighted that Mr Mdluli confirmed he was not seen at work, confirmed the depot’s small size, confirmed that he stated he was at boiler 4, did not dispute that the employer’s witnesses looked for him at boiler 4 and did not find him, and confirmed that despite being requested to come and see Mr Kazim he did not do so. The Court considered that this body of evidence pointed to the conclusion that Mr Mdluli lied about being at work on 7 June 2016.

The Court further observed that both the arbitrator and the Labour Court did not deal with the evidence concerning insubordination, and that where Mr Mdluli’s version conflicted with that of Mr Kazim and Mr Mashia, it should have been rejected as false in light of the overall consistency of the employer’s case and the corroboration found in Mr Mdluli’s own concessions.

On the review standard, the Court concluded that the arbitrator’s decision was not rationally connected to the evidence as a whole and was therefore unreasonable, meaning that the Labour Court ought to have upheld the review and set aside the award.

Outcome and Relief

The Labour Appeal Court upheld the appeal against the Labour Court’s order.

It set aside the Labour Court’s order and substituted it with an order upholding the review application and reviewing and setting aside the arbitration award. It further declared that the dismissal of the third respondent was procedurally and substantively fair.

On costs, the Court applied the labour-law approach that costs are determined in accordance with law and fairness, and noted that the third respondent did not oppose the appeal. It made no order as to costs in relation to the appeal and, in the substituted Labour Court order, similarly made no costs order.

Cases Cited

R v Dhlumayo and Another 1948 (2) SA 677 (A)

Kunz v Swart and Others 1924 AD 618

Taljaard v Sentrale Raad vir Koöperatiewe Assuransie Bpk 1974 (2) SA 450 (A)

Legislation Cited

No legislation was cited in the text of the judgment provided.

Rules of Court Cited

No rules of court were cited in the text of the judgment provided.

Held

The Labour Appeal Court held that the arbitrator’s conclusion that Mr Mdluli was present at work on 7 June 2016 was not one that a reasonable arbitrator could reach on the evidence. The canteen printout could not reasonably be treated as proof of presence at the depot, particularly given the conceded small size of the depot and the evidence that Mr Mdluli was not seen there.

The Court held further that, because the arbitrator provided no basis for his credibility finding in favour of Mr Mdluli, the appellate court was entitled to re-evaluate the evidence on the record. On that evidence, the employer’s witnesses were found to be reliable, and Mr Mdluli’s concessions supported the employer’s case that he lied about his presence at work and failed to comply with an instruction to meet his manager.

The appeal succeeded, the review was upheld, the arbitration award was set aside, and the dismissal was declared procedurally and substantively fair, with no costs order.

LEGAL PRINCIPLES

The judgment applied the principle that appellate courts are generally slow to interfere with credibility findings based on oral evidence, as expressed in R v Dhlumayo and Another 1948 (2) SA 677 (A) and related authorities. However, where the decision-maker provides no proper basis for a credibility finding, an appellate court may be entitled to evaluate the record and determine whether the factual conclusions are supportable.

The judgment applied the principle that an arbitration award may be reviewed and set aside where the outcome is not rationally connected to the evidence before the arbitrator and is therefore unreasonable.

The judgment also applied the labour-law principle on costs that, in labour matters, costs are determined according to law and fairness, and that a lack of opposition may weigh against burdening an employee with an adverse costs order.