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[2017] ZALAC 6
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Damelin (Pty) Ltd v Solidarity obo Parkinson and Others (JA48/15) [2017] ZALAC 6; (2017) 38 ILJ 872 (LAC); [2017] 7 BLLR 672 (LAC) (10 January 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA 48/15
In
the matter between:
DAMELIN
(PTY) LTD
Appellant
and
SOLIDARITY
OBO PARKINSON, STEVE
First Respondent
SITHOLE,
SIBONGISENI NO
Second Respondent
COMMISSION
FOR CONCILIATION, MEDIATION AND
ARBITRATION
Third Respondent
Heard:
30 November 2016
Delivered:
10 January 2017
Summary:
Dismissal for poor performances – employee dismissed
for
failing to meet stipulated target – court finding that period
to meet target, after a warning, was too short or that
target was
incapable of being achieved. Appeal dismissed with costs.
Coram:
Tlaletsi DJP, Coppin JA and
Landman JA
Neutral citation:
Damelin (Pty) Ltd v Steve Parkinson
(LAC
:
JA 48/15)
JUDGMENT
LANDMAN
JA
Introduction
[1]
Damelin (Pty) Ltd, the appellant or “Damelin”, appeals
against a judgment of the Labour Court (Bleazard AJ) that
reviewed
and set aside an award made by Ms S Sithohle NO, a Commissioner
acting under the auspices of the Commission for Conciliation,
Mediation and Arbitration (CCMA), the second and third respondents
respectively, concerning Mr Steve W Parkinson (Parkinson) represented
by Solidarity, the first respondent. The appellant appeals with leave
of the court
a quo
.
[2]
Mr Edy, who appeared for the appellant, relied on the heads of
argument filed by Mr Nel but referred to two other decisions
and made
a few additional submissions. Ms Ras, appeared on behalf of the first
respondent.
Background
[3]
The appellant is a company carrying on business in the tertiary
education sector. It has several campuses throughout South Africa,
including one at Boksburg. Parkinson commenced employment as the
general manager of the Boksburg campus, with effect from 3 January
2011.
[4]
Parkinson’s contract of employment specified in clause 4.3.3
that:
’
The
attainment of performance goals determined by the employer, from time
to time shall be periodically evaluated by the employee’s
supervisor, continued non-attainment of performance goals may result
in the termination of employment.’
[5]
When Parkinson assumed his position at the Boksburg campus in January
2011, the campus had 352 enrolled students of which 168
were
first-year students. His target for 2012, which was the national
target, was to enrol 420 first year students by February
2012.
[6]
In 2011, Mr Andrew Pienaar, the national sales director, estimated
that there were 15 000 grade 12 learners in the catchment
area for
the Boksburg campus. 85% of this number would translate into 10 824
leads ie. possible Damelin students in this area.
Pienaar wrote on 9
March 2011 to all campus general managers advising them of the leads
as at March 2010 and 2011. He added:
‘
As per
Nolan, please note that he will be holding all General Managers
personally responsible for these numbers and the lack of
Schools
Marketing activities.’
[7]
On 9 March 2011, Parkinson queried the target of 15 000 grade 12
learners. He says that his team contacted all the schools in
the area
and there were only 12 735 grade 12 learners in his area and this
translates into 10 824 leads (85% of 12 735). He concludes
that
unrealistic numbers give rise to unrealistic targets.
[8]
Pienaar replied saying that 15 000 was the same target as in the
previous year (2010). He suggested that Parkinson gets creative
and
canvass the Vaal area where he said there are schools and very little
tertiary education.
[9]
Parkinson replied, pointing out that learners in the Vaal area would
either go to Damelin’s Vaal franchise or the Alberton
franchise. He says if they do marketing further than Nigel they would
be benefiting the Witbank and Middleburg franchise. And if
they were
to canvass Kempton Park, they would be infringing on the Bramley
franchise. He ends off saying:
‘
Setting a
target that is 50% higher than what is available is setting people up
to fail.’
[10]
Parkinson repeated his query: Where, he asked, is he to find the
additional grade 12 learners to make up the 15,000 target.
He asks:
“Or are we being told we have failed before we can even begin?”
He points out that although he was not there
in 2010 no one achieved
their targets.
[11]
On 14 November 2011, Mr Nolan Charles, the Group Chief Commercial
Officer, informed Parkinson that his campus is:
‘…
behind
in first year preenrolments compared to last year this time (sic).
This situation is unacceptable and cannot continue. What
do you
expect me to tell the CEO and Chairman of Educor regarding your
campus poor performance? They are not accepting any of my
excuses on
your behalf and are holding me FULLY accountable for your lack of
performance. Damelin campuses generally are showing
on average a 30%
growth compared to last year, while your campuses are not even
breaking even. You are letting me, yourself and
your team down. We
placed you at this campus with clear instruction in terms of what our
expectations are for growth. We have given
you the tools, the plan,
the incentives to make these numbers a reality.
I am now officially informing you of
the following sanctions that will be effective from the 1 December
2011 if you do not turn
your first year preenrolment numbers around
to at least a 30% increase compared to last year by the 30 November
2011.
1)
All
your annual leave will be cancelled for November/December’s/January
2011.
2)
You
will formally be given notice that we intend to dismiss you from your
employment at Damelin.
Do not underestimate my resolve to
follow through with these sanctions as I am under immense pressure to
ensure you deliver. I WILL
NOT CARRY YOU THROUGH THIS PROCESS. You
need to work with your sales managers and sales consultant to achieve
these numbers. If
they are not prepared to co-operate then dismiss
them. Either they are ASSETS to you or they are a millstone around
your neck (sic).’
[12]
In a letter dated 25 January 2012, addressed to Parkinson, Nolon set
a target for the Boksburg campus for the 2012 enrolment
of 558
students (420 first year students and 138 so-called roll over
students ie students in their second and higher years). The
targets
were to be achieved by 8 February 2012. The letter advises Parkinson
that:
‘
This
situation is not acceptable and the level of poor performance will
not be tolerated.
You are officially informed that if
your campus is not at least a few percent ahead of sales as compared
to last year (irrespective
of the national sales target), formal
disciplinary steps will be taken which will result in your dismissal.
Should you wish to discuss this any
further, kindly contact me.’
[13]
On 30 January 2012, the Group National Sales Manager advises
Parkinson that one Nunlal has been temporarily seconded to the
Boksburg campus to manage the sales office. The next day Parkinson
complained that the target is still set at 15 000.
[14]
On 1 February 2012, Charles writes to all general managers and sales
managers:
‘
I have
consistently over the last few months told you that there will be
serious consequences for nonperformers in the Damelin Group.
We have,
at an head office level spent millions on school marketing in an
attempt to ensure we have a good database to work with.
On the ground
this was YOUR responsibility to implement and monitor and you are now
reaping the benefits of this labour. Most campuses
are ahead of last
year’s numbers but a few are not. This lack of performance
falls squarely on the shoulders of the GM and
S.M of the campuses
concerned. To those campuses who are behind each GM and S.M will
receive a letter stating that you have till
the
end
of February 2012 to be at least on par with last year’s numbers
as at the end of February 2011
.
If you are not we will take the necessary disciplinary action to
dismiss you or redeploy you (sic).’ (My emphasis.)
[15]
The actual enrolment of first-year students for the Boksburg campus
for 2012 was 117 first year students. In 2011, the figure
had been
168. Parkinson had not met the target. The Bramley and Mowbray
campuses did not meet their targets. The Benoni campus
narrowly
missed its target.
[16]
A disciplinary inquiry was convened for 9 May 2012. Parkinson was
charged with poor work performance relating to his failure
to reach
sales targets. He was dismissed on 15 May 2012.
[17]
Parkinson was dissatisfied with his dismissal and his union referred
a dispute to the CCMA. The dispute could not be resolved
and the
arbitrator heard the evidence of two witnesses for appellant and
Parkinson.
[18]
Pienaar expressed the opinion that the target of 558 enrolments set
for 2012 was achievable based on the number of leads. He
offered an
explanation as to why the target had not been achieved. He testified
that:
‘
In my
personal opinion what went wrong there was that they focused too much
on handing out flyers, branding exercises for lack of
a better term,
getting out information and they didn’t focus on the
traditional way of getting in students and that is to
phone them, get
them in, get the appointment in, do the career tests, evaluate the
results and sign them on that is what brings
you in the numbers at
the end of the day. All the other things, all the marketing exercises
and all the pamphlets etcetera that
assists yes, and it pushes you
over the top but that doesn’t - that’s not what brings
you the numbers. And what’s
within the bundle that adds to that
being the mail you asked me to read out, where they had t[w]o extra
temps in to call the 8
000 people. I mean at that stage if you need
to call your database there is something wrong with what you have
done.’
[19]
Parkinson explained in the course of his evidence at the CCMA
arbitration the steps that had been taken to boost enrolment
at his
campus: schools were visited, presentations were made and data
collected, all the learners had been telephoned, advertisements
were
placed, flyers were handed out, a request for the secondment of a
sales manager was made and received but the database was
exhausted by
February 2012.
[20]
Parkinson also offered an explanation for not achieving the targets.
He said the target of 15 000 was unachievable; there were
only 13 500
matriculation students in the catchment area. The Benoni “City
Campus” had been reopened in November 2010
and impacted on his
campus as Benoni residents preferred to attend their local campus.
The fees of the Benoni campus were lower
than those of Boksburg and
students benefited from lower travelling costs. The matriculation
numbers were dropping. There were
20 competitors in Boksburg.
Students were turning to technical subjects. But the Boksburg campus
offered mainly management and
academic programmes.
[21]
Parkinson testified that he had explained his predicament to Damelin
head office and had had several meetings with head office
staff where
he complained that the target was unrealistic. He was not counselled.
Unlike other managers, he was not sent on a performance
improvement
course. He was not given a formal warning. He did not regard the
letters addressed to him as warnings as they had not
been preceded by
any process. His sales manager was not disciplined. Neither was the
national sales manager. He acknowledged that
the general managers of
the Mowbray and Bramley campuses were replaced.
[22]
The Boksburg campus’s collection of fees was good. The Boksburg
campus made a profit. Boksburg exceeded the targets set
as regards
roll-over students.
[23]
It was put to Parkinson that he was incompetent at his job. He denied
this. He had pointed out that the Boksburg campus did
not offer
technical programmes but he agreed that his campus offered courses in
sound technology, hospitality and MTV program which
the Benoni campus
did not. It was put to him that his continuing non-performance made
the employment relationship intolerable.
[24]
The commissioner considered the Code on Good Practice as regards
Dismissal for poor work performance and found that Parkinson
had been
given more than a period of six months to improve his performance. He
had not communicated that his targets were not attainable.
Higher
standards are expected of senior employees. The letters were
sufficient and did not need to be headed a formal warning.
Dismissal
was the appropriate sanction.
[25]
Parkinson was dissatisfied with the award. He applied to the court
a
quo
to review and set aside the award. The court
a quo
examined the appellant’s disciplinary procedure and code and
inquired from Mr Nel, who appeared for the appellant in the
court
a
quo
, what the nature of its complaint
vis-à-vis
Parkinson was. Mr Nel informed the court that the issue was one of
misconduct and not poor performance. The court considered that
the
appellant could not willy-nilly depart from the procedures specified
in its code without notification. The appellant’s
letter of 25
January 2012 was ambiguous and was not a warning. It was unreasonable
for the commissioner to have reached this conclusion.
In any event,
dismissal could only be considered as a fourth step. The court
a
quo
was of the opinion that the commissioner had allowed the
appellant to ask leading questions of its witnesses in spite of
objections
to this approach. The court
a quo
set aside the
award and reinstated Parkinson.
Evaluation
[26]
It is common cause that Parkinson was dismissed. Therefore, the
onus
rested upon Damelin to prove that the dismissal was procedurally and
substantively fair. The Code of Good Practice on Dismissals
provides
the following guidelines in cases of dismissal for poor work
performance:
‘
Any person
determining whether a dismissal for poor work performance is unfair
should consider—
(a) whether or not the employee
failed to meet a performance standard; and
(b) if the employee did not meet
a required performance standard whether or not—
(i) the
employee was aware, or could reasonably be expected to have been
aware, of the required performance standard;
(ii) the employee was given a fair
opportunity to meet the required performance standard; and
(iii) dismissal was an appropriate
sanction for not meeting the required performance standard.’
[27]
At the outset, it is necessary to state that this appeal must be
decided on the characterisation of the dismissal as one for
poor work
performance and not as Mr Nel, who appeared for the appellant in the
court
a quo
, was induced to concede in that court, that is was
one of misconduct.
[28]
Secondly, Charles informed Parkinson on 1 February 2012 that he would
be dismissed if he did not enrol the same number of first
years by
the end of that month as had been enrolled in 2011. However, the
evidence tendered at the arbitration by Damelin was focused
on
proving that Parkinson had not met a target of 420 first year
enrolments. The commissioner noted the reduced target in her award.
The basis of the dismissal, in view of the concession by Charles, can
only be that Parkinson had continuously failed to meet a
target of
168 first year enrolments.
[29]
Thirdly, the inquiry whether Parkinson was given a fair opportunity
to meet the initial target and the reduced target depends
to a great
extent on whether the targets were fair ie reasonably achievable.
[30]
Mr Edy was asked by this Court whether the poor performance was
related solely to not achieving the target or whether it implied
that
Parkinson had not put in the required effort to meet the reduced
target. Mr Edy replied that insufficient effort had been
devoted and
thus the target numbers eluded Mr Parkinson. The Boksburg campus
enrolled 161 first year students (ie 57 students less
than in 2011).
A shortage in first-year students impacts adversely on the following
years as there will be fewer roll-over students.
[31]
Parkinson’s main defence related to the reduction in the
catchment area of the Boksburg campus and the impact that the
reopened Benoni campus had on the Boksburg campus.
[32]
There was and is no infallible way to predict the number of potential
first years students in a given area. Past experience
provides a
guideline but if the parameters on which the estimates were made,
change, the guidelines may be defective. This explains
why so much of
the evidence was opinion based. The formula that was presented as a
method of arriving at a target is no better
that the estimate on
which it is based.
[33]
In 2010 (leading to the February 2011 figures for enrolment) the
catchment area for the Boksburg campus extended to Springs
in the
East and was limited by Bramley in the West. Importantly it included
the nearby town of Benoni some 5 km away. In 2011,
the Benoni campus
was reactivated and marketed as a city campus. The Boksburg campus
was consequently limited to 70 schools but
could canvas two schools
in Benoni jointly with the Benoni campus. The Benoni campus offered
60% of its programmes in further education
and training and 40% in
Higher Education. The offering at the Boksburg Campus placed more
emphasis on Higher education: 60% of
the programmes related to this,
while 40% of the programmes related to further education and
training. The programmes offered at
Boksburg were academic or
management orientated while those at Benoni were mostly technical.
But Boksburg offered three technical
programmes. The parents of the
Boksburg students were said to be more affluent than the parents of
the Benoni students. The fees
for courses at the Benoni campus were
lower than those at the Boksburg campus.
[34]
The person who initiated the reintroduction of the Benoni campus did
not testify. Charles set the target of 420 first year
enrolments but
he did not testify. It was left to Leloka, the previous General
Manager of the Benoni campus, and Pienaar to testify
on the impact
that the Benoni campus had on the viability of the Boksburg campus in
its reduced catchment area. Leloka testified
that it was not intended
that Benoni campus would impact on the viability of the Boksburg
campus. He also testified that it had
no impact on the Boksburg
campus. Pienaar disagreed that the reintroduction of the Benoni
campus would have had no impact on the
Boksburg campus. But he
testified that the impact would not have been a major one. The
commissioner found that the Benoni campus
would have no major impact
on the Boksburg campus.
[35]
The fact that Charles reduced the target from 420 first year
enrolments to 168 first year students is arguably an acceptance
that
the 420 target was completely unrealistic in the changed
circumstances of the Boksburg campus. But, as noted, Charles did
not
testify.
[36]
The commissioner found that Parkinson did not challenge the target,
presumably the target of 420 first-year enrolments. But
Parkinson
vigorously challenged the assumptions on which the 420 target was
based. The assumption was that there were 15 000 potential
first year
students in the reduced Boksburg catchment area that could be
persuaded to enrol at that campus. The actual number of
learners
leaving school at the end of 2011 was put by Parkinson at 13 500 and
this was not disputed by Damelin. Parkinson queried
whether he was
being set up to fail.
[37]
Mr Edy placed great emphasis on what he submitted was Parkinson’s
lack of diligence in contacting potential students
on the Boksburg
database. He illustrated this by referring to the fact that in
November 2011 it was necessary for Parkinson to
call in temporary
staff to call the 8 000 names on the database. This submission
appears to originate from Pienaar. Pienaar made
the damning
suggestion that when Parkinson called in the temps in November 2011,
the 8 000 names on the database had not been canvassed.
But Pienaar
said he did know what happened at the Boksburg campus except when he
visited there or learnt of its various initiatives.
[38]
In his evidence, Parkinson stressed that his staff had called the
students capture on his database. His evidence finds support
in the
testimony of Leloka who testified that documents showed that by 17
March 2011 the Boksburg campus had called the learners
of 30 of the
70 schools in its catchment area. It would be most improbable, having
canvassed 30 schools by mid-March, that Parkinson
would permit his
team to discontinue canvassing the database until November 2011. The
commissioner made no finding as regards Parkinson’s
credibility. There is no reason on the record to suggest that he
should be disbelieved.
[39]
Pienaar also thought that Parkinson might have laboured under a
misapprehension that his staff were doing what they were telling
him
they were doing. But this is simply speculation. It would seem to tie
into Charles communication that the general managers
should in effect
dismiss others in order to save their own jobs. This is an
unacceptable approach in employment law.
[40]
In
Palace
Engineering (Pty) Ltd v Ngcobo and Others
,
[1]
it was said at para 24:
‘
Although a
senior employee is indeed expected to be able to assess whether he is
performing according to standard and accordingly
does not need the
degree of regulation or training that lower skilled employees require
in order to perform their functions, an
employer is not absolved from
providing such an employee with resources that are essential for the
achievement of the required
standard or set targets.’
[41]
Accepting that the letter of 25 January 2012 constituted a final
warning, the period of some 27 days within which to achieve
the
reduced target set in that letter, given all that preceded it and
taking into account that it was not achieved even with assistance
afforded by Damelin head office goes to show that either the period
was too short or that the target was incapable of being achieved.
[42]
In my view a reasonable commissioner would have found that Damelin
had not acquitted the
onus
of showing that there was a fair
reason to dismiss Parkinson and that dismissal was a fair sanction.
[43]
Parkinson seeks reinstatement in his employment. This is the primary
remedy, and there is no reason why it should not have
been ordered.
[44]
Costs should follow the result of the appeal.
Order
[45]
In the result, I make the following order:
1.
The
appeal is dismissed with costs being the expenses necessary incurred
by the first respondent.
_____________________
AA Landman
Judge of the Labour
Appeal Court
Tlaletsi
DJP, Coppin JA concur in the judgment of Landman JA
APPEARANCES:
FOR
THE APPELLANT:
Adv Edy
Instructed
by Jason Moodley Attorneys
FOR
THE FIRST RESPONDENT:
Ms Nicolette Ras
Instructed
by Solidarity
[1]
(2014) 35 ILJ 1971
(LAC).