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[2015] ZALAC 52
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South African Revenue Service v CCMA and Others (JA06/11) [2015] ZALAC 52; (2016) 37 ILJ 655 (LAC); [2016] 3 BLLR 297 (LAC) (8 December 2015)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Case no: JA 06/11
Reportable
SOUTH AFRICAN REVENUE
SERVICE

Appellant
and
CCMA

First Respondent
NOMSA MBILENI
NO
Second Respondent
JJ
KRUGER

Third Respondent
Heard:
26 February 2015
Delivered:
08 December 2015
Summary:
The question posed on appeal was whether an employer who has
delegated final disciplinary discretion to a person
qua
chair of a disciplinary enquiry can substitute the chair’s
decision with a different or harsher sanction
Held
-
Absent a power to regard the decision of a chair as a mere
recommendation an employer cannot do so and any purported decision
to
substitute a sanction is invalid
Held
-
An employer’s invalid substitution of a sanction is not merely
a procedural irregularity – because of the invalidity
of such a
decision the decision is also a substantively unfair act – the
distinction between substantive fairness and procedural
unfairness is
a forensic tool of analysis rather than two discrete concepts
Held
-
The fundamental  premise of our labour relations jurisprudence
is that fairness shall prevail – a general rule that
employers
are not at large to interfere with the outcomes of disciplinary
hearing outcomes with which they disagree is an appropriate
and
necessary safeguard for workers subjected to discipline – the
rule is worthy of preservation
The LAC decision in
SARS  v  CCMA (Chatrooghoon)
explained and applied
The
LC decision in
SARS
v  CCMA (Botha)
explained and criticised
Held
-
Racist abuse – seriousness - despite the gravity thereof, a
fair enquiry including an enquiry into whether any mitigating

circumstances might exist is necessary – the imposition of a
sanction of dismissal for racist conduct cannot as a matter
of course
follow – despite the likelihood that cogent mitigation could
exist being rare, without such an enquiry, the disciplinary
enquiry
would be a sham –
The
LAC decision in
Crown
Chickens v Kapp
at [39] explained
On
appeal, the decision by the commissioner of SARS to substitute a
sanction of dismissal for the sanction of a suspension imposed
by the
disciplinary enquiry chair found to be invalid – the decision
of labour court dismissing a review application against
an
arbitrators award on the grounds that the award satisfied the test in
Sidumo
v Rustenurg Platinum Mines
upheld
- Appeal dismissed
Coram: Davis JA,
Sutherland JA and Mngqibisa-Thusi AJA
JUDGMENT
SUTHERLAND JA
Introduction
[1]
In
the lexicon of the South African people, there is a word, which more
than any other word, has the capacity to utterly denigrate
the person
to whom it is addressed and to mark the speaker as utterly
contemptible. That word is “kaffir”. In 2015,
21 years
since the Apartheid mind-set was supposedly defeated, this Court is
called upon to adjudicate upon a matter triggered
by a white man who
saw it fit to refer to his black boss as a “Kaffir”.
[2]
However,
the chief controversy before the Labour Appeal Court is not whether
that abuse was uttered, nor indeed the seriousness
of such utterance,
which is undisputed, but rather, an issue that goes to the heart of a
fair system of employee discipline in
our Labour Law jurisprudence:
may an employer unilaterally substitute a decision of a chair of a
disciplinary enquiry, to whom
final decision making authority had
been assigned, and impose a different, harsher, sanction?
[3]
The
controversy, as articulated before the Labour Appeal, is the most
recent chapter of a long evolution. That evolution is addressed

chronologically, at the disciplinary enquiry, at the arbitration, at
the review of the arbitration award Pillay J in the Labour
Court, and
lastly on appeal against the order of Pillay J.
The Disciplinary
Enquiry Stage
[4]
Mr
Jacobus Johannes Kruger (Mr Kruger) is an employee of the South
African Revenue Service (SARS). He was accused of uttering the

above-mentioned racial abuse on 27 July 2007 and was suspended on 8
August 2007, and appeared before a disciplinary enquiry on
31 August
2007.
[5]
Regrettably,
the record prepared for the appeal does not include the minutes of
that hearing, nor the bundle of documents used,
including apparently,
affidavits from his accusers, handed in during the hearing. What is
revealed to the Labour Appeal Court about
that episode is derived
from the evidence elicited in the cross-examination of Mr Kruger in
subsequent arbitration proceedings,
from the arbitration award, and
from some unchallenged references thereto in the affidavits deposed
to for the review application.
[6]
The
exact allegations in the charges and the evidence adduced (as
inferred from the sources mentioned) do not tie up exactly as
to what
was uttered and on what occasion it was uttered. These differences
are not significant for the purposes of this judgment.
Rather than
needlessly traverse the differences, I privilege the account given in
the award. According to that account, on 27 July
2007, Mr Kruger, at
the end of a heated telephone conversation with Mr Amos Mboweni, his
immediate supervisor, said to fellow employees,
present in his
company at the time: “Ek kan nie verstaan hoe ‘n kaffer
dink nie”. Mr Kruger may have used the
term on another occasion
too.
[7]
At
the disciplinary hearing, Mr Kruger pleaded guilty. He submitted a
case in mitigation based on stress from which he said he was

suffering at that time. A plea bargain was apparently struck in terms
of which the chair of the disciplinary enquiry, an independent
person
drawn from a dispute resolution organisation, found him guilty as
charged, imposed a final written warning, suspended him
without pay
for 10 days, and directed him to receive counselling.
[8]
However,
when the result of the disciplinary enquiry was subsequently
reported, presumably routinely, to senior management, it resulted
in
a notification from the Commissioner of SARS, its chief executive
officer, to Mr Kruger, dated 3 October 2007, stating that
the
disciplinary enquiry chair’s “recommendation” about
the sanction had been “declined” and that
his services
were “terminated with immediate effect”. It may be
mentioned, at this juncture, that SARS, at that time,
had a firm and
fixed view that it was lawfully able to treat all disciplinary
enquiry outcomes as mere recommendations. By the
time of the appeal,
it had abandoned that view because of the judgment of Ndlovu JA in
SARS
v CCMA (The Chatrooghoon Case).
[1]
[9]
Mr
Kruger was invited to appeal. Mr Kruger’s Shop Steward, Anton
Van Heerden, did so on his behalf on 10 October. The notice
of appeal
challenged, first, the power of the employer to substitute the
sanction, and secondly, extrapolated on mitigating circumstances.
The
appeal was dismissed on 22 October 2007.
The Arbitration Stage
[10]
Mr
Kruger thereupon referred an unfair dismissal dispute to the CCMA.
Again, regrettably, the record prepared for the appeal omits
the
referral to conciliation document and the referral to arbitration
document. This failure obscures what exactly was the issue

articulated to be in dispute which had been referred. Again the
Labour Appeal Court is driven to glean this important fact from
a
secondary source. The award states that the “issue to be
decided” is:
‘
2.1
Whether the dismissal of the applicant was procedurally and
substantively unfair.
2.2     Whether
[the Commissioner of SARS] had powers to convert a sanction of final
written warning and suspension
without pay to dismissal.’
[11]
The
cited paragraph 2.1 is not helpful in divining the issues which were
put in dispute before the arbitrator because these categories
of
“procedural” and “substantive” fairness are
generic issues. Generally, it is only useful to belabour
this
distinction when one or other category of unfairness is
not
in issue. These two cited paragraphs, read together, cannot, in my
view, logically mean that the issue as articulated in paragraph
2.2
meant that the question about the powers of the SARS commissioner to
“convert a sanction” was a third issue. Rather,
the text
of paragraph 2.1 ought to be read as being the proper subject matter
of the arbitration, namely, that there is a dispute
as to whether the
substitution of the sanction constituted both or either substantive
or procedural unfairness. Moreover, as the
unfair dismissal, alleged
to have been committed, was the action of substituting a dismissal
for a lesser sanction, initially imposed,
logically, that must be the
proper scope of the dispute. However, a reading of the award and the
outcome reached, show that this
is not, apparently, how the
arbitrator understood the scope of the enquiry.
[12]
What
the arbitrator did was to approach the matter as two discrete
enquiries. First, the arbitrator enquired into whether the employer

could substitute a sanction. The arbitrator held that the employer
could not do so. That ought, logically, to have been the end
of the
matter. However, the arbitrator then also enquired into whether the
alleged misconduct had indeed occurred. This second
line of enquiry
was inspired by Mr Kruger retracting his admission of guilt, tendered
at the disciplinary enquiry, and asserting
that he had not uttered
the words and had been subjected to undue pressure by Van Heerden to
plead guilty, whereas he was innocent.
The arbitrator held that the
misconduct did occur. Among the questions, which this case gives rise
to, is whether the arbitrator
needed to, or ought to have conducted
that factual enquiry at all. The conclusion to which I have come is
that the arbitrator ought
not to have done so because that factual
enquiry had no effect on the outcome of the arbitration. The outcome
of the arbitration
turned on the finding that the employer had no
power to change the disciplinary enquiry outcome. Accordingly upon
that premise
this judgment shall not address the factual enquiry,
because to do so would be to commit the same error which was
committed by
the arbitrator.
[13]
The
first question addressed, ie, whether the employer was vested with
power to substitute the disciplinary enquiry sanction, was
dealt by
the arbitrator by relying on the authority of
County
Fair Foods (Pty) Ltd v CCMA (County Fair ).
[2]
The
ratio
in the judgment in
County
Fair
was that the disciplinary code of that employer vested a power of
final decision in the person designated to chair the disciplinary

enquiry. Accordingly, the employer was prohibited from changing it.
As a result, the arbitrator, in applying
County
Fair
,
found that because the disciplinary code in force to regulate the
relationship between SARS and its employees, properly interpreted,

also conferred final decision-making power on the chair of the
disciplinary enquiry, the arbitrator, similarly, declared the
dismissal
of Mr Kruger on 3 October 2007 to be unfair.
[14]
The
arbitrator’s award then stated, expressly, that the sanction
imposed by the chair of the disciplinary enquiry would prevail.
The Review Stage
[15]
The
award was published on 15 March 2008. SARS applied to review the
award on 19 May 2008.
What were the grounds
of Review?
[16]
Among
the arguments advanced in argument at the appeal was that SARS could
not, in its grounds of appeal, legitimately include issues
not raised
at the arbitration or before the Labour Court in the review
application. This proposition of law is correct. (See:
Netherburn
Engineering CC t/a Netherburn Ceramics v Mudau
(2009)
30 ILJ 269 (LAC) at paragraphs 25 – 29;
NUM
obo Botsane  v Anglo Platinum Mine (Rustenburg Section)
(2014)
35 ILJ 2406 (LAC) at paragraph 46) Hence, an identification of the
questions the review court was required to answer is necessary.
[17]
The
case that SARS advanced in the review application is contained in two
affidavits. The first affidavit, filed on 19 May 2008,
declared that
the review is one contemplated by section 145 of the Labour Relations
Act 66 of 1995 (LRA).
[3]
The
award is alleged to be vitiated by gross irregularity. The
significance of this allegation is that plainly, a ground that fell

outside the ambit of section 145 was not available to SARS to rely
upon. Two specific grounds were articulated:
17.1.
First,
that the arbitrator wrongly relied on the decision in
Mgobhozi
v Naidoo
NO
and Others
(2006)
27 ILJ 786 (LAC)
as
authority to hold that the employer had no power to change a sanction
of a disciplinary enquiry chair, whereas that case has
nothing to do
with that issue. (This is technically an accurate description of
paragraph 5.8.2 of the award, but as it was later
conceded, the
reference to that case by the arbitrator was a clerical misnomer and
reference to
County
Fair
was what was intended, which would have been an appropriate reference
for that proposition). This ground was rightly abandoned.
17.2.
The
second ground was premised on an argument about the interpretation of
the SARS disciplinary code. SARS contended it could treat

disciplinary enquiry outcomes as recommendations. The arbitrator held
that the disciplinary code meant that the employer had no
powers
conferred on it to change a sanction imposed by a disciplinary chair.
The arbitrator had relied on
County
Fair
.
The ground of appeal was that this finding was wrong. However, in the
alternative, it was advanced as a ground that if the authority
of
County
Fair
was accepted as generally correct, then, at least, in regard to a
statutory body like SARS, unlike a private employer as in
County
Fair
,
the decision could have no application. (The interpretation ground)
[18]
On
21 January 2009, a supplementary affidavit was filed by SARS. The
supplementary affidavit, although disavowing a desire to add
to the
scope of the case as set out in the founding affidavit, did precisely
that in paragraphs [8] – [10]. The gravamen
of these paragraphs
is to allege that there is a duty of trust and confidence implied by
law into the terms of employment contracts,
and also into the
collective agreement which governs the employer/employee
relationship, wherein resided the SARS disciplinary
code. Upon the
basis of such an implied term, the contention was advanced that
racist abuse is a material breach of such implied
term. Accordingly,
the contention, such abuse “warrants” dismissal.
The argument further runs on to assert that
not only the employees
and the employer, but also, dispute resolvers (ie chairs of internal
enquiries and external arbitrators)
are bound to uphold that implied
term. Accordingly, a decision not to dismiss, by the chair of the
disciplinary enquiry, and a
similar decision by the arbitrator
“breached” that implied term. Ergo, it was contended that
the decisions taken must
be overturned on review. Self-evidently, if
this contention were to be read literally, it would be a nonsense to
say that the chair
of an enquiry and the arbitrator could be bound by
contracts to which they were not parties. However, I understand the
proposition
to be that they were obliged to take decisions about the
employment relationship within the paradigm of the reciprocal
obligations
of the employer and its employees, as captured in the
individual contract of employment and collective agreements which
bound the
disputants. Thus, on such grounds, it is alleged, the award
was unreasonable. (The Trust and Confidence Ground)
[19]
SARS
Supplementary affidavit also addressed the prospects that the
substitution of a sanction might be held to be invalid, anticipating

the
Chatrooghoon
Case. At paragraph 7, this is stated:
‘
In the
founding affidavit the meaning and application of clause 10.2.6 [of
the disciplinary code] is dealt with at some length.
The essence of
the applicant’s case is that it is open to it as employer not
to implement the sanction imposed by a dispute
resolver and to impose
a sanction that it deems appropriate. …The case made out in
the supplementary affidavit is that even
if the arbitrator were
correct – ie that clause 10.2.6 means that the applicant is
bound to implement the sanction imposed
by the dispute resolver –
the
setting aside of the dismissal and restitution of the sanction
imposed by the chair of the disciplinary hearing is none the
less
reviewable.
’
(Emphasis supplied)
[20]
Plainly,
the decision of the arbitrator is indeed reviewable, a trite
proposition. The very question posed to the arbitrator was
whether
the dismissal was unfair. If the dismissal was unfair, it stood to be
overturned. That would leave the status
quo
ante
;
ie, a
de
facto
restoration of Mr Kruger to the condition in which he was when the
disciplinary enquiry chair sanctioned him. This outcome was

criticised by SARS. However, the logical consequence of a finding
that the dismissal was
invalid
would be that the
status
quo
ante
3 October 2007 regarding the employment relationship was restored. In
effect, Mr Kruger’s dismissal was set aside and his
status
,
qua
employee, would thereupon have been that of an employee who had
already been sanctioned in the manner decided by the chair of the

disciplinary enquiry. The award expressly states that consequence,
but the fact that it was reiterated adds nothing to the legal

position that prevailed upon the dismissal being declared unfair, and
accordingly, that part of the award supposedly confirming
the chair’s
sanction, is superfluous. As such, it cannot therefore trigger any
legal consequence. Indeed, the appropriate
way to read that part of
the award is that it is no more than a prudent clarification of the
consequences of the award, the arbitrator
having found that the
employer had no power to change the outcome of the disciplinary
enquiry and thereupon to dismiss Mr Kruger.
The outcome of the
review application
[21]
The
review application was ultimately heard by Pillay J on 1 October 2009
and judgment dismissing the application was handed down
on 23 October
2009. The Judgment is reported as SA
Revenue
Service v CCMA (
2010)
32 ILJ 1238 (LC) (
The
Kruger Review
)
[22]
The
critical question to be answered in every review application against
an arbitrator’s award is whether the arbitrator has
rendered a
reasonable award within the meaning of the test in
Sidumo
and  Another v Rustenburg Platinum Mines Ltd and Others.
[4]
Applying
that test, Pillay J held that the finding by the arbitrator that the
employer had no power to change the sanction was a
reasonable
decision. On appeal, that specific finding by Pillay J is no longer
challenged. The reason for that subtraction from
the grounds of
appeal is the decision by Ndlovu JA in the Labour appeal Court in the
Chatrooghoon
Case
which
held that SARS had no power to change a sanction in circumstances
indistinguishable from the present case of Mr Kruger, save
for a
different act of misconduct committed by Chatrooghoon; ie, in that
case, the abuse of confidential staff information.
[23]
The
Chatrooghoon
decision
is binding on this Court unless we were to be persuaded that it was
clearly wrong. We were not invited to do so. Ndlovu
JA at paragraphs
23 – 30 in
Chatrooghoon
addressed,
first, the theme of the invalidity of a substituted sanction and,
secondly, the theme premised on the alleged implications
of an
implied term of trust and confidence in the disciplinary code and
employment contracts. Because of the importance of that
judgment on
the various arguments advanced before us, and a contested
interpretation of the effect of the judgment of Ndlovu JA,
it is
appropriate to cite the relevant passages at length:
‘
[23] It is
common cause that after 1 January 2004, the incidence of
discipline in SARS workplace was governed by the disciplinary
code or
the collective agreement which, at the time material to this dispute,
was binding on all the parties to it, namely SARS
and the two unions
concerned.
[24] To my mind, the wording of the
collective agreement is clear and unambiguous on the point that the
decision of the chairperson
on penalty becomes the final sanction,
not a mere recommendation. Therefore, Mr Bruinders correctly conceded
this point.
[25] Indeed, the duty of trust and
confidence is an implied term in every employment contract. The
breach of that duty by an employee
may result in the dismissal of the
employee concerned on the ground that, in the absence of trust and
confidence in the employment
relationship, the employer can no longer
tolerate the continued employment of that employee. However, the
issue here is about whether
SARS was, in terms of the collective
agreement, entitled to substitute a sanction of dismissal (of
Chatrooghoon) for a sanction
short of dismissal imposed by the
chairperson, given the fact that the collective agreement was silent
on the issue of substitution.
Indeed, as a matter of principle, it is
in my view regardless whether the substituted sanction was
higher or lesser than the
one imposed by the chairperson.
In other
words, the issue is essentially about whether the element of implied
term of trust and confidence in the collective agreement
extended to
include a right in favour of SARS, as the employer, to substitute any
sanction imposed by the chairperson appointed
in terms of the
collective agreement, where SARS is of the view that the misconduct
the employee was found guilty of has affected
the trust relationship
between the parties.
[26] As indicated, it is trite that
the rules of contractual interpretation do allow for reading into a
contract a term which is
implied by law for that type of contract.
However, as was stated in
Alfred McAlpine and Son (Pty) Ltd v
Transvaal Provincial Administration
, the intention of the parties
should not be totally ignored, to the extent that if the term in
question is in conflict with the
express provisions of the contract,
the term cannot normally be implied.
[27] It is apposite to refer to the
relevant parts of clauses 10.3 and 10.4 of the disciplinary code, in
relation to the issue of
sanction:
'10.3   Finding
…
10.3.3   Before
deciding on a sanction, the chair must give the employer and employee
parties an opportunity to present
relevant circumstances in
aggravation and mitigation.
10.4   Sanctions
…
10.4.2   The
chairperson with due consideration to the Code of Good Practice in
the
Labour Relations Act, the
nature of the case, the seriousness of
the misconduct, the employee's previous record, any relevant
mitigating or aggravating
circumstances and sanctions imposed in
similar or comparable cases in the past
may
impose any of the following sanctions
:
10.4.2.1   counselling;
10.4.2.2   a written
warning;
10.4.2.3   a final
written warning;
10.4.2.4   suspension
without pay, for no longer than 15 working days;
10.4.2.5   demotion of
one grade;
10.4.2.6   a
combination of the above; or
10.4.2.7   dismissal.
10.4.3   With
the agreement of the employee, the chairperson may only impose the
sanction of suspension without pay
or demotion as an alternative to
dismissal. …
10.4.6   Employee
relations will be responsible for implementing the hearing outcome,
and informing the employee.    10.4.7   The

employee has the right to appeal the outcome of the disciplinary
proceedings using the proceedings outlined in
section 11
below.
10.4.8   The employer
shall not implement the sanction during an appeal by the employee.'
(Emphasis added.)
[28] The wording of the collective
agreement does not only make it abundantly clear that the
chairperson's pronouncement on penalty
is a final sanction, but, in
my view, it also leaves no room for interpretation in favour of the
parties having intended to provide
in the collective agreement a term
granting a right to SARS to substitute its own sanction for a
sanction imposed by its chairperson.
Whilst it is trite that
the duty of trust and confidence on the part of an employee is a term
implied by law in an employment contract,
I do not think that such
implied term extends to include the right of an employer to
substitute its own sanction for that of the
chairperson, particularly
in a situation such as the present where the parties in a collective
agreement elected expressly to confer
on the disciplinary chairperson
the sole power to impose the final sanction.
[29] Significantly, the fact that in
terms of the old disciplinary code the wording was clear that a
disciplinary chairperson (a
magistrate) was only entitled to issue a
recommendation which SARS was empowered either to endorse or reject
should, in my view,
serve as sufficient demonstration that in terms
of the (new) disciplinary code, SARS no longer has such power. It
seems to me that
the disciplinary code, to the extent that it
conflicts with the old one on this particular aspect, ought to
be treated on
the same basis as in statutory interpretation involving
amending statutes. In this regard, the learned author Kellaway makes
the
following submission, with which I respectfully agree:
“
Although the
omission of certain words in a provision in an amending statute,
which were there before, may well appear to be
an oversight, a court
should not, it is submitted, construe the provision as if the words
were still there, particularly if the
inclusion would clearly
conflict with the intention or purpose of the amending Act.”
[30] On the basis
of this historical background, it seems to me reasonable to conclude,
as a further ground, that when the parties
signed the collective
agreement providing for the (new) disciplinary code they also
intended to move away from the previous practice
where SARS had the
final say on the question of sanction. That being the case, I am
inclined to find that the collective agreement
prohibited SARS
from substituting its own sanction for the one imposed by the
chairperson of the disciplinary enquiry appointed
by SARS in terms of
the collective agreement. Instead, SARS was obliged in terms of the
collective agreement to implement and execute
the sanction imposed by
the chairperson, unless there was an appeal by the employee
concerned. Therefore, for SARS to have substituted its
own
sanction it acted ultra vires the disciplinary code and the
collective agreement, which had statutory authority in terms of
the
LRA. Indeed, it was up to SARS at the time of conclusion of the
collective agreement to have negotiated a clause that would
include
its right to substitute the disciplinary sanction in certain
circumstances. This, unfortunately, SARS did not do.’
(Emphasis
supplied and footnotes omitted)
[24]
This
judgment of Ndlovu JA plainly puts paid to the “Interpretation
ground.”
[25]
It
is appropriate to observe that the “Trust and Confidence ”
argument, in the exact terms advanced before Pillay J,
in the
Kruger
Review Case
does not seem to have been put before the court in
Chatrooghoon,
and lest it may be thought that the judgment of Ndlovu JA does not
encompass that line of argument.  I deal with that aspect
here.
The remarks of Ndlovu JA at paragraph 25 of
Chatrooghoon,
can only mean that SARS cannot invoke a breach of trust to justify a
change in sanction. If that
dictum
is correct, it must follow that no legitimate complaint can be made,
on such a basis, about the way the relevant dispute resolvers

exercise their discretion in order to found a justification to
interfere with their decisions. Accordingly, in my view, the effect

of the judgment of Ndlovu JA in
Chatrooghoon
disposes of the contention that an implied term of trust and
confidence can be invoked to found an allegation of material breach

on the part of the chair of the disciplinary enquiry or of the
arbitrator for not imposing a sanction which they were entitled
to
impose, but chose not to impose. Whether the “Trust and
Confidence” type of argument can be deployed to do battle
in a
specific review of the Chair’s decision (as distinct from the
arbitrator’s decision) is a distinct and different
question.
[26]
Pillay
J in the
Kruger
review Case a quo
,
in response to arguments about the susceptibility of the chair’s
decision to a review, surveyed several aspects of the Labour
Courts’
review jurisdiction and related legal principles about Administrative
Law reviews. The excursus seems, in my view,
to have been an
obiter
exploration of what options might be available to an employer that is
an organ of state and is aggrieved by a decision taken by
itself (ie
by whomsoever had the duly delegated authority to make a final
decision) which it deemed “egregious”. In
particular,
reference was made to the notion of an organ of state reviewing
itself in an employment discipline case as addressed
in
Ntshangase
v MEC for Finance Kwazulu-Natal and Another (Ntshangase)
.
[5]
According to the narrative recorded in the judgment of Pillay J at
paragraph 12, the
Ntshangase
case
was invoked by counsel, in argument, as authority for a broader idea;
ie that not only could an organ of state review itself
(ie review the
decision of the
chair
of the disciplinary enquiry) on grounds of handing down an egregious
sanction, but that an
arbitrator’s
decision
was somehow also susceptible to this approach. I confess to not
grasping the force of the submission. As regards the chair’s

decision, however, the manifest unhelpfulness of that line of
argument is obvious because no review application
against
the chair’s decision
has ever been brought. Moreover, there is no logical foundation upon
which to elide that idea into a similar review of an arbitration

award regulated by the LRA. The authority exercised by each dispute
resolver has a different source and a different purpose. The
chair is
an instrument of the employer’s prerogative to discipline an
employee. The arbitrator performs a function in terms
of a power
conferred by statute to adjudicate afresh the fairness of the reason
relied upon by the employer to dismiss an employee.
Whether section
158 of the LRA is the appropriate platform upon which an employer may
address a grievance about a chair’s
“egregious”
decision is unnecessary for this Court to decide. For that reason, no
further comment is appropriate on
the possibilities mentioned in the
judgment of Pillay J in this regard, save to record that Pillay J did
not contemplate that the
speculative options alluded to by her
contributed to the review powers capable of being exercised by the
Labour Court.
[27]
Ultimately,
the conclusion to which Pillay J came, in the
Kruger
Review
case
a
quo
,
was that the review application before her court was confined to a
case within the ambit of section 145 of the LRA, as the application

had expressly stated, and even were one or more of the speculative
options mentioned by the Judge been available to an aggrieved

employer, none were justiciable in the application before her court.
This conclusion must be correct.
[28]
Pillay
J thereupon held that the arbitrator’s decision that the
dismissal of Mr Kruger, by means of a substituted sanction
based on a
non-existent authority to make such a substitution, was not
unreasonable and dismissed the review application. The “merits”

of the allegations of misconduct did not affect that decision and
Pillay J, correctly, did not deal with the arbitrator’s

treatment of that topic. In my view, that approach by Pillay J was
correct because once the dismissal decision was up-ended on
grounds
of invalidity, there was no need to enquire further, and indeed no
logical room or justification, to entertain an enquiry
into that
subject matter. The arbitrator, who did so, was misled into
undertaking such an enquiry, and ultimately regardless of
the factual
findings, they could have no impact on the
ratio
in the award; ie the substituted sanction was invalid and for that
reason the dismissal was unfair.
The Appeal Stage
[29]
The
Notice of Appeal by SARS against the decision of Pillay J challenged
two findings. The first challenge was about the interpretation

finding that the collective agreement disallowed the employer from
changing a sanction, a point since abandoned. The second challenge

was that Pillay J was wrong to suggest that the employer
could
have reviewed the chair’s decision and
should
have done so. This finding by Pillay J, if it was a finding, rather
than just a hint on how to repair a debacle, was irrelevant
to the
decision to hold the dismissal unfair and it could therefore take the
SARS’ case nowhere.
The “procedural
fairness” argument
[30]
As
I understood, Mr Kennedy’s key argument advanced in the appeal
hearing (and not really foreshadowed by the grounds in the
Notice of
appeal) was that, notwithstanding that it was not possible for SARS
to substitute a sanction imposed by the chair, it
remained possible
for the arbitrator to overturn the sanction of the chair. The reason
why there was space for this power for the
arbitrator to address the
merits of the misconduct, so it was contended, was because the
substitution decision was an instance
of “procedural”
unfairness only. In a case where an employer’s decision is
unfair only because it is “procedurally
unfair”, an
arbitrator may yet uphold the sanction because it was objectively
appropriate.
[31]
Upon
that platform, Mr Kennedy invited the court to reappraise the
arbitrator’s findings. Accordingly, the critical question
upon
which that line of argument turns is whether the proposition that an
invalid decision to substitute a sanction is a matter
of substantive
fairness, as held by Pillay J, in the
Kruger
Review a quo
,
or is, merely, an instance of procedural fairness, which, so it is
argued, would allow an arbitrator an opportunity to examine
the
merits of the misconduct allegations and impose an appropriate
sanction.
[32]
It
had been argued on behalf of Mr Kruger that this line of argument was
illegitimate, not having been encompassed by the Notice
of appeal or
the grounds of review. There is some force to this view, but in my
view, the argument, nevertheless, invokes an issue
that was at least
latent in the case from inception, as an examination of the history
of the case demonstrates.
A
fresh argument
about an issue already raised, or latent in the dispute, does not
transgress the bounds of the review grounds invoked. Therefore,
the
argument advanced on behalf of Mr Kruger that the SARS’ case,
in this respect, trespasses beyond its proper scope is
probably
incorrect. However, even if I am wrong on this point, I deem it
prudent to deal with the argument, because it has cropped
up
elsewhere too, and clarity from this court is required in the public
interest.
[33]
It
bears mention that, often, too much is made of the distinction
between substantive and procedural unfairness. The distinction
is a
useful forensic tool, not a principle of law creating two separate
concepts. The distinction ought not to be made to do work
which
distorts its usefulness. An unlawful act will always be, within the
Labour jurisprudence paradigm, both substantively and
procedurally
unfair. A lawful act
may
be both substantively and procedurally unfair, and sometimes only one
or the other. Sometimes a defective and thus unfair procedure
may
taint an enquiry so as to prevent a fair decision on a substantive
issue from being taken. Sometimes, an unfair procedure does
not get
in the way of discerning a substantively fair dismissal.
[34]
One
argument advanced on behalf of SARS to try to support the notion that
the substitution of the sanction in this case ought to
be treated as
merely procedural fairness issue, relies on a remark in the judgment
of Pillay J at paragraphs 19 and 20 recording
that among the
submissions made on behalf of Mr Kruger, in the review application
before her, the substitution issue was conceded
to be merely
“procedural”. The passage in question reads only that the
procedural fairness was in issue to the extent
that SARS had to
justify overturning the sanction of the chairperson and it was
submitted that:
‘
By altering
the sanction to summary dismissal, SARS acted irregularly and ultra
vires since no justification existed for such a
serious deviation
from SARS policies and procedures.
Although the
arbitrator had to determine the substantive and procedural fairness
of the dismissal. The guilt of the employee was
not in issue. He did
not ask to be cleared of any wrongdoing
.’(Emphasis
supplied)
[35]
I
am unconvinced that the recorded remark necessarily had an
abandonment of a reliance on substantive fairness in mind because the

burden of the recorded submission seems to me to be an attempt to
distinguish guilt from sanction, and emphasises the invalid and

therefore unfair interference with a sanction imposed. It would
therefore be unsafe to conclude that there has been an intentional

disavowal of the proposition that an invalid decision results in
substantive unfairness. However, even if it had been made, a
submission of such a nature; about the law, would not bind a court,
and as already addressed, Pillay J did not understand that she
was
confined by such a remark to construe the invalidity of the
substitution of sanction as a mere procedural affair, if indeed
that
is what was meant by the submission.
[36]
A
further argument advanced in the appeal to try to support the
proposition that the substitution decision was merely procedural
was
to invoke the decision by Lagrange J in
SARS
v CCMA and Others (The Botha Case)
[6]
.
This matter was decided after
Chatrooghoon
had
been reported. The facts were that Botha, an employee of SARS had
been disciplined for inappropriate use of the unrestricted
access he
had to the internet. The chair of the disciplinary enquiry convicted
him and issued a final written warning. As in the
other examples
dealt with in this judgment, senior management saw fit to override
the Chair and substituted a sanction of dismissal.
Botha’s
response was to refer two separate disputes. Dispute number 1 was
about the interpretation of the disciplinary code.
Dispute number 2
was an unfair dismissal claim. Why they were not consolidated is not
explained. In the consequent arbitration
in dispute number 1, the
award declared that the power of substitution was absent. No review
was brought against that award. Subsequently,
dispute no 2, about the
unfair dismissal was heard. That arbitrator adopted the view that the
invalid substitution of a sanction
was a matter of procedural
unfairness. He then dealt with the merits and concluded that the
dismissal was an instance of inconsistent
application of discipline.
Moreover, he held that SARS had failed to meet the requirements in
Edcon
v Pillemer NO
(2008)
29 ILJ 614 (LAC) to adduce evidence of an irreparable breakdown in
the employment relationship to justify a remedy other
than
reinstatement. Accordingly, Botha was reinstated.
[37]
On
review, Lagrange J, in
Botha,
addressed three grounds of review relied upon by SARS. The first
ground was the implied term based on trust and confidence theme

scotched by the
Chatrooghoon
decision. The second ground addressed the factual merits of the case
that the employment relationship was destroyed. Lagrange J
held that
the view adopted by the arbitrator that the relationship was
undamaged was unreasonable. The third ground was described
a
“procedural unfairness”. The “procedural”
unfairness in issue was the question of whether the offer to
Botha of
a chance to make representations before a substitution of the
sanction was imposed could save the substitution from being

procedurally unfair. This is not a question that arises in this case
of Mr Kruger. Lagrange J found at paragraph 25 of his judgment
that
in those particular circumstances, the observance of
audi
alterem partem
did not save the decision from procedural unfairness. In finding
thus, Lagrange J alluded to a remark by Pillay J at paragraph
52 in
her judgment in the
Kruger
Review Case
,
the very judgment upon which the Labour Appeal now sits on appeal.
That passage reads:
‘
The
dismissal of the employee was substantively unfair because the
decision
to dismiss was not one that SARS could validly make
;
the collective agreement barred it from substituting the decision of
the disciplinary chairperson.
Procedurally,
the dismissal
was
also unfair
because the
process
of dismissing
the employee
was
not available to SARS;
if it was available, then SARS should have afforded the employee a
pre-dismissal hearing. That it did not do.’ (Emphasis
supplied)
[38]
It
appears to me that it was assumed by
everyone
involved in the
Botha
case,
both
in the arbitration and on review
,
that the substitution issue was confined to procedural unfairness.
That unreasoned assumption triggered the notion that there was
space
to address, separately, the merits of the alleged misconduct and an
appropriate sanction under the rubric of substantive
unfairness. A
proper reading of the judgment of Pillay J in the
Kruger
Review case
does not support that notion. The perspective of Lagrange J that the
issue was about procedural fairness only, was further encouraged
by
the view Lagrange J took of remarks in the judgment of Ndlovu JA in
the
Chatrooghoon
case. At paragraph 31 Lagrange J states:
‘
However, in
the LAC matter previously referred to [ie,
Chatrooghoon
]
even though the LAC held that the decision of SARS to dismiss the
employee contrary to the decision of the enquiry chairperson
was
ultra
vires, it proceeded to separately consider the reasonableness of the
arbitrator’s finding that the employee should be
reinstated,
taking
into account the fact that the employee was remorseful and had acted
with
bona
fide
motives,
as well as the fact that he could be accommodated elsewhere in the
organisation.  After doing so, the LAC concluded
that the
arbitrator’s award met the standard of reasonableness.
Consequently,
it appears that the LAC’s approach was that the fact that the
decision of SARS to override the chairperson‟s
decision was
ultra vires did not dispose of the need to evaluate the
reasonableness of arbitrator’s findings on the substantive

merits of the dismissal.
’
[7]
(Emphasis supplied) (Footnotes omitted)
[39]
First,
it is plain that the remarks attributed to Ndlovu JA do not
constitute a finding that the substitution of sanction issue
is
merely a matter of procedural fairness. Moreover, in my view,
Lagrange J was misled by the way the
Botha
case
was presented into the interpretation he gave to the judgments of
Ndlovu JA and of Pillay J. First, the remark by Pillay J, in
the
Kruger
Review Case
appears in a passage in which she unequivocally held that the
substitution decision was an instance of substantive unfairness.

Pillay J did no more than declare that the substitution decision was
also
procedurally unfair for want of an opportunity for
audi
alterem partem,
a
secondary aspect
.
Secondly,
the judgment of Ndlovu JA in
Chatrooghoon
is not authority for the notion that a finding that a decision to
substitute a verdict and dismiss
per
se
was invalid, did not “dispose of the need” to make a
finding on the merits. The mere fact that in
Chatrooghoon
the court indeed did also address the merits of the dismissal
decision is an insufficient basis upon which to understand that
Ndlovu JA understood it was
necessary
to do so. Indeed the judgment of Ndlovu JA at paragraphs 37 and 38,
dealing with the merits of the sanction of dismissal, does
not say
so, nor does he say so elsewhere his judgment. Moreover, it is not
apparent that the question of the necessity of doing
so was ever
argued before the Court over which Ndlovu JA presided. Rather, it
seems that, because the arbitrator had done so, and
the Review Court
had also done so, so did the Labour Appeal Court also, deal with that
aspect. However, in my view, there is no
logical room to have done so
once it is properly understood that the substitution decision is
substantively unfair. In any event,
as is patently clear, the remarks
made by Ndlovu JA about the merits of the sanction of dismissal had
no effect whatsoever on the
result, and had those remarks been
omitted, the result of an invalid dismissal could not have be
different to that which the court
held to be the case.
[40]
To
sum up on this aspect, the
Chatrooghoon
case is not authority for the proposition that an invalid
substitution of sanction is merely procedurally unfair and the
judgment
of Pillay J, in the
Kruger
Review case,
does not hold the substitution decision was merely procedurally
unfair, and therefore the premise upon which Lagrange J in the
Botha
case held it was appropriate to visit the merits of the alleged
misconduct was incorrect.
The Jurisprudential
nature of a disciplinary enquiry chair’s power
[41]
In
my view, the proper starting point for an understanding of the
critical controversy is the jurisprudential character of the
disciplinary enquiry chair’s decision. It is plain that the
person appointed to perform that function is clothed with the
persona
of the employer. The chair’s decision is that of the employer.
Anomalously, an employer that is an organ of state may review
itself,
an escape mechanism not available to employers in the private sector.
But plainly, an employer that is an organ of state
cannot
unilaterally repudiate its own decision. So much is beyond doubt as a
result of the judgments in
Oudekraal
Estates v City of Cape Town
2004
(6) SA 222
(SCA) at paragraphs 35 – 37
,Benwenyama
Minerals (Pty) Ltd Genorah Resources
(Pty)
Ltd
2011 (4) SA 113
(CC) at paragraph 85, and
Ntshangase
(Supra).
[42]
Thus,
in my view, it must follow that if the substitution of a sanction is
invalid
,
as found in
Chatrooghoon
,
that invalidity vitiates the act completely; ie it
cannot
be made. Invalidity is more than procedural unfairness, it denotes an
unlawful act; ie one the law will not acknowledge. Accordingly,
in my
view Pillay J was correct to hold that an invalid substitution of a
sanction was not merely an instance of procedural unfairness
that
might leave open a space for a parallel enquiry into the
appropriateness of a remedy for such a “procedural”
mishap and, in turn, allow space to address the gravamen of the
misconduct
per
se
.
Similarly, the contention that the judgment of Ndlovu JA, in
Chatrooghoon,
has application only to procedural unfairness cannot succeed because
the force of those
dicta
by Ndlovu JA is that a substitution of a sanction without a lawful
foundation, is not merely unfair for want of a procedural
authorisation,
but is invalid.
[43]
It
was upon this premise that Pillay J correctly dismissed the review
application.
The persisting curse
of racism
[44]
Mr
Kennedy devoted substantial attention to the anti-social significance
in South African society of racist abuse, not least of
all within an
employment context in an organ of state. There can be no doubt that
racial abuse is serious because over and above
the insulting
attributes, that behaviour has the capacity to disrupt social order
and engender the perpetuation of patterns of
subordination and
contempt which are anathema to the values upon which our society
rests. There is also no doubt that such misconduct
would certainly
justify a dismissal. However, the mere fact that a species of
misconduct, however alarming, would
entitle
an employer to fairly dismiss the perpetrator does not mean that the
employer
must
elect do so.
[45]
The
dictum of Zondo JP
in
Crown Chickens (Pty) Ltd t/a Rocklands Poultry v Kapp
[8]
was
alluded to, in which it was remarked that dismissal was the only
appropriate sanction for racial abuse. The miscreant in that
case had
uttered these following words to his black subordinate who had been
injured: “Los die kaffer – laat vrek”
and refused
to call an ambulance. Zondo JP stated this:
‘
[37]
The attitude of those who refer to, or call, Africans 'kaffirs' is an
attitude that should have no place in any workplace in
this country
and should be rejected with absolute contempt by all those in our
country - black and white - who are committed to
the values of human
dignity, equality and freedom that now form the foundation of our
society. In this regard the courts must play
their proper role and
play it with conviction that must flow from the correctness of the
values of human dignity, equality and
freedom that they must promote
and protect. The courts must deal with such matters in a manner that
will 'give expression to the
legitimate feelings of outrage' and
revulsion that reasonable members of our society - black and white -
should have when acts
of racism are perpetrated.
[38] In
Van Wyk's
case Berker
CJ said at 172 that the Namibian Supreme Court 'will act in the
letter and spirit of the Constitution' and 'in doing
so it will deal
extremely severely with persons in the country who act contrary to
the Constitution and policy'. In
Selzwedel's
case Mohamed CJ,
dealing with a similar issue, made it abundantly clear at 79E of the
judgment that in such cases the Supreme Court
of Appeal would deal
severely with criminal offenders guilty of such conduct. He further
stated that, as the highest court in such
matters, the Supreme Court
of Appeal had to project this message clearly and vigorously. As
judge president of this court
and the Labour Court I deem it
appropriate to echo that message clearly and firmly. Within the
context of labour and employment
disputes this court and the Labour
Court will deal with acts of racism very firmly. This will show not
only this court and the
Labour Court's absolute rejection of
racism but it will also show our revulsion at acts of racism in
general and acts of racism
in the workplace in particular. This
approach will also contribute to the fight for the elimination of
racism in general and
racism in the workplace in particular and
will help to promote the constitutional values which form the
foundation of our society.
[39]
Viewed
in the light of the history of racism and racial abuse in this
country and the constitutional values of human dignity and
equality
and the repugnancy of the first respondent's racist conduct, it will
be seen that the first respondent's conduct was such
that the only
appropriate sanction for it was dismissal
.
Maxim had done nothing to invite such conduct but, on the contrary,
he was entitled to expect the first respondent to respect
his
dignity…’
[9]
(Emphasis supplied)
[46]
This
Court endorses these sentiments about racist conduct unreservedly.
However, the phraseology employed by Zondo JP at paragraph
39
requires careful examination. It is unlikely that Zondo JP meant to
say that the outcome of a disciplinary process could be
determined
simply by the nature of the misconduct
per
se
.
If that were the law, it would make a mockery of the duty to consider
factors in mitigation. The
dictum
cannot therefore be read to mean it is a rule of law that those who
utter racial abuse have to be dismissed. The correct position
is that
it is likely to be rare that a case in mitigation could be
sufficiently meritorious to avoid dismissal. But from the point
of
view of fair process, such an enquiry is necessary, and as a matter
of principle, the possibility of such a case in mitigation
being
successful must mean that there has to be space for it to be
ventilated. Were it otherwise, an enquiry would be a sham.
[47]
Understandably,
the idea that a racist could be given a smack on the hand and told to
go back to his desk sticks in one’s
craw. Both the arbitrator
and the judge
a
quo
expressed their disgust at that outcome. However, SARS, through its
duly authorised decision-maker made a decision to impose a
sanction
less than dismissal, exercising a discretion the decision-maker was
authorised to make. SARS then purported to substitute
that sanction
when it had no power to do so. Whether SARS had or has a remedy to
address its grievance about its own decision,
in some or other form,
then, or now, premised on the
dicta
in
Ntshangase
or premised on the provisions of Section 158 of the LRA, or any other
basis, or is at large to invoke, independently of its dissatisfaction

with the decision of the chair of the disciplinary enquiry,
operational reasons to address the propriety of continued employment

of Mr Kruger, are not matters about which this Court is required to
pronounce a view.
[48]
The
established law about an employer being disallowed from interfering
in the outcome of a disciplinary enquiry where the chair
has the
power to make a final decision, which is the crucial issue in this
appeal, has, as its aim, the protection of workers from
arbitrary
interference with discipline in a fair system of labour relations.
This principle is worthy of preservation.
[49]
What
seems to me to be of paramount importance is to recognise that
racists have done quite enough damage to our country and we
should
guard against a hard case tempting us to distort established legal
principle to ensure that they do not get away with insulting
us. If
we fell victim to that temptation, it would mean a subtle and
exquisite victory for the racists. What the arbitrator did
and what
the Pillay J did, was not to allow their indignation to undermine
their fidelity to the law. People, who, like Mr Kruger,
are without
honour, are beneficiaries of that system of law no less than the rest
of us, an outcome which is our credit, not to
theirs.
Conclusion
[50]
As
a result, in my view, it has not been shown that the award was one to
which a reasonable arbitrator could not have come and the
judgment of
Pillay J on that finding must stand. The appeal must fail.
Costs
[51]
As
to costs, I take the view that the law and equity requires there to
be no order.
The order
[52]
The
appeal is dismissed.
_______________
Sutherland
JA
Davis JA and
Mngqibisa-Thusi AJA concur in the judgment of Sutherland JA
APPEARANCES:
FOR THE
APPELLANT:

Adv Paul Kennedy SC
Instructed
by Routledge Inc
FOR THE THIRD
RESPONDENT:

Adv Riaan Grundlingh
I
Instructed by
T C Hitge Inc
[1]
(2014) 35 ILJ 656
(LAC)
.
In
order to distinguish the plethora of cases reported as “SARS v
CCMA” and the danger of confusion, in this judgment
they are
called by the name of the employee in question.
[2]
(2003) 24 ILJ 355
(LAC) at para 19 – 23.
[3]
The relevant
portion Section 145 provides:
(1) Any party to a dispute who
alleges a defect in any arbitration proceedings under the auspices
of the Commission may apply
to the Labour Court for an order setting
aside the arbitration award-
(a)
….
(b)
….
(2) A defect referred to in
subsection (1), means-
(a)
that the commissioner-
(i)
committed misconduct in relation to the duties of the commissioner
as an arbitrator;
(ii)
committed a gross irregularity in the conduct of the arbitration
proceedings; or
(iii)
exceeded the commissioner's powers; or
(b)
that an award has been improperly obtained.
(3) ….
(4) If the award is set aside, the
Labour Court may-
(a)
determine the dispute in the manner it considers appropriate; or
(b)
make any order it considers appropriate about the procedures to be
followed to determine
the dispute.
[4]
2008 (2) SA 24
(CC).
[5]
[2009] 12 BLLR
1170 (SCA).
[6]
[6]
C683/2011 (9
February 2015
)
(unreported)
(the
Botha
case).
[7]
At para 31.
[8]
(2002) 23 ILJ 863
(LAC).
[9]
At paras 37-39.