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[2015] ZALAC 36
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Gemalto South Africa (Pty) Ltd v Ceppwawu obo Louw and Others (JA 54/14) [2015] ZALAC 36; [2015] 11 BLLR 1100 (LAC); (2015) 36 ILJ 3002 (LAC) (27 August 2015)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Case
no: JA 54/14
DATE:
27 AUGUST 2015
In the matter
between:
GEMALTO SOUTH
AFRICA (PTY)
LTD
.............................................................................
Appellant
(Applicant
in the Court a quo)
And
CEPPWAWU obo
LOUW, JAMES & 20
OTHERS
..................................................
First
Respondent
MOAHLOLI NYAMA
N.O
......................................................................................
Second
Respondent
COMMISSION FOR
CONCILIATION
MEDIATION AND
ARBITRATION
........................................................................
Third
Respondent
First
to Third Respondents in the Court a quo)
Heard: 27 May
2015
Delivered: 27
August 2015
Summary:
Review of arbitration award - dismissed employees singled out among a
group of employees for refusing to subject themselves to
polygraph
testing – reasons for which employees dismissed not serving the
real purpose of the polygraph test – no rational
link between
the dismissal and the alleged misconduct - selective dismissal unfair
– dismissal substantively unfair –
commissioner’s
award falling within the band of reasonableness – Labour
Court’s judgment upheld – Appeal
dismissed with costs.
Coram: Tlaletsi
DJP; Landman et Sutherland JJA
JUDGMENT
TLALETSI DJP
[1] This is an
appeal with leave of the court below against the judgment and order
of that court (Cele J) in which it dismissed
the appellant’s
application to have an arbitration award issued by the second
respondent (the commissioner) under the auspices
of the third
respondent (the CCMA) reviewed and set aside.
[2] The award
concerned a dismissal dispute referred to the CCMA by the first
respondent (the union) on behalf of its members (the
employees) who
were at all relevant times employed by the appellant. The union
contended that its members were unfairly dismissed
for
insubordination by the appellant. The commissioner in essence found
the employees to have been guilty of the misconduct but
that the
sanction of dismissal was procedurally fair but substantively unfair
and awarded the employees compensation equal to five
months of their
remuneration calculated at the rate as at the time of their
dismissal. The collective amount of compensation was
determined by
the commissioner to be R1 026, 970-00 which was payable within 14
days of receipt of the award. No award was made
as to costs.
[3] It is the above
award which was the subject of the review application brought by the
appellant in the Labour Court. The Labour
Court found, in essence
that the decision reached by the commissioner fell within a range of
reasonableness and dismissed the application
for review and made no
order as to costs.
[4] The crisp issue
to be determined in this appeal is whether the Labour Court was wrong
to have concluded that the award of the
commissioner is not one that
a reasonable commissioner could not make in the circumstances.
[5] The factual
background leading to the dispute consists of facts which are largely
common cause. The appellant is involved in
the manufacturing and
personalizing of secure operating devices such as smart cards and sim
cards. The appellant sells these products
to most of the banks in the
country. In order for the appellant to produce these products,
customers would necessarily entrust
the appellant with their
clients/users details. Due to the nature of the appellant’s
business and the high security risks,
it operates in high security
environment that deals with financial information and secure
transaction tools.
[6] On or about 31
December 2010, Standard Bank, one of the appellant’s biggest
clients, sent a letter to the appellant apparently
alleging that some
cards and data pertaining to Standard Bank had been removed from the
appellant’s premises and as a result
of which a loss amounting
to R50 000 000 was suffered by Standard Bank. The bank demanded
payment of the said amount from the appellant.
Due to the
significance of the claim, the possible damage to the appellant’s
reputation and relationship with Standard Bank,
the appellant decided
to conduct an investigation into the Standard Banks’s claim. As
part of the investigation, the appellant
requested all its employees
including senior management, who had access to sensitive data, to
undergo polygraph tests.
[7] On 31 March
2011, Graham Adams, the appellant’s Risk Manager addressed a
letter to the union and all employees wherein
the following was
stated:
‘It is a
well-known fact that Gemalto operates in a secure environment and in
keeping abreast with VISA and MASTERCARD security
requirements and
maintaining our trusted relationship with clients, Gemalto is
required to authenticate employees’ integrity
by means of a
polygraph examination.
As such Gemalto
endeavours to conduct polygraph examination for all employees who
have access to its secure plant facilities.
The examination will
start from 4 April 2011. All affected employees will be notified
accordingly of their examination in due course
by the designated Risk
Manager Graham Adams.
As this initiative
is an inherent business requirement your co-operation in this regard
is required.’
[8] The said letter
by Adams was followed by a letter issued by Mark Warren, the Plant
Manager, dated 7 April 2011. This letter
was issued in response to
the union’s communication of the unwillingness of its members
to participate in the polygraph tests
process. In the letter, Warren
noted, inter alia the union and its members’ unwillingness to
participate in the polygraph
test process despite management meeting
all the employees on 5 April 2011 as well as a subsequent meeting
with all the shop stewards
wherein the importance of the tests was
fully explained; that the employees’ request for another
meeting which had been scheduled
for 13 April 2011 already, had no
impact on the current operation of polygraph testing as it is the
appellants’ prerogative
to manage its employees and to demand
performance on requests which are reasonable and lawful. In
conclusion, the letter urged
the union officials to intervene
immediately as the behaviour of its members would not be tolerated
and would instead be met with
strong disciplinary action resulting in
possible termination of employment.
[9] At the meeting
of 13 April 2011, the appellant’s representatives reported
about the Standard Bank’s claim which
was considered to be
substantial and that should Standard Bank be successful, the
appellant’s business viability would be
adversely affected. The
union representatives expressed the view that polygraph testing was
voluntary and that the appellant should
consider other alternative
investigation “tools” as polygraph testing would not
work. They contended further that its
implementation would not
succeed as the majority of the employees were not participating.
Appellant’s representatives responded
that they had considered
other methods and found polygraph tests to be the most effective
method. They further reported that there
were employees who had a
clause in their contracts of employment allowing the employer to
demand that they undergo polygraph tests,
and that they were at risk
of disciplinary action should they persist in their refusal to
undergo the tests. The minutes of the
meeting concluded by recording
that there was deadlock on the matter and that the union would be
allowed to address its members.
[10] Another meeting
was held on 5 May 2011. The minutes reflect that polygraph testing
was further discussed. Appellant’s
representatives recorded
that it would not be cost effective to consider other alternative
methods to polygraph testing; that only
a small and negligible number
of employees have subjected themselves to the test; that employees
would be allowed more time to
subject themselves to tests and that
information session for the employees on polygraph testing would be
arranged to try and allay
their fear. Management reiterated that the
employees who had clauses providing for polygraph tests incorporated
in their contracts
of employment were acting in breach of those
contracts. The union indicated that it was opposed to compulsory
polygraph testing
and that its members should not be intimidated to
undergo the testing if they do not want to.
[11] It is common
cause that information sessions were conducted by external “polygraph
specialists” on 17 and 20 May
2011. Few employees attended the
sessions.
[12] It is further
common cause that a group of 189 employees signed a petition which
was presented to the appellant. The petition
stated that:
‘We are not
going to the polygraph tests. As nothing wrong has happened to the
Company (loss of cards). The polygraph test
is not accurate. Those
who want to be tested can go as the polygraph test is voluntary not
compulsory. You should explain to us
what will happen to those who
fail it.’
[13] On 27 June
2011, the appellant issued a letter to 28 individual employees noting
that despite its attempts to consult them
and their union on
polygraph tests, they have failed to undergo the tests. The
addressees were reminded that their contracts of
employment allowed
the employer to demand polygraph testing and were given 48 hours
final extension to submit their names for polygraph
testing.
[14] The 28
employees who were served with the letters did not submit themselves
to undergo the tests. The appellant charged the
employees for:
‘gross
insubordination, in that it’s alleged that you collectively and
with common purpose refused to carry out a lawful
and reasonable
instruction to attend a polygraph, this instruction was given to you
on numerous occasions since April 2011. Your
continuous refusal is in
breach of your contract of employment and has potentially created a
serious breach of trust.’
The alternative
charge was of insubordination with details similar to the one set out
in the gross insubordination charge. The chairperson
of the
disciplinary enquiry found the employees guilty of the charge of
gross insubordination and found summary dismissal as the
appropriate
sanction.
[15] Aggrieved by
the findings of the disciplinary enquiry, the first respondent and
its members referred a dispute of unfair dismissal
to the CCMA. The
matter could not be settled through conciliation and proceeded to
arbitration stage where it was arbitrated by
the commissioner who
issued his award on 21 September 2012. The referral was initially on
behalf of 23 employees. However, the
referral on behalf of two of the
employees was dismissed on 16 July 2012 for their failure to attend
hearing.
[16] At the
arbitration, the appellant presented the evidence of Mark Warren and
Theo Heffer who was the chairperson of the disciplinary
enquiry. The
union tendered the evidence of James Louw (Louw) who was one of the
dismissed employees, Gabriel Malakia Tau (Tau)
and Gilbert Rose
(Rose) both former shop stewards of the union.
[17] Warren
testified that after they received a demand from Standard bank which
accused the appellant of being infiltrated by fraud
syndicates, they
conducted internal investigation. The investigation did not yield
intended result and was widened to include polygraph
testing for all
employees who had access to sensitive data and access to the
manufacturing plant. They hoped that the exercise
would assist to
maintain integrity and check if there were any potential problems to
be dealt with. He mentioned that it was not
the first time that
polygraph testing was used as it was common practice and policy to do
so. It was also generally accepted as
an investigative tool and
employees participated in order to protect the appellant’s
interest.
[18] Warren
mentioned that some employees were contractually bound to undergo
polygraph testing because their contracts had annexures
obliging them
to undergo such tests whenever required by the appellant to do so.
However, some of the annexures could not be found
and they decided to
charge only those employees whose annexures to their contracts could
be found.
[19] Heffer’s
evidence related mainly to his appointment as chairperson and whether
he conducted the enquiry fairly. Nothing
turns on his evidence since
the process was found to be fair.
[20] The union’s
case was that its members did not subject themselves to the polygraph
tests since they were not obliged to
do so and that their dismissal
was unfair because they were the only ones disciplined and dismissed
out of the group of many other
employees who also refused to subject
themselves to these tests.
[21] The
commissioner, after analysing the evidence, made, among others, the
following findings:
21.1. that since the
employees did not undergo the polygraph tests, “logically it
would mean guilty as charged, but however
the question remains, was
dismissal appropriate in the circumstances.’’
21.2. the appellant
presented no evidence to show whether the employees had a history or
record of misconduct.
21.3. that dismissal
for misconduct as a transgression should be for instances of such
gravity that makes continued employment intolerable.
21.4 that according
to Warren, the sanction of dismissal was fair in the circumstances of
this case because the employees refused
to comply with their
contractual obligations and allowing that to happen would cause
“anarchy” in the business.
21.5. that one Rose
who was a signatory to the petition continued to work until
retrenched by the appellant. Although Rose may not
have had a clause
to undergo polygraph test in her contract, she was equally guilty as
the dismissed employees.
21.6. the appellant
tendered no evidence to justify why the employees were treated
differently from other employees who did not
have clauses relating to
polygraph testing in their contracts of employment. The fact that
some of the annexures went missing is
not a justification for not
disciplining them for failure to obey a lawful and reasonable
instruction.
21.7. Why only 23
out of 189 employees who signed the petition were charged was not
justified by the appellant. Selective discipline
was applied to the
employees dismissed. Tau, who signed the petition was not disciplined
but retrenched a month before the respondents
were charged.
As pointed out
already, the dismissal of the employees was found to be substantively
unfair but procedurally fair and the commissioner
awarded
compensation.
[22] In the Labour
Court, the appellant sought the review of the award on the basis that
the award is defective and that the commissioner’s
decision is
not one that a reasonable decision-maker would have made when regard
is had to the evidence before him; that the commissioner
committed a
gross irregularity in the conduct of the proceedings by misapplying
the parity principle; he failed to apply his mind
to the fact that
the appellant only disciplined those employees it could prove had
breached their contractual obligations and were
therefore guilty of
gross misconduct and, that the commissioner failed to apply the
correct test which was to consider whether
the appellant by
distinguishing between the employees acted capriciously, arbitrarily
or as a result of improper motive.
[23] The Labour
Court held, among others, that the appellant could easily have
decided to charge all employees and treat them equally
(the 189
employees including the 23 who were charged) by using the existing
contracts as an indication of the type of contract
that it had with
all of them; that it was improper for the appellant to assume that
any of those employees whose annexures had
disappeared, might dispute
that they had signed those contracts; that the appellant could easily
have led evidence to show that
it was its practice in terms of the
industry in which it operated that all employees had to sign
contracts with the clause providing
for polygraph testing. The Labour
Court concluded thus:
‘As already
pointed out in this address as to how it would proceed with the
sanction if it found them guilty was open to the
applicant. In my
view the commissioner’s criticism of the differentiation is
meritorious, it does not, in my view, amount
to any defect as is
defined in Section 145(2) of the Act, nor am I satisfied that the
decision reached by the second respondent
in this case does not fall
within the range of reasonableness.’
The review
application was dismissed with no order as to costs being made.
[24] In this Court,
the appellant rehashed the grounds of review relied upon in the court
a quo and contended, in the main that,
the arbitration award issued
by the commissioner was not one that a reasonable arbitrator could
make in that there was no evidence
that the appellant’s
decision to discipline and dismiss the employees concerned was
arbitrary, capricious or induced by improper
motive; that there was
no evidence to support the finding that the disciplinary action and
sanction imposed were inconsistent;
and that the court a quo erred in
failing to find that the commissioner committed a gross irregularity
by failing to appreciate
the true nature of the enquiry concerning
the consistent application of discipline in the workplace and
applying the applicable
legal principles.
[25] It is common
cause that the 23 employees failed to heed the appellant’s
instruction to subject themselves to polygraph
testing. Their failure
to comply is per se an act of insubordination. However, the real
question to be answered is whether their
dismissal was in the
circumstances of this case substantively fair. The procedural
fairness of their dismissal is not in issue
as there is no challenge
to the ultimate procedure adopted by the appellant in dismissing
them. In determining the substantive
fairness for the dismissal, the
surrounding circumstances as well as the events that led to the
dismissal are factors that deserve
consideration.
[26] What
distinguishes the 23 dismissed employees from the rest of their 166
colleagues is undoubtedly the fact that the appellant,
upon perusal
of the personal files or records of all the 189 employees that
refused to undergo polygraph test, managed to find,
attached to the
23’s contracts of employment, clause 18.1 that stated that:
‘All employees
where circumstances in the Company’s discretion require will
undergo a lie detector test. This test will
be paid for by the
company. The company reserves the right to use any information
obtained from the test to conduct further investigations.’
But for this
distinction, the 23 employees’ position was similar to the
others in that they were part of a group of employees
who
collectively did not want to subject themselves to polygraph tests
and signed a petition objecting to submit to polygraph testing.
The
only reason why they became a soft target for discipline is the fact
that annexures bearing their signatures could be found.
[27] It is
significant to note that the appellants’ case had always been
that all the employees, without discrimination, were
obliged, as
management prerogative, to be subjected to polygraph test.
Furthermore, that all the employees had a clause 18.1 in
the annexed
to their contracts of employment. However, these annexures could not
be found for other employees because they were
either deliberately
removed or lost. It was only then decided, based on the perception
that it would be a difficult task to prove,
in the absence of the
said documents, that the rest of the employees were obliged to
undergo polygraph testing, that disciplinary
proceedings were
instituted only against the 23. The latter, only became victims for
disciplinary action and subsequent dismissal
for the sole reason that
annexures to their contracts of employment were not removed or lost.
Had that not been the case, they
would, like their colleagues, not
have lost their employment.
[28] It is therefore
not unreasonable to conclude that the dismissal of these employees
had nothing to do with the object and purpose
of the polygraph
testing exercise. What started off as an investigation of the
Standard Bank claim ended up not being the reason
for the employees’
discipline and ultimate dismissal. It is illogical to accept that
subjecting only the 23 employees to
the polygraph testing out of the
many would have assisted the appellant to uncover what it referred to
as a “suspected syndicate”
or achieve the objective of
addressing the Standard Bank claim. There is therefore no rational
connection between the purpose of
discipline and the alleged
misconduct sought to be investigated. Furthermore, there is no causal
link between the reason for the
dismissal and the alleged losses
suffered by Standard Bank. The differentiation between the 23 out of
the rest of the 166 employees
on this narrow distinction is in my
view unfair. It is tantamount to making an example out of the 23
employees for the others.
[29] The 23
employees may have breached a term of their contract of employment.
However, in the circumstances of this case, I am
not persuaded that
the enforcement of the term is fair. The employer wanted to use a
contractual obligation to run a blanket polygraph
test without any
reason to suspect the employees of any involvement in wrongdoing.
Once a blanket approach was not possible, to
mechanically test the
few who were vulnerable to discipline is an unfair invocation of the
employer’s rights because it remained
dysfunctional to any
operational requirement.
[30] For the reasons
set out above, it cannot be found that the commissioner’s
decision is unreasonable and could not have
been made by a reasonable
decision-maker. The appeal falls to be dismissed. It would be in
accordance with the requirements of
the law and fairness that costs
should follow the result.
[31] In the result,
the following order is made:
The appeal is
dismissed with costs.
Tlaletsi DJP
Landman et
Sutherland JJA concur in the Judgment of Tlaletsi DJP
APPEARANCES:
FOR THE
APPELLANT: K S Makapane of Bowman Gilfillan Attorneys
FOR THE FIRST
RESPONDENT: S Gaibie of Cheadle Thompson & Haysom Inc.