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[2024] ZALCJHB 81
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Maruleng Local Municipality v Commission for Conciliation, Mediation and Arbitration (JR1926-21) [2024] ZALCJHB 81 (20 February 2024)
FLYNOTES:
LABOUR – Dismissal –
Misconduct
–
Authority
to sign cession agreements – Employee has no authority to
sign unless delegated by municipal manager –
Commissioner
found dismissal substantively and procedurally unfair –
Employer’s reprimand did not constitute
double jeopardy –
Commissioner’s finding of substantively unfair dismissal not
reviewable – Persuasive
mitigatory factors present to
sustain finding – Dismissal procedurally fair but
substantively unfair.
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not reportable
Case
no:
J
R 1926-21
CCMA
LP 2542/21
In
the matter between:
MARULENG LOCAL
MUNICIPALITY Applicant
and
CCMA First
Respondent
GRACE MAFA CHALI
N.O Second
Respondent
MOHALE CHAMP
MACHUBENE Third
Respondent
Heard
: 25 January 2024
Delivered
: 20 February 2024
JUDGMENT
NORTON
AJ
Introduction
1.
Maruleng Local Municipality (the “Municipality” or the
“Applicant”) has instituted review proceedings
in this
court to set aside an award handed down by a CCMA Commissioner. Ms
Mafa-Chali (the Commissioner” or the “Second
Respondent”), in which she found that the dismissal of Mr
Machubene (the “employee” or the “Third
Respondent”)
was substantively and procedurally unfair and
ordered his reinstatement to the date of dismissal (10 March 2021)
with backpay of
R300 000.
2.
The Third Respondent has
conceded that the dismissal was procedurally fair
[1]
,
and that disposes of the one leg of the fairness enquiry, with the
issue of the substantive fairness of the dismissal requiring
interrogation within the lens of the review test set out in section
145 of the Labour Relations Act, 1995 (the “LRA”).
3.
I set out the factual background below, and then proceed to discuss
the relevant legal principles that arise, thereafter
I apply the law
to the facts and finally I will hand down my ruling.
Factual
Chronology
4.
The Municipality is based
in Hoedspruit in the Limpopo Province. The Local Government:
Municipal Structures Act, 1998
[2]
(“Structures Act”) and Local Government: Municipal
Systems Act, 2000
[3]
(“Systems
Act”), and the Municipal Finance Management Act, 2003
[4]
(“Finance Act”) applies to this entity.
5.
The employee was employed
as the Director: Technical Services on a fixed term contract from 1
November 2018 to 31 October 2023.
[5]
His remuneration was R50 000 a month.
6.
The employee acted as the Municipal Manager from 1 January 2019 to 30
June 2019.
7.
The current Municipal Manager (Mr Thabo Magabane) was appointed on 1
July 2019.
8.
On 30 July 2020, following an investigation, the Municipality served
Mr Machubene with a notice to attend a disciplinary
enquiry to answer
to 23 misconduct charges.
9.
At the conclusion of the disciplinary enquiry he was found guilty of
the majority of the charges. Most notably he was found
guilty of
signing cession agreements without authority on the 27 November 2018;
28 August 2019; 3 September 2019; 29, 30 and 31
October 2019; and 5
and 7 November 2019. He was also found guilty of gross
insubordination by failing to execute a lawful instruction
to provide
investigators with a file pertaining to a contract; as well as gross
misconduct by approving an amendment to a scope
of work without the
authority to do so, and finally gross dereliction of his duties by
misleading a service provider about which
globes to replace in
streets in the Municipality.
10.
The presiding officer recommended dismissal, and the council of the
Municipality agreed, passing resolution SC01/03/2021
on 22 March 2021
to that effect.
11.
On 23 March 2021 the employee’s employment was effectively
terminated.
12.
The employee referred an unfair dismissal dispute to the CCMA.
Conciliation was unsuccessful and he referred the dispute
to
arbitration.
13.
The arbitration was held in June and July 2021.
The
CCMA Arbitration
14.
At the arbitration the Municipality called Mr Mdhluli to testify
about the investigation he had carried out. The investigation
led to
the institution of the charges, the disciplinary enquiry, and
ultimately the employee’s dismissal.
15.
The Municipal Manager
(“MM”), Mr Thabo Magabane followed and testified that
between November 2018 to November 2019,
and on 12 different occasions
the employee signed cession agreements
[6]
purporting to have authority to do so, binding the Municipality to
some R5.8 million worth of payments to subcontractors. All the
cession agreements involved one service provider called “Lubocon
Civils”.
[7]
Mr Magabane
also testified that he had instructed the employee to hand over a
file pertaining to a particular project (MLM/SCM/05/2019
and
MLM/SCM/09/2019) to investigators, but he failed to do so. He
testified further that the employee instructed a service provider
(Paino Trading) to install street lights in the wrong locations
causing financial loss to the Municipality.
16.
The Municipality called two more witnesses, Mr Thabo Shai, and Mr
Lesiba Machaba, but their evidence is not material to
the issues
before this court.
17.
The employee in defence testified that he had authority to sign the
cession agreements, that the source of authority came
from the
General Conditions of Contracts (“CTC”) regulating the
relationship between the Municipality and contractor.
He argued too
that there had been a past practice where senior managers (not the
Municipal Manager) had signed cession agreements,
and that other
employees had not been disciplined for doing so. He explained that he
no longer had the files relating to the project
under investigation
as they had been taken by Internal Audit.
18.
The employee pointed out that the Municipal Manager had access to the
cession agreements when he signed payment certificates,
and by
implication that if the Municipal Manager was concerned with what he
was doing, could have refused to sign the payment certificates.
19.
On 18 August 2021 the Commissioner handed down her arbitration award.
20.
On 10 September 2021 the Municipality launched it’s review.
The
review challenge
21.
The Municipality submits that the Commissioner
21.1. failed to
properly consider the evidence before her and attach the appropriate
weight in that regard; and
21.2.
arrived at conclusions
that were not rationally justifiable.
[8]
22.
The Municipality principally draws attention to the Commissioner’s
finding that:
22.1. The employer
had failed to prove the existence of a rule that prohibited the
employee from signing the cession agreements.
22.2. There had
been inconsistency with respect to sanction in that other employees
had signed cession agreements prior to
the employee doing so, and
they had not been dismissed.
22.3. The employee
had been subjected to “double jeopardy” because he had
been reprimanded by the Municipal Manager
that only he (ie the MM)
had the authority to sign cession agreements, unless he delegated
that power in writing to a trusted employee.
23.
In the arbitration award the Commissioner writes:
Firstly,
I must say from the onset that the Employer has failed to provide the
existence of the rule that the Employee breached
prohibiting him to
sign cession agreements on behalf of the MM or municipality.”
She
reasoned that “
the
investigator …could not directly cite the specific legal
provisions of the two pieces of legislation (the System Act
and the
Structures Act)…that support his version that only the MM is
authorised to sign documents for the municipality or
only signing
with delegated powers on behalf of the MM
…”
[9]
”
The
Employee submitted documentary evidence of the previous years cession
agreements signed by his predecessors Reneilwe Mamatlepa,
Aliwani
Makhadane and Yeta Wasilota. All of them were not dismissed and are
still working for the municipality. He (
the
employee
)
argued that the Employer was inconsistent as his predecessors…were
not dismissed…This piece of evidence was not
challenged by the
Employer except to state that the Employee did not know whether the
said employees had delegated authority or
not…The Employer is
expected to apply the rules consistently
…”
[10]
“
The
MM testified and led unchallenged evidence that after realizing that
the employee signed the direct payment agreements without
authorisation, he was called to a meeting with the Mayor and was
reprimanded for his behaviour and the behaviour then stopped.
Now if
the Employee was given a reprimand which is a form of disciplinary
action to correct the behaviour, why would the MM then
continue to
still charge the employee for the same conduct for which he as
reprimanded. This is what is called double jeopardy.
Reprimand is a
form of progressive disciplinary action. It merely means the Employer
has taken disciplinary action against the
employee twice for the same
misconduct
.”
[11]
24.
Mr Magabane testified on the issue of authority as follows,
“…
no other person can
sign and commit the municipality without the knowledge of the
municipal manager, because I am expected in terms
of roles and
responsibilities to account to council and other authorities on the
happenings in the municipality
.”
[12]
A
few minutes later he is asked. “
From the day of your
appointment, did you at any stage give the delegation to Mr Machubene
to sign on behalf of the municipality
or on your behalf
” He
replies “
no
”.
25.
Mr Magabane continues,
“
Now
the moment the municipality signs, it validates the form and
contents. It no longer comes to the accounting officer for
payment…That
form and an invoice or delivery note gets
presented to the CFO for payment. Then they pay…So the
municipal manager or the
accounting officer will not even know,
because at the first instance did not sign or see the form…So
the municipality shall
have paid, but the accounting officer would
have no clue…His role has been circumvented
”
[13]
26.
Mr Machubene’s
representative in cross examination puts to Mr Magabane. “
You
approved every single payment
…”
Mr
Magabane says, “
I
will dispute it.
”
[14]
27.
Later when Mr Machubene
gives evidence however, it becomes clear that the Municipal Manager
signed every payment certificate which
included as one of the
attachments the cession agreement.
[15]
28.
Mr Machubene testified that he previously worked at the Mopani
District Municipality for 5 years and had similarly signed
direct
payment agreements. That was the practice, and he continued to do so
at the Maruleng Local Municipality until he was stopped
by the
Municipal Manager.
29.
It was common cause that the employee signed the cession agreements
(alternatively called “direct payment agreements”).
30.
It became clear, despite the Municipal Manager’s initial
denial, that he had ultimately authorised the payments
to the
sub-contractors. He was thus aware that the employee had signed the
agreements for over a year, because he had authorised
the payment
certificates. That is materially relevant, and compromises the
Applicant’s case.
31.
The Municipal Manger explained why he had not taken disciplinary
action against other employees who too had signed cession
agreements.
He said that those employees may have been authorised by the employee
when he was the acting municipal manager, furthermore
that there was
no evidence that they were not delegated to sign, and finally that
such occurrences happened before his appointment.
In my view it was
unreasonable for the commissioner to discount such a plausible
explanation and then find that the employer had
acted inconsistently.
The
legal issues that arise
32.
The authority challenge
32.1. The
Municipality’s evidence and argument was that only the MM has
the authority to sign the cession agreements,
unless he had delegated
that power to a trusted employee. It is common cause that the MM had
not delegated his power to the employee
to sign the session
agreements.
32.2. The
Municipality referred to legislation in support of their view, such
as the Systems Act, the Structures Act and the
Finance Act.
32.3. The
commissioner gave little weight to this evidence, unhappy that it had
been presented late.
32.4.
Sections 60, 61 and 62 of the Finance Act are relevant to the
question of authority. Municipal Managers are the accounting
authority
of the municipality. They must seek within their sphere of
influence to prevent prejudice to the financial interests of the
municipality.
In addition the accounting officer of a municipality is
responsible for managing the financial administration of the
municipality
and must ensure that the resources of the municipality
are used effectively, efficiently and economically. According to
section
79 the MM may delegate any function in writing to a member of
senior management or an employee.
32.5. According to
section 55(2) of the Systems Act the accounting officer is
responsible and accountable for all income and
expenditure of the
municipality.
32.6. The
Applicant’s witnesses referred to this legislation, even though
they could not identify the relevant sections
applying to the
Municipal Manager and his accounting and financial responsibilities.
32.7. It was
incumbent on the Commissioner to have conducted a cursory perusal of
the legislation, and to satisfy herself
one way or another about the
legal standing of the Municipal Manager vis a vis the employee to
sign cession agreements.
32.8. Certainly the
Municipal Manager has the authority as per the Finance Act and
Systems Act discussed above - but what
about employees such as the
Third Respondent? I am persuaded by the Municipal Manager’s
view, supported by the legislation,
that unless he has delegated the
power in writing to an employee, the employee has no authority to
sign.
32.9. I therefore
find that the Commissioner committed a gross irregularity when she
found that the Applicant had not established
a rule that only the
Municipal Manager could sign the cession agreements unless he had
delegated that responsibility in writing
to the employee. He had not
done so, and therefore the Employee breached the rule.
33.
The double jeopardy challenge
33.1. I agree with
the municipality that the employer’s reprimand did not
constitute “double jeopardy”,
(punishment of an employee
twice for the same offence) and the commissioner erred in that
respect. The reprimand did not constitute
a species of disciplinary
sanction, but rather an “off the cuff” signal of
disapproval.
33.2. I therefore
agree with the municipality that the commissioner erred in this
respect.
34.
The inconsistency challenge
34.1. I also agree
with the employer’s ground of review that the commissioner
erred by finding an inconsistent application
of sanction because
different employees were not disciplined for signing cession
agreements.
34.2. I say so
because she failed to consider the evidence that they may have been
authorised to do so, and in any event such
conduct occurred before
the Municipal Manager’s time. These are relevant distinguishing
factors vitiating a finding of inconsistency.
Analysis
and discussion
35.
In my view the commissioner erred by finding that the employee had
not proved a rule, (and by implication had not proved
a breach of the
rule). With a proper analysis of the law and the evidence before her,
the commissioner should have found that there
was a rule, and that
the employee was in breach thereof.
36.
I am mindful though of the mitigatory elements which impact on the
appropriacy of the sanction of dismissal imposed by
the employer some
3 years ago. Those are that, the employee had signed such agreements
for 5 years whilst employed at the Mopani
District Municipality (with
no challenge to his authority to do so); that there was a practice at
the Municipality before Mr Magabane
joined that senior employees were
doing the same thing, and importantly that the Municipal Manager knew
, or reasonably should
have known when he signed the payment
certificate that the employee was signing the cession agreements, and
failed to intervene
much earlier.
37.
I agree with Ms Mafa Chali’s comment,
“
It
is therefore questionable that the MM would authorise payments if the
official that signed the cession agreements did not have
authority to
bind the MM. Surely the MM should have seen that the cession
agreements do not have his signature and rejected them
outright when
the documents were presented to him for payment approval
”
[16]
38.
Finally, the employee stopped signing, when he was reprimanded by the
Municipal Manager for doing so. He therefore no
longer posed a
financial risk to the municipality.
39.
In summary I agree with the Municipality that the commissioner erred
by finding that there was no rule that Mr Machubene
could not sign
session agreements. I also agree that the commissioner should have
found that Mr Machubene had breached the rule.
I do not however reach
the conclusion that the commissioner’s finding of a
substantively unfair dismissal is reviewable and
should be set aside,
because there are four persuasive mitigatory factors to sustain the
finding that the dismissal was unfair.
Those factors are (1) the
Municipal Manager’s knowledge that the employee had signed the
cession agreements without apparent
authority at least 11 times
without intervening; (2) that previous employees had done so without
any sanction; (3) that the employee
stopped signing when the
Municipal Manager reprimanded him, and (4) finally the employee’s
evidence of a prior practice where
he had previously worked.
40.
Although I agree with the municipality’s attack on the double
jeopardy and inconsistency point, I do not find that
those two points
can sustain an overall finding that the award falls outside of the
boundaries of reasonableness, especially noting
the mitigatory
factors set out above.
41.
The test for review is
set out in section 145 (2) of the LRA – an arbitration award
may be set aside of the commissioner committed
misconduct, a gross
irregularity or exceeded his or her powers, or if the award was
irregularly obtained. The test is infused with
the standard of
reasonableness, established by the Constitutional Court
in
Sidumo and another v Rustenburg Platinum Mines
.
[17]
The standard is expressed in the negative, “
Is
the decision reached by the commissioner one that a reasonable
decision maker could not reach
?”
42.
Over the years, various
courts have espoused related principles, and one apposite to the case
before us is
Herholdt
v Nedbank
.
[18]
In that case the Supreme Court of Appeal stated
“
A
review of a CCMA award is permissible if the defect in the
proceedings fall within one of the grounds in section 145(2)(a) of
the LRA. For a defect in the conduct of the proceedings to amount to
a gross irregularity as contemplated by section 145(2)(a)(ii)
the
arbitrator must have misconceived the nature of the inquiry or
arrived at an unreasonable result.
A
result will only be unreasonable if it is one that a reasonable
arbitrator could not reach on all the material that was before
the
arbitrator. Material errors of fact, as well as the weight and
relevance to be attached to the particular facts, are not in
and of
themselves sufficient for an award to be set aside
but are
only a consequence if their effect is to render the outcome
unreasonable
.”
(my emphasis)
43.
I mention this case because it is authority for the proposition that
if an award can reasonably be sustained from relevant
evidence before
the commissioner, which may not have been considered or given the
weight that it should have by that commissioner,
and the outcome of
the award would have remained the same (assuming the consideration of
that evidence), then the Court may not
set aside the award on review.
44.
Without belabouring the point, it may be expressed as follows: if an
arbitrator bases an award on evidence “A”,
“B”
and “C” and reaches outcome “Z”, yet later,
reasons “A”, “B” and
“C” are
shown during a review to be unpersuasive, but within the record there
is evidence “D” and “E”
which is material and
relevant, and would lead to the same outcome “Z”, then
the award may not be set aside because
evidence “D” and
“E” sustains the same outcome. The converse is true, if
there is no other material and
relevant evidence to sustain the
award, then it may be reviewed and set aside.
45.
In my view the four mitigatory factors explained above (and to use
the analogy of evidence “D” and “E”),
are
sufficient to render the dismissal unfair and to sustain the
commissioner’s finding on substantive unfairness.
The
remedy
46.
The commissioner found that the dismissal of Mr Machubene was
substantively and procedurally unfair and ordered his reinstatement
to the date of dismissal (10 March 2021) with backpay of R300 000.
47.
The commissioner handed down her award in August 2021. The employee’s
fixed term contract was scheduled to terminate
on 31 October 2023.
But for the review, the award would have been capable of fulfilment.
That is no longer the case.
48.
According to section 193(1) and (2)(c) of the LRA, if there is a
finding of substantive unfairness then reinstatement
is the primary
remedy, unless it would not be reasonably practicable. That is the
current situation. The appropriate remedy instead
would be
compensation. In light of the 6 months back pay which the employee
was entitled to, and noting the loss of employment
until October
2023, I am inclined to grant the maximum compensation of 12 months as
contemplated in section 194(1) of the LRA.
49.
Accordingly, I make the following order:
Order
50.
The arbitration award under CCMA Case number LP 2542/ 21 is reviewed
and set aside in the following respect:
50.1. The finding
of procedurally unfairness is set aside.
50.2. The order of
reinstatement is set aside.
50.3. The order of
backpay of R300 000 is set aside.
51.
The arbitration award is substituted as follows:
51.1. The dismissal
was procedurally fair but substantively unfair.
51.2. The employer
is to pay the employee maximum compensation of 12 months remuneration
of R600 000.
51.3. Payment to be
made by no later than 20 March 2024.
52.
There is no order as to costs.
D
Norton
Acting
Judge of the Labour Court of South Africa
Appearances
For
the Applicant:
Adv Ramoshaba
Instructed
by:
Modjadji Raphesu Attorneys
For
the Respondent:
Adv Grundlingh
Instructed
by:
Joubert & May Attorneys
[1]
Employee’s Supplementary Heads of Argument, at paragraph 46
[2]
Act No.117 of 1998
[3]
Act No.32 of 2000
[4]
Act No.56 of 2003
[5]
Founding Affidavit, paragraph 13
[6]
An agreement between the Municipality and a sub contractor for
payment of services.
[7]
Founding Affidavit, paragraph 29
[8]
Founding Affidavit, paragraph 53
[9]
Arbitration award, paragraphs 121, 122 and 123.
[10]
Paragraphs 119 and 120
[11]
Arbitration award, para 35.
[12]
Transcript pg 167
[13]
Transcript pg 185,
[14]
Transcript
pg 251
[15]
Transcript pg 450
[16]
Paragraph 125 of the award.
[17]
CCT 85 / 06
[18]
(2013) 34 ILJ 2795 (SCA)