Brief Summary

Labour Law — Unfair dismissal — Insufficient evidence for reinstatement — Employee dismissed for insubordination; first arbitrator found dismissal unfair but awarded compensation instead of reinstatement. The Labour Court set aside the second arbitrator's award, reinstating the employee and ordering compensation. The appeal court held that the employment relationship had irretrievably broken down, making reinstatement impracticable. The appeal was upheld, and the Labour Court's judgment was set aside.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an appeal to the Labour Appeal Court against a judgment and order of the Labour Court (Molahlehi J). The appeal concerned the Labour Court’s decision to review and set aside an arbitration award (the “second arbitrator’s” award), and to substitute it with an order reinstating the employee and granting additional relief.

The parties were the Department of Finance and Economic Development (Province of Gauteng) as the appellant (employer), and Truly Mosome as the first respondent (employee). The General Public Service Sectoral Bargaining Council (GPSSBC) was cited as the second respondent, being the bargaining council under whose auspices the arbitration occurred. The commissioner who issued the second arbitration award, Zarina Walele, was cited as the third respondent.

The procedural history was central to the appeal. Following the employee’s dismissal for insubordination, a first arbitration resulted in a finding that dismissal was substantively unfair and an award of compensation rather than reinstatement. On review, Cele J set aside the first arbitration award only as to the relief and remitted the matter for a further hearing to adduce evidence on whether the appropriate remedy under section 193(2) of the Labour Relations Act 66 of 1995 should be reinstatement or compensation. A second arbitration followed, in which the second arbitrator again declined reinstatement on the basis that the employment relationship had irretrievably broken down, and awarded compensation.

The employee then brought a review application against the second arbitration award. The Labour Court set aside the second award and ordered reinstatement, together with a warning to be recorded on the employee’s employment record, and compensation equivalent to seven months’ salary. The employer appealed to the Labour Appeal Court.

The general subject-matter of the dispute, as ultimately framed on appeal, was whether the second arbitrator’s remedy determination under section 193(2)—specifically the conclusion that reinstatement was not competent because continued employment would be intolerable due to an irretrievable breakdown—was reviewable, and whether the Labour Court had correctly understood the scope and effect of the prior remittal order.

2. Material Facts

The employee was employed by the appellant as an advisor responsible for educational projects. Her immediate supervisor was Ms Kekana. The court treated it as apparent from the correspondence that the working relationship between the employee and Ms Kekana was strained rather than cordial.

On 8 July 2004, Ms Kekana addressed a letter to the employee criticising aspects of performance and conduct. The supervisor alleged, among other things, lack of initiative, lack of cooperation, negative criticism without proactive input, unexplained absence from the office, and failure to attend a scheduled meeting, and she called the employee to a meeting to discuss a planned project.

On the same date, the employee responded with a letter whose salient features were quoted in the judgment. The letter contained language and statements the employer regarded as disrespectful and insulting, including content that questioned the supervisor’s competence and suitability for her position, and refused to attend the scheduled meeting.

A disciplinary enquiry followed. The employee faced multiple charges including insubordination, framed (in substance) as gross insubordinate behaviour toward her supervisor through unacceptable and disrespectful language, including remarks implying the supervisor was “stupid” and did not deserve her post. The employee was found guilty of three charges (including insubordination) and was dismissed.

The dismissal dispute proceeded to arbitration under the GPSSBC. In the first arbitration award (dated 9 June 2009 as recorded in the judgment), the commissioner found the employee guilty of insubordination but concluded that dismissal was substantively unfair, and ordered seven months’ compensation rather than reinstatement, citing an irretrievable breakdown and no prospect of reconciliation.

The employee took that award on review. On 24 July 2008, Cele J set aside the first arbitration award only in respect of the relief granted, and remitted the matter to the bargaining council for further evidence on whether the employee should be reinstated or compensated under section 193(2). Cele J also ordered the employee to refund the compensation amount previously paid.

On remittal, a second arbitration was held before a different commissioner (the third respondent). Evidence was led (at least) from Ms Kekana, the departmental head Fati Manamela, and the employee. The second arbitrator concluded that the employment relationship had irretrievably broken down and that reinstatement was not competent, with compensation being the appropriate remedy.

The employee again sought review. The Labour Court set aside the second arbitration award and ordered reinstatement, a warning to be recorded, and seven months’ compensation. The employer appealed.

Where the court distinguished disputes of fact, it treated the arbitration as having presented two mutually exclusive versions regarding whether the employment relationship had irretrievably broken down. The second arbitrator accepted the employer’s version as more probable on the evidence led before her, including evidence that the breakdown extended beyond the employee’s relationship with Ms Kekana to include the relationship with the departmental head.

3. Legal Issues

The central legal questions were concerned with the application of law to fact and the reviewability of an arbitrator’s remedial discretion, rather than a pure question of law alone.

The principal issues the Labour Appeal Court was required to determine were whether the Labour Court:

maintained a correct understanding of Cele J’s review-and-remittal order, particularly whether it meant the second arbitrator was effectively obliged to order reinstatement because substantive unfairness had already been determined; and

correctly concluded that the second arbitrator misdirected herself in determining that reinstatement was excluded by section 193(2)(b) on the basis that continued employment would be intolerable due to an irretrievable breakdown of the employment relationship.

A further issue was whether, on the record and reasoning reflected in the second arbitration award, the second arbitrator’s conclusion and remedy determination was one a reasonable arbitrator could reach, given that section 193(2) makes reinstatement the primary remedy unless one of the statutory exceptions applies.

4. Court’s Reasoning

The court’s reasoning was anchored in the structure of section 193(2) of the Labour Relations Act 66 of 1995, which obliges the Labour Court or an arbitrator to order reinstatement or re-employment unless one of the listed exceptions exists. The exception most directly implicated was section 193(2)(b), which applies where the circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable. The court also treated the remittal order and the scope of the second arbitration as determinative of the enquiry.

A major aspect of the reasoning was the interpretation of Cele J’s prior review order. The Labour Appeal Court rejected the Labour Court’s understanding that Cele J’s remittal meant the second arbitrator was obliged to order reinstatement. It characterised Cele J’s order as having set aside the first award only to the extent of the remedy, because Cele J was not satisfied that the evidence before the first arbitrator was sufficiently cogent to justify a non-reinstatement remedy under section 193(2). On this approach, the remittal was not a directive favouring reinstatement, but a direction to hold a fresh hearing (described as de novo in the judgment) for the reception of further evidence so that the arbitrator could properly exercise the remedial discretion under section 193(2).

In support of this, the court noted that evidence led in the first arbitration (including evidence from a witness who testified in the first arbitration but not in the second) was not treated as part of what the second arbitrator relied upon in making her remedy determination. This, in the court’s view, reinforced that the remittal contemplated a new evidentiary hearing directed at the appropriate remedy, rather than a narrow exercise constrained by the first arbitration’s factual findings.

Turning to the second arbitration award itself, the court held that the second arbitrator understood and appreciated the mandate given by the remittal, namely that the sole question before her was whether the employee should be reinstated or compensated under section 193(2). The court also accepted that the second arbitrator identified the relevant statutory exception, particularly section 193(2)(b), and approached the matter on the basis that she had to decide between two mutually exclusive versions by assessing which was more probable.

The Labour Appeal Court further found that the second arbitrator properly considered the correspondence between the supervisor and the employee, including the employee’s response letter, and characterised the employee’s letter as derogatory, insulting, contemptuous, and disrespectful. It emphasised that the content of the letter struck at the supervisor’s competence and legitimacy in her position, and that this kind of attack was relevant to whether the employment relationship could continue.

A key evaluative judgment endorsed by the court was that the second arbitrator was entitled, on the totality of the evidence, to conclude that the employment relationship was not only damaged between the employee and Ms Kekana, but also between the employee and the departmental head (Ms Manamela). The court treated this as important because the employee’s argument that Ms Kekana had since left employment did not, on the evidence accepted by the arbitrator, resolve the broader breakdown with the employer’s management structures.

The court also rejected the contention that the misconduct’s seriousness depended on wider publication. It accepted that the employee’s letter had been copied to the departmental head, and in any event considered that publication was not a prerequisite for finding that the conduct was serious and destructive of trust.

In discussing the assessment of remedy and the broader fairness enquiry, the court referred to the proposition (described as trite in the judgment) that the arbitrator must consider the totality of circumstances, including the seriousness of the misconduct, when determining sanction and remedy. In that context, it quoted a passage from Motsamai v Everite Building Products to the effect that the arbitrator must decide the appropriate sanction with regard to the evidence, the employer’s code, and the nature and seriousness of the misconduct, and that the decision must be reasonable in all the circumstances.

On the review standard implicit in the court’s approach, the Labour Appeal Court concluded that the second arbitrator’s decision not to reinstate was a decision a reasonable arbitrator could reach. It found no basis to conclude that the second arbitrator committed a reviewable irregularity in preferring compensation over reinstatement under section 193(2) on the evidence she accepted.

Finally, because the court considered the Labour Court to have misconstrued the first review judgment and to have erred in setting aside the second arbitrator’s award, it held that the appeal should succeed and the Labour Court’s substituted reinstatement order could not stand.

5. Outcome and Relief

The Labour Appeal Court upheld the appeal.

It set aside the Labour Court’s order and replaced it with an order that the appellant must compensate the first respondent in an amount equivalent to seven months’ salary, quantified in the order as R104 423.00.

The court made no order as to costs.

Cases Cited

Motsamai v Everite Building Products (full citation not provided in the judgment text).

Legislation Cited

Labour Relations Act 66 of 1995, section 193(1).

Labour Relations Act 66 of 1995, section 193(2), including section 193(2)(b).

Rules of Court Cited

No rules of court were cited in the judgment text.

Held

The Labour Appeal Court held that the Labour Court erred in its interpretation of the earlier remittal order (Cele J’s judgment) and in setting aside the second arbitrator’s award. The remittal was for a fresh determination, on further evidence, of the appropriate remedy under section 193(2) and did not oblige the second arbitrator to order reinstatement.

It further held that the second arbitrator properly exercised the remedial discretion under section 193(2) and reasonably concluded, on the evidence before her, that the employment relationship had irretrievably broken down and that continued employment would be intolerable within the meaning of section 193(2)(b). As a result, reinstatement was not competent and an award of compensation was justified.

LEGAL PRINCIPLES

Section 193(2) of the Labour Relations Act 66 of 1995 establishes reinstatement or re-employment as the primary remedy for unfair dismissal, subject to specified statutory exceptions, including where continued employment would be intolerable (section 193(2)(b)) or where reinstatement is not reasonably practicable (section 193(2)(c)).

Where an earlier review order sets aside an arbitration award only as to remedy and remits the dispute for further evidence on remedy, the subsequent arbitrator’s mandate is to determine the appropriate remedy under section 193(2) on the evidence led on remittal. Such a remittal does not, merely because a prior award found dismissal unfair, necessarily compel reinstatement if the statutory exceptions in section 193(2) are established on the evidence.

An arbitrator determining remedy under section 193(2) must evaluate the evidence and decide, on the probabilities, whether the circumstances demonstrate an irretrievable breakdown and resultant intolerance of continued employment. Where the arbitrator applies the correct statutory framework and reaches a conclusion supported by an evaluative assessment of the evidence, the remedy determination will not be set aside on review merely because another decision could have been preferred; the question is whether the conclusion is one a reasonable arbitrator could reach on the material before them.

In assessing the appropriateness of dismissal and related remedial consequences, the seriousness of misconduct such as insubordination may be treated as materially relevant to whether the employment relationship can continue, because conduct striking at the core of authority and trust in the workplace may support a finding that reinstatement is inappropriate under section 193(2)(b).

Department of Finance And Economic Development (The Province of Gauteng) v Mosome and Others (JA1/2013) [2014] ZALAC 46 (19 September 2014)