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[2010] ZALAC 5
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The Foschini Group v Maidi and Others (JA 12/08) [2010] ZALAC 5; (2010) 31 ILJ 1787 (LAC) ; [2010] 7 BLLR 689 (LAC) (25 March 2010)
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA
HELD
AT JOHANNESBURG
Case
No: JA12/08
In
the matter between:
THE
FOSCHINI GROUP
Appellant
and
MAIDI
MABEL & 4 OTHERS
First
to Fifth Respondents
ERIC
LOUW
Sixth
Respondent
COMMISSION FOR
CONCILIATION,
MEDIATION
AND ARBITRATION
Seventh Respondent
JUDGMENT
REVELAS
AJA
[1]
This is an appeal and a
cross-appeal against a judgment of the Labour Court in review
proceedings. The first to fifth respondents (‘the respondents’)
were suspended by the appellant on 21 September 1999
and charged with
‘
failure to secure assets of the
company’
after substantial stock
losses were detected at the clothing store where they had been
employed. They did not attend the disciplinary
enquiry to be held
into the charges which were set down for 15 and 16 October 1999, and
it proceeded in their absence. On 20 October
1999 each of the
respondents was notified in writing that they were found guilty and
dismissed for the following:
‘
Gross
negligence in that you failed to take proper care of company property
under your control resulting in a financial loss of
R 207 000 as well
as an irretrievable breakdown in the trust relationship. The fact
that you allowed stock losses to reach a level
in excess of 28% also
indicated a total lack of commitment towards the company. No notice
pay due to extent of loss to the company’
[2]
The following day the
respondents referred a dispute about the alleged unfairness of their
dismissals on procedural and substantive grounds to the second
respondent, the Commission for Conciliation Mediation and Arbitration
(‘the CCMA’). This immediate recourse to the remedies
under the Labour Relations Act 66 of 1995 (‘the LRA’)
pre-empted the internal appeal offered to the respondents by the
appellant during the unsuccessful attempt by the parties to
conciliate
their dispute on 19 November 1999 at the CCMA. When the
matter was first set down for arbitration, the appellant had not
received
the notice of set down for the arbitration, which was
proceeded with in its absence and decided in favour of the
respondents. The
appellant then successfully applied for the award to
be rescinded.
[3]
The matter was set down for
arbitration a second time on 15 December 2000, when it proceeded
before Commissioner Roopa, who issued an award to the effect that the
dismissals were fair. The respondents then applied to the
Labour
Court to review the award of Commissioner Roopa. The review
succeeded on the sole ground that the CCMA was unable
to furnish a
full record of the arbitration proceedings.
[4]
The matter was then set down for
arbitration a third time. It was postponed once to allow
the
appellant to obtain legal representation. It then proceeded on 17
June 2003 and 8 August 2003 before the sixth respondent (‘the
arbitrator’) and on 8 September 2003 the arbitrator issued an
award to the effect that the dismissals were both procedurally
and
substantively fair.
[5]
The respondents applied to the
court
a quo
to review the arbitrator’s decision. They also sought at a
later stage, to review the arbitrator’s ruling granting
the
postponement and allowing legal representation. The court
a
quo
declined to entertain the latter
review, but ordered on 30 August 2006 that the arbitrator’s
award be set aside insofar as
it related both to the substantive
fairness of the dismissal of each of the respondents as well as to
the procedural fairness of
the dismissal of the first respondent.
[6]
The appeal, with leave having
been granted on petition to this court, is against the judgment
of
the court
a
quo
granted in the review application in respect of the third arbitration
award, dated 8 September 2003. The learned judge
in the court
a
quo,
having set aside the award,
declined to substitute it with an order for compensation or
reinstatement and remitted the matter back
to the CCMA, to be
arbitrated afresh (for a fourth time) before a different arbitrator.
The latter order gave rise to the respondents’
cross-appeal on
the basis that, instead of remitting the matter to the CCMA for
another hearing, the award of the arbitrator should
have been
substituted with an award for the reinstatement of the respondents.
[7]
The delay of more than a decade
between the date of dismissal and the hearing of this appeal
is a
serious indictment against the system of expedited adjudication
aspired for in the LRA and by those involved in labour dispute
resolution. The causes for the delay are not limited to the fact that
there were three arbitration hearings. For instance, the
heads of
argument for both parties in respect of this appeal were filed more
than a year ago. There also seems to have been inordinate
delays in
finalising the review applications. Regrettably, this is not an
isolated incident. Even the Constitutional Court expressed
concern in
this regard in
Equity
Aviation Services (pty) Ltd v CCMA and Others
[
1]
where
Nkabinde J had cause to observe that the system ‘operates far
from expeditiously’.
[8]
The facts and events which gave rise to the dismissal of the
respondents commenced
after the appellant carried out one of its
biannual financial stock-takes. This particular official
financial stock-takes
was conducted on 11 August 1999. An
investigation followed which, according to the appellant, exposed
severe shrinkage, in excess
of 28%, of the stock in the store.
[9]
The staff compliment of this
store comprised of the five respondents only, and relying
on the
principle of ‘
collective
misconduct’,
each of the
respondents were charged as mentioned above in the first paragraph,
and notified them that their attendance was required
at a
disciplinary hearing to be held on 15 October 1999. It is common
cause that the respondents and their union representative
appeared on
the day scheduled for the enquiry, but left before its commencement
and the respondents were consequently dismissed
in their absence. The
reason for their absence at the enquiry was not common cause and will
be dealt with further on in this judgment
as it is convenient to deal
with the substantive review first.
SUBSTANTIVE
FAIRNESS
[10]
Mr Wilson, who acted as the initiator at the
disciplinary enquiry, was also the appellant’s
only witness
with regard to the stock-losses incurred at the Mabopane store where
the respondents were employed. As the appellant’s
national
operations administrative manager, he was instructed by his immediate
supervisor, the operations director, to visit the
store in Mabopane
to investigate the shrinkage of 1553 items in the six months
preceding 11 August 1999.
[11]
Mr Wilson testified that he arrived at the
Mabopane store on 7 September 1999, almost a month after
the biannual
stock take. On arrival, he explained the purpose of his visit to the
first respondent. He told her that he had come
to investigate the
massive stock losses at the store under her charge. He interviewed
each staff member (i.e. all five the respondents),
seeking an
explanation of how the loss could have occurred.
[12]
The explanation given by the staff was
that the store was broken into the previous night. Although
a few
clothing hangers were discovered in the stores ceiling, there was no
sign of forced entry and this was verified by the alarm
records
provided by the security company responsible for the store. According
to the security company’s access control sheets,
access could
have been gained through the store roof. Since Mr Wilson’s
investigation of this possibility revealed that the
suspension of the
ceiling was too weak to sustain the weight of a person, that
possibility was discounted. The first respondent
also never
reported the break-in to the appellant’s head office.
[13]
The issue of the break-in and the later
burglary on 18 September 1999 was entirely irrelevant because
they
occurred almost a month after the stock-take when the shrinkage was
first detected. Mr Wilson initially believed the discrepancy
to be
attributable to an administrative error and was also told by the
staff that they were concerned about the store’s computer
systems that had gone down regularly and as a result the stock
database or the “FINSAS” could have been corrupted and
could therefore be inaccurate.
[14]
According to Mr Wilson’s explanation,
the shrinkage percentage in question was calculated as
follows: The
official records reflected that a total of 2801 items had been
counted in the store on 11 August 1999 (the biannual
stock-take
date). The appellant’s computer system which is operated to
assist it in stock control and records the “theoretical
stock
holding” for each store (FINSAS), showed that on that day, that
theoretically there should have been 4354 items in
the store. The
discrepancy of 1553 items therefore represented a 28,58% loss of
stock, which it was valued at R 207 000, 00.
[15]
Mr Wilson explained that the appellant’s
business shrinkage percentage of 2% is considered undesirable
but
nonetheless acceptable, probably because its occurrence is a reality.
A shrinkage rate however of over 3% Mr Wilson said, “
set
off alarm bells”.
The stock loss
at the rate of more than 28% therefore necessitated a visit to the
Mabopane store by Mr Wilson.
[16]
At the arbitration hearing, Mr Wilson
explained at length the procedure he followed in his investigations,
with reference to documents, in determining the shrinkage. He also
explained how the FINSAS system worked. Through its FINSAS system,
the appellant was able to control approximately three billion Rands
worth of stock
per annum
He
also explained the concept of shrinkage and its impact on the
appellant’s business and the measures adopted by the
appellant
to combat this scourge. He said that one of these measures was to
conduct stock-takes. Official financial stock-takes
were conducted
twice a year. Each month two full stock counts are also
conducted by the staff members in the stores. In
the Mabopane
store, the first respondent and the other staff members (the
remaining respondents) were responsible for stock and
they all
received ongoing training in this regard.
[17]
The following evidence of Mr Wilson is important
for purposes of understanding how the appellant’s
stock control
operated. All new stock arrivals are recorded on the FINSAS system
together with subsequent sales, customer returns
or other stock
transactions which cause stock to diminish. The computer at the head
office regularly dials into the computer kept
in the store, to
receive this information. In other words, the movement of the stock
or clothing items is recorded in the head
office computer system.
This dialing in of the information is termed “
polling
”
and means the delivery of information about stock and sales from the
store to head office. The information is then fed into
the various
office control systems.
[18]
If the store’s information is not
retrieved in this way on a particular day, it is stored at
branch
level and “
goes down”
at
the next opportunity. Therefore, at all times, there was a constant
record of what the store’s ‘theoretical stock
on hand’
should be. At the end of a physical stock take, the area manager is
able to compare the physical count with the
theoretical stockholding
on FINSAS to obtain an unofficial result of what the store has lost.
Once a stock-take had been conducted
the area manager would reconcile
the count, seal the bin cards in an envelope and then courier it to
the stock department, situated
in Parow. Mr Wilson pointed out that
tampering with the bin cards was not possible. These stock take
figures would then be verified
by the appellant’s head office
and once the results were audited and issued, they were communicated
to him.
[19]
During his investigations, Mr Wilson reviewed the stock loss control
sheets completed over the period prior to the official
stock take
which revealed a trend of stock losses in the store. Two
previous security reports confirmed that there was an
actual stock
loss problem at this store. Shrinkage trends in other stores in the
same shopping centre were also canvassed by him
and they did not
reveal similar stock losses. A scrutiny of the store’s
transaction report aroused his suspicions because
of the abnormally
high amount of transactions involving a high fraud risk was
reflected. He also called the appellant’s IT
department and
enquired whether all computer systems were in good working order
during the relevant period. He was assured that
since February 1999
no “
out of
line”
situations
had occurred.
[20]
Even the sales audit department, tasked with identifying
discrepancies in systems, was unable to identify a problem
there. No
discrepancies were found in respect of the banking daily takings.
This Mr Wilson confirmed with the treasury and bank
matching
department. The stock department confirmed that all stock dispatched
to the store was accurately captured on the system.
Two other area
managers were sent to the store to verify the figures, but neither
were able to detect any administrative error.
[21]
Apart form his oral testimony Mr Wilson also
produced certain supporting documents in evidence. The
first was a
summary of cyclical recorded stock loss results (every six months) of
the stores in various areas. For the period
1998 – 2000
the stock loss result reflected a loss for Mabopane which prompted Mr
Wilson’s visit. This document also
revealed that since the
dismissal in question, shrinkage decreased drastically.
[22]
The second document was a summary of losses
per department for the Mabopane store in the relevant
stock take
period, reflecting the physical stock take and the bin cards and the
theoretical stock in the different departments
as kept on the FINSAS
data base. A schedule of comparative stock take results for the area
which demonstrated that the Mabopane
store was different was also
considered.
[23]
A summary of the daily polled transactions
for the store over the stock take period was also produced.
This was
the document that proved that the final stock figure, as at 11 August
1999, was 4 354 units, which tallies with the departmental
loss
figure.
[24]
Shrinkage across all the store departments
was also investigated showing that the problem did not
lie there
either. The investigations and checks carried out by Mr Wilson led
him to conclude that there was no feasible explanation
such as a
possible administrative error or a burglary existed. In his opinion,
the stock loss problem originated in the store itself,
and that the
store staff who had all been tasked with the responsibility to secure
the appellant’s assets or stock, had to
provide an adequate
explanation.
[25]
At the conclusion of his investigations Mr Wilson
prepared a report setting out his findings excluding administrative
fraud or error and advised that the respondents were directly
responsible for the stock losses.
[26]
The first respondent maintained that the
shrinkage at the store was never more than 3% percent. She
also
disputed that the sole purpose of Mr Wilson’s visit to the
store was to investigate the so-called burglary the night
before.
Since she did not inform the head office of the alleged burglary, it
is difficult to comprehend why the appellant would
have sent Mr
Wilson, its operations administration manager, all the way from Parow
to investigate a burglary, if the area manager
could have done this.
Mr Wilson’s testimony in any event was that be was not told of
the burglary until he arrived in Mabopane
to make enquiries.
[27]
The arbitrator accepted Mr Wilson’s testimony that the
stock-loss rate was just more than
28%, and the reason for his
recommendation to that all the staff in the store (i.e. the five
respondents) were to be held accountable
for the stock losses. The
arbitrator also observed that the document reflecting the
stock-losses, as generated by the appellant’s
FINSAS system was
not disputed by the respondents. Neither was Mr Wilson’s
evidence that ‘the documentary evidence
was checked and
re-checked’ challenged in cross-examination. The arbitrator
further accepted ‘the extensive comprehensive
documentary
evidence’ given by Mr Wilson of the ‘massive stock loss’
and rejected the respondents’ challenge
that the loss was less
than 3%. He emphasized in his award that Mr Wilson’s intimate
knowledge of the system as the appellant’s
erstwhile operations
manager, placed him in a better position than any of the parties or
himself (the arbitrator) to understand
and explain the system. Having
accepted that there was a stock-loss in excess of 28% in the store,
the arbitrator dealt with the
question of accountability and why the
respondents should collectively be held accountable.
[28]
Insofar as substantive fairness is concerned, the
court
a
quo
in
effect upheld the respondents’ assertion that the stock losses
were not above 3%, by finding that the appellant was unable
to prove
the existence of massive stock losses, since Mr Wilson’s
evidence was ‘unconvincing’ and the report
he had
prepared and presented at the arbitration hearing was hearsay. The
learned judge
a
quo
found
that the arbitrators award ‘had no rational link’ to the
reasons given for it and that there was insufficient
evidence before
the arbitrator to arrive at the conclusion he came to. The court
a
quo
therefore
applied the test for the reviewability of an arbitrator’s award
as formulated in
Carephone
(Pty) Ltd v Marcus NO.
[
2]
That
test has since been substituted by the more stringent test of
reasonableness in the decision of the Constitutional Court in
Sidumo
v Rustenburg Platinum Mines Ltd
[
3]
,
where
Navsa AJ held
[
4]
‘
that
the better approach is that s 145 is now suffused by the
constitutional standard of reasonableness. That standard is the one
explained in Bato Star. Is the decision reached by the commissioner
one that a reasonable decision maker could not reach?’
[29]
In
Fidelity
Cash Management Services (Pty) Ltd v CCMA
[
5]
Zondo
JP described the difference between the two tests as follows:
‘
The
difference seems to me to be twofold. Firstly,
Carephone
sought to construe s 145 so as to bring
it in line with a constitutional imperative at the time which was to
the effect that an
administrative action had to be justifiable in
relation to the reasons given for it, whereas
Sidumo
seeks to construe s 145 so as to meet
the current constitutional requirement that an administrative action
must be lawful, reasonable
and procedurally fair. It seems to me
that, even if there may have been a debate under
Carephone
and prior to
Sidumo
on whether a commissioner’s
decision for which he or she has given bad reasons could be said to
be justifiable if there were
other reasons based on the record before
him or her which he or she did not articulate but which could sustain
the decision which
he or she made, there can be no doubt now under
Sidumo
that
the reasonableness or otherwise of a commissioner’s decision
does not depend – at least not solely – upon
the reasons
that the commissioner gives for the decision.’
[30]
In my view, the court
a
quo
erred in its reasoning with regard
to both the former, as well as the current test for review. There was
simply no reasonable or
even rational basis upon which the court
a
quo
could have rejected Mr Wilson’s
testimony on the basis of his report being ‘unconvincing’
and because it constituted
hearsay. If one has regard to Mr Wilson’s
entire testimony, and not only his report, the arbitrator came to a
conclusion
which is manifestly a decision any reasonable
decision-maker could make.
[31]
The very brief summary of Mr Wilson’s testimony in the
arbitrator’s award and the summary
above, demonstrate that Mr
Wilson conducted a thorough investigation himself, which preceded and
founded his report. The only challenge
presented by the respondents
to the entire body of Mr Wilson’s evidence, was to dispute the
actual shrinkage rate, by asserting
that it was never above 3 %. No
proper evidence to support that assertion was proffered by any of the
respondents. In finding that
the appellant did not prove its case,
the court
a quo
in effect required the criminal law standard of proof to be applied
in arbitration hearings and consequently misconceived the nature
of
such proceedings.
[32]
Section 138 of the LRA prescribes the general code of conduct in
arbitration proceedings. Subsection
(1) thereof, which is the
relevant part, reads as follows:
‘
(1)
the commissioner may conduct the arbitration in a manner that the
commissioner considers appropriate in order to determine the
dispute
fairly and quickly, but must deal with the substantial
merits
of the matter with
the minimum of legal
formalities’
(
emphasis
added).
[33]
In
Pep
Stores Pty Ltd v Laka NO and others
[
6]
the
following was said with regard to this section: ‘Section
138
of the LRA advocates an arbitration process that is simple, less
formalistic and less legalistic with curtailed legal representation’
[34]
In
Naraindath
v CCMA and Others
[
7]
Wallis
AJ held that in certain appropriate circumstances, an excessive
concern for court procedures may constitute reviewable error,
and
dealt as with the appellant’s complaint in that matter, that
the arbitrator relied on hearsay evidence and did not apply
the
criminal standard of proof, as follows:
“
Instead
the commissioner appears to have approached the matter in a sensible
and practical fashion, which expedited proceedings
and brought them
to finality sooner than would have been the case if he had been
emulating a conventional trial”
[
8]
[35]
In
OK
Bazaars (A Division of Shoprite Checkers) and Others
[
9]
,
the Labour Court held that an irregularity resulted when criminal law
standards were employed in arbitration proceedings in order
to decide
on the admissibility of confessions and the onus of proof. The rule
against the admission of hearsay is no longer an
absolute one in our
law, by virtue of the provisions of Section 3 of the Law of Evidence
Amendment Act 1998.
[36]
The
implication of the court
a
quo
’
s
finding
with regard to hearsay in effect required the arbitrator to have
heard the evidence of all the persons interviewed by Mr
Wilson, as
well as all the people who had part in the
“
polling
”
process,
the capturing and collating of data in the FINSAS system, or the
drafting of spread sheets. In this regard it erred. Counsel
for the
appellant, Mr
Janisch
,
gave the apt example of matters involving financial irregularities,
where the decision makers such as arbitrators of the CCMA,
generally
rely upon the evidence of a forensic auditor, who was not personally
involved in making any of the inputs, but who could
analyse,
understand and draw conclusions from the data generated by the
employer
’
s
systems. In
La
Consortium and Vending CC t/a LA Enterprises and Others v MTN Service
Provider (Pty) Ltd and Others
[
10]
this
approach was also adopted by the Court (Full Bench) required to
adjudicate upon the admissibility of electronic data as hearsay.
The
Court in that matter also pointed out that the margin of error in
effecting electronic entries is minimal and will generally
be made by
employees acting within the scope of their employment, and concluded
that
‘
the
fact that more than one person contributed to their existence does
not constitute a valid objection to the admission of data
messages
into evidence and the court affording them
‘
due
weight
’
”
[
11]
[37]
This practice is clearly acceptable because
evidence of this nature is most conveniently and accurately
presented
by a person who understands the systems and has personal knowledge of
how they integrate with the practical operation
of the employer’s
business. The arbitrator concluded that Mr Wilson was such a person.
Since he was the appellant’s
national operations manager, with
eight years retail experience, the conclusion reached was reasonable.
that the margin of error
in effecting electronic entries is minimal
and will generally be made by employees acting within the scope of
their employment.
The Court concluded that ‘the fact that more
than one person contributed to their existence does not constitute a
valid objection
to the admission of data messages into evidence and
the court affording them ‘due weight’ ”
[
12]
[38]
As Mr Wilson was not personally present
during the stock-taking and did not personally generate the
stock
loss documents which resulted in his investigations, these documents
were strictly speaking hearsay, but it was permissible
for the
arbitrator to have relied on them in conjunction with Mr Wilson’s
testimony, provided he was satisfied that the evidence
was reliable,
which it was. Moreover, his view that the evidence was reliable was
imminently reasonable.
[39]
There was no suggestion that Mr Wilson fabricated
the documents or that he and other employees of the appellant
colluded in some conspiracy to rid the appellant of all its the staff
in the Mabopane Store. On the other hand, the first respondent’s
credibility was viewed questionable by the arbitrator. Her evidence
that Mr Wilson’s visit to the store was because of the
burglary
and that he never mentioned the 28% stock loss, vacillated. She also
contradicted herself in respect of police case numbers
in relation to
the alleged burglary. The arbitrator’s rejection of her
evidence was therefore not unreasonable.
[40]
The court
a quo
correctly found that the question of
whether a burglary had occurred on 6 September 1999 was irrelevant
because the stock-take occurred
long before that. However, the
learned judge lamented that the arbitrator did not appreciate that he
was not called upon to decide
on the question of the burglary and
“did not understand how to separate those two issues.”
The comment in my view is not only unwarranted but
also factually incorrect. The arbitrator specifically found in his
award that
the burglaries were irrelevant and seemed to have
perfectly understood the reason therefore. Any reasonable
commissioner, seeking
to determine the matter fairly, expeditiously,
and affordably, could have relied upon the evidentiary material which
was before
him to arrive at the same conclusion. Consequently, the
arbitrators’ finding that massive stock losses or shrinkage
indeed
occurred, did not warrant the criticism of the court
a
quo.
[41]
Once the arbitrator’s finding as to
the existence of massive stock losses in the store is found
to have
satisfied the test of reasonableness, the next question is whether
the finding of ‘team misconduct’ on the
part of the
respondents and the subsequent sanction of dismissal in respect of
each respondent, was a reasonable one.
[42]
In determining the collective accountability
of the five respondents, the arbitrator considered arbitration
awards
delivered in similar matters. In particular he relied upon the
matter of
Federal
Council Retail and Allied Workers v Snip Trading
[
13]
where
Professor Grogan, as arbitrator, was required to determine the
substantive fairness of a policy adopted by a general retailer
(also
an employer with several stores as in the present case), in terms of
which all employees at a particular store could be held
accountable
for stock losses.
[43]
In his award, Professor Grogan accepted that
the notion of “collective guilt” was repugnant
to the
principles of natural justice, and noted that the term “collective
misconduct” referred to situations where
a number of employees
participate for a common purpose, but are then held liable
individually. In the context of employees
in a small store, who
are unable to point to some cause for the stock loss, he held
[
14]
:
“
In
my view, the species of misconduct upon which the company relies when
it calls members of an entire staff to book for stock loss,
although
collective in nature, would be better described as
‘
team
misconduct,’
…
.In
the case of ‘
team
misconduct’
the employer dismisses a group of workers because responsibility for
the collective conduct of the group is indivisible. It is
accordingly
unnecessary in cases of team misconduct to prove individual
culpability, ‘derivative misconduct’ (see Chauke’s
case, supra)
[
15]
or
common purpose - the three grounds upon which dismissal for
collective misconduct can otherwise be justified. In ‘
team
misconduct’
the employees are dismissed because, as individual components of the
group, each has culpably failed to ensure that the group complies
with a rule or attains a performance standard set by the employer”.
If
employees in a small store are unable to give an explanation for
stock losses in that store to the effect that it was beyond
their
control, the only possible inference is that they are guilty.
Consequently he held that the policy was not unfair.
[
16]
[44]
In his award, the arbitrator also
referred to the arbitration award in SA
Commercial
Catering and Allied Workers Union v Pep Stores,
[
17]
where
the entire staff compliment in a particular store of the respondent
in Lady Frere were dismissed after an enquiry into stock
losses of
81%. The arbitrator in that matter found that the stock loss figure
was so glaring that it could not possibly have
escaped
the attention and knowledge of every member of the Lady Frere staff.
It
was further held that it was the responsibility of every staff member
to protect the interests of their employer. In the present
matter the
arbitrator pointed out that the first respondent and the staff (the
other respondents) were similarly responsible for
stock losses. With
reference to the aforesaid cases, the arbitrator concluded that the
dismissals were fair on substantive grounds.
[45]
The question whether employees, other than
managers, such as the second to fifth respondents, should
be held
accountable (i.e. disciplined and dismissed) for a general stock loss
at a store, was pertinently raised by this Court.
These respondents
did not testify at any stage.
[46]
According to Professor Grogan in
Snip
Trading
the
justification for the dismissal of each employee lies in his or her
individual culpability for the failure of the group
to attain the
performance standard set by the employer.
[
18]
This
justification is permissible if one accepts that an employer is
entitled to introduce strict rules in order to protect its
assets. It
is often extremely difficult to prove that stock losses are caused by
a particular employee. Consequently, it is acceptable
for employers
to introduce rules into the workplace and employment contracts which,
if breached carry the sanction of dismissal,
even for a first
offence, and even if it is not a criminal offence. ‘Unauthorized
possession’ and ‘failure to
follow security procedures’
were examples given by Professor Grogan of such offences. These rules
are reasonable, he reasoned
because ‘rules are assessed not
only in terms of fairness, but also in terms of operational
requirements.’
[
19]
[47]
In
Chauke’s
case
(
supra)
[
20]
the
Labour Appeal Court accepted that this type of matter presents a
difficult problem for fair employment practices, and illustrated
the
problem by posing the following question: “Where misconduct
necessitating the disciplinary action is proved, but management
is
unable to pinpoint the perpetrator or perpetrators, in what
circumstances will it be permissible to dismiss a group of workers
which inconstably included them? Cameron JA then postulated two
lines of justification for a fair dismissal in such circumstances.
The first is where an employee, who is part of the group of
perpetrators, is under a duty to assist the employer in bringing the
guilty to book. The second is where an employee ‘has or may
reasonably be supposed to have information concerning the guilty,
his
or her failure to come forward with the information may itself amount
to misconduct. The relationship between employer and
employee is in
its essentials is one of trust and confidence, and, even at common
law, conduct clearly inconsistent with that essential
warranted
termination of employment
(
Council
for Scientific and Industrial Research v Fijen
[
21]
).
Failure
to assist an employer in bringing the guilty to book violates this
duty and may itself justify dismissal’ The learned
judge of
appeal further
[
22]
held
that this derived justification is wide enough ‘to encompass
those innocent of it, but who through their silence make
themselves
guilty of a derivative violation of trust and confidence.’
[48]
The arbitrator, in concluding that all five
employees were fairly dismissed, came to a decision which
falls
within a range of reasonable outcomes by following legal principles
that have been authoritatively dealt with in the matters
referred to
above.
[49]
Mr
Khoza
,
for the respondents, did not take issue with these legal principles.
He reiterated the argument that the appellant did not prove
the
existence of a stock loss of 28%. The argument has been canvassed
above. In addition, Mr
Khoza
argued that dismissal was too harsh a sanction given the service
records of the respondents which ranged from eighteen to three
years
service. It appears that the respondents colluded to keep from their
employer the fact that almost a third of the stock in
the Mabopane
store disappeared and gave unacceptable explanations for the
disappearances. The relationship of trust between
them and the
appellant clearly has broken down irretrievably. In these
circumstances dismissal is the only appropriate sanction.
Consequently, the arbitrator’s findings as to the substantive
fairness of the dismissal ought to have been upheld by the
court
a
quo.
I proceed now to deal with the
question of the procedural review.
THE
DISCIPLINARY ENQUIRY AND PROCEDURAL FAIRNESS
[50]
The appellant’s version as to why the
disciplinary hearing took place in the absence of the
respondents was
as follows: Mr Jan Masemola, the union official who was to represent
the respondents at their enquiry on the 15th October
1999 (a
Friday) sought a postponement of the enquiry the previous day, in
respect of the first respondent, so that she could be
heard
separately. An agreement was then reached with Mr Masemola, that the
enquiry in respect of the first respondent would take
place on
Saturday 16 October, and that the hearing in respect of the remaining
respondents would proceed as scheduled, on Friday
15 October. On this
day Mr Masemola and the respondents (including the first respondent),
arrived at the enquiry and Mr Masemola
requested a postponement of
the enquiry, which Mr Le Roux, the chairperson of the enquiry
refused, as he was not amenable to a
postponement because Mr Wilson
had to return to Cape Town the following Monday.
[51]
Mr Masemola then demanded that Mr Wilson relinquish his
role as initiator at the enquiry and indicated that if
Mr Wilson were
to remain as the initiator, the respondents would not participate in
the hearing. Although Mr Masemola was assured
of an opportunity to
cross-examine Mr Wilson, the appellant stood firm on its decision for
Mr Wilson to remain in the proceedings
as the initiator. Mr Masemola
persisted in the stance he had adopted. When he learnt that Mr Wilson
would continue as initiator,
he and the five respondents left the
enquiry. The enquiry proceeded in their absence and Mr Wilson
led all the evidence before
Mr Le Roux.
[52]
That same evening, at about 18h00, Mr Le Roux telephonically
enquired from Mr Masemola whether
the first respondent would attend
her hearing scheduled for the following day, as arranged by
agreement. Mr Masemola reiterated
his objection to Mr Wilson’s
role as initiator. The following day, when Mr Le Roux attended the
appointed venue, neither
Mr Masemola nor the first respondent
appeared. All five respondents were found guilty as charged and each
one of them notified
that they were dismissed.
[53]
The respondents’ version as to these events was presented by
the first respondent. The
other respondents did not testify.
According to the first respondent, Mr Masemola successfully applied
for a postponement of the
enquiry to 19 October 1999. The
postponement was obtained from Mr Le Roux on the grounds that Mr Jabu
Motau, the official appointed
to represent the respondents, was only
available on19 October and not before that. However, when
Mr Motau and the respondents
arrived at the appointed venue for the
enquiry on 19 October 1999no one was in attendance and they left
after an hour. Each one
of the respondents was later notified of
their dismissal.
[54]
The arbitrator made favourable credibility
findings in respect of both Mr Le Roux and Mr Wilson because
their
versions corroborated each other. Their version on this aspect
was also fortified by the evidence of Ms Lizette Bester,
a former
human resources official of the appellant. Her evidence was presented
as part of the record of the first arbitration hearing
in this matter
before Commissioner Roopa, which was held on 15 December 2000. The
transcript of her evidence was contained in the
appellant’s
bundle of documents presented as evidence in the third arbitration
hearing (the one under consideration in this
appeal). She could
not testify personally at that hearing because she had since left the
country to live in Dubai. For that
reason her testimony was allowed
as hearsay.
[55]
The arbitrator drew an adverse inference
against the respondents for not calling either Mr Masemola
or Mr
Motau, who would have been in the best position to testify on behalf
of the respondents, concerning the events surrounding
the
disciplinary hearing which was held
in
absentia
.
[56]
Faced with the two conflicting versions regarding
the postponement of the enquiry, the learned judge
a
quo
seemed to have accepted the
evidence of the first respondent. Although he made no credibility
findings with regard to the witnesses
either way, and further did not
analyse or weigh up the two different versions presented to the
arbitrator regarding the postponement,
he nevertheless found that
‘
Clearly, no enquiry was held in
respect of the first applicant [respondent]. In the absence of any
enquiry by the commissioner,
I find that it probably skipped his mind
to investigate this carefully, as he failed to do so
’
.
[57]
This criticism of the arbitrator’s
finding of procedural unfairness is unjustified, and
most probably
attributable to the learned judge’s erroneous understanding
that only the second to fifth respondents arrived
at the enquiry
venue on 15 October 1999. It was common cause between the
parties before the arbitrator that all five respondents
arrived at
the hearing venue on that day. This fact and its significance did not
escape the arbitrator. The first respondent, being
there on the day
in question, associated herself with the approach adopted by Mr
Masemola and left the hearing, thereby displaying
her attitude toward
her own hearing set down for the following day.
[58]
On the evidence accepted by the arbitrator,
the respondents’ refusal to attend the disciplinary
hearing was
unreasonable. Assuming the objection to a material witness, being the
enquiry initiator, to be a valid one, the respondents
should
nonetheless have participated in the hearing and placed their
objections on record. It is a trite principle in our law that
a
party, who chooses not to attend a hearing, does so at his or her own
peril, and is precluded from later complaining about the
outcome of
the hearing.
[
23]
In
any event, the fact that Mr Wilson was the initiator would not have
prevented cross-examination by the respondents’ representative
and on the evidence accepted by the arbitrator, Mr Masemola was given
that assurance.
[59]
The arbitrator’s finding that the
dismissals were also procedurally fair, given all the facts
placed
before the arbitrator, as in the case of his finding on substantive
fairness, is one that a reasonable decision maker could
have made,
and ought not to have been upset on review. Consequently, the appeal
should succeed and there should be no order as
to costs.
[60]
The order of the court
a
quo
, dated 30 August 2006, is altered
to read “the application for review is dismissed”
_______________
E
REVELAS
ACTING
JUDGE OF THE LABOUR APPEAL COURT
DM
DAVIS JA: I agree.
____________
DM DAVIS JA
JUDGE
OF THE LABOUR APPEAL COURT
AN
JAPPIE JA: I agree.
_____________
AN JAPPIE JA
JUDGE
OF THE LABOUR APPEAL COURT
For the
appellant:
Adv M W Janisch
Instructed
by:
Perrot Van
Niekerk Woodhouse and Matyolo Inc
For the
respondent: Mr MW
Khoza
Instructed
by:
Retail and
Allied Workers Union
Date
of Judgment:
25 March 2010
[
1]
(2008)
29 ILJ 2507 (CC) at 2529 D-E
[
2]
1999(3)
SA 304 (LAC) being whether there must be a rational objective basis
justifying the connection made by the decision-maker
between the
material properly available to him and the conclusion he eventually
arrived at.
[
3]
(2007)
ILJ 2405 (CC)
[
4]
At
paragraph [110]
[
5]
(2008)
28 ILJ 2405 (LAC) para [102]
[
6]
(1998)
19 ILJ 1534 LC, See also East Rand Gold and Uranium Co Ltd v CCMA
and Others (1999) 20 ILJ 2348 (LC).
[
7]
(2000)
21 ILJ 1151 (LC)
[
8]
At
1164, A-C [42]
[
9]
(2000)
21 ILJ 1188 (LC) at 1191 [12]
[
10]
Case
No A5014/08, dated 19 August 2009 (SCHC)
[
11]
At
para [19]
[
12]
At
para [19]
[
13]
(2007)
7 BLAR 669 (T)
[
11
At
678 paragraph [32]
[
12
Chauke
and Others v Lee Service Centre CC t/a Leeson Motors (1998) 19 ILJ
1441 (LAC). Here the Labour Appeal Court held that an
employer, who
suffered continuously under industrial sabotage perpetrated by
unidentified employees, was entitled to dismiss
all the employees on
the shop floor where the damages occurred, on the basis that the
employees must have known who the perpetrators
were and failed to
come forward and identify them.
[
13
Snip
Trading at 676 paras [26]
[
17]
(1998)
19 ILJ 939 (CCMA)
[
18]
See:
Snip Trading at 680 paras [37] - [41]
[
19]
See:
Metro Cash n Carry Ld v Tshehla
[1997] 1 BLLR 35
(LAC) at 41 G and
Snip Trading at 680, par [40]
[
20]
At
1447 pars [31] and [33]
[
21]
(1996)
17 ILJ 18 (A) at D-E
[
22]
At
1447 [33]
[
23]
See
Reckitt and Colman SA (pty) Ltd v Chemical Workers Industrial Union
and Others (1991) 12 ILJ 806 (LAC) at 813 C-D and Old
Mutual Life
Assurance Co SA Ltd v Gumbi
[2007] 8 BLLR 699
(SCA)