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[2018] ZALAC 37
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Nokeng Tsa Taemane Local Municipality v Louw NO and Others (JA7/16) [2018] ZALAC 37; [2019] 1 BLLR 35 (LAC) (17 October 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JA7/16
In the matter between:
NOKENG TSA TAEMANE
LOCAL
MUNICIPALITY Appellant
and
KAREN
LOUW
N.O. First
Respondent
SOUTH AFRICAN LOCAL
GOVERNMENT
BARGAINING COUNCIL:
BENONI Second
Respondent
COMMISSIONER:
MABHOKO MATHOLE
Third
Respondent
Heard: 23 August 2018
Delivered: 17 October
2018
Summary: Constructive
dismissal – employee failing to prove on a balance of
probabilities that employer made continued employment
intolerable –
Appeal upheld and Labour Court judgment set aside.
Coram: Phatshoane
ADJP, Davis JA and Murphy AJA
JUDGMENT
MURPHY
AJA
[1] This is an appeal
against the judgment of the Labour Court (Snider AJ) in which it
reviewed and set aside the arbitration award
of the third respondent
and ordered the appellant, Nokeng Tsa Taemane Municipality (“the
municipality”) to pay Mr.
David Louw (“Louw”) three
months’ compensation for unfair constructive dismissal.
[2] Louw has since died
and has been substituted in these appeal proceedings by Ms. Karen
Louw, the executor of his estate.
[3] Louw was employed by
the municipality on 1 July 2001. At the time of the termination of
his contract of employment, he was a
manager of the income section in
the finance department.
[4] On 15 April 2008,
Louw was issued with a notice of suspension pending an investigation
into allegations of financial misconduct
by him. About six months
later, on 2 October 2008, he was furnished with a charge sheet in
respect of a disciplinary hearing set
down for 13 October 2008. It
was alleged that Louw had caused the municipality financial losses by
failing to implement a resolution
of the municipality increasing
rates and by authorising payment of approximately R20 000 to a
colleague which was not due
or payable to her. The disciplinary
hearing was postponed to 12 November 2008.
[5] On 11 November 2008,
Louw’s attorneys directed a letter to the municipality
indicating that Louw was prepared to resign
on payment of between
two-three months’ salary as a settlement of the matter. The
municipality’s attorneys responded
on the same day stating that
the municipality was prepared to accept Louw’s resignation
without any financial settlement.
Paragraph 4 of the letter
concluded:
‘
Our client’s
further instructions are that in the event of your client not
tendering his resignation aforesaid the disciplinary
enquiry will go
ahead in full force. Then, and in that event our client considers to
proceed to institute criminal proceedings
against your client and/or
bringing civil action to recover whatever financial losses your
client has caused our client or both
actions. Accordingly, and
against the set-out above, client therefore rejects your client’s
offer.’ (sic)
[6] Louw’s
attorneys immediately replied to the above letter stating:
‘
2.
The threats contained in the abovementioned letter and specifically
paragraph 4 thereof leaves our client with no alternative
but to
resign.
3. It is our instruction
that in the light of the comments made by your client, the trust
relationship between the parties has irretrievably
broken down and
your conduct amounts to the constructive dismissal of our client.’
[7] Louw failed to attend
the disciplinary hearing scheduled for the next day.
[8] Louw then filed an
unfair dismissal claim with the bargaining council (the second
respondent). He testified at the arbitration
hearing that he
interpreted paragraph 4 of the letter of 11 November 2008 as a threat
rendering his employment intolerable because
he believed that he
would be found guilty of the offences regardless of the merits. No
other evidence was led to support his claim
of constructive
dismissal. On 4 February 2010, the third respondent (“the
commissioner”) handed down his arbitration
award dismissing the
application on the ground that Louw had failed to show on a balance
of probabilities that the municipality
had made the continuation of
employment intolerable.
[9] Louw then filed an
application in the Labour Court to review and set aside of the
arbitration award. The Labour Court properly
held that the test was
not one of reasonableness but an objective enquiry into whether the
arbitrator was correct in reaching his
conclusion.
[10] The Labour Court
construed the threat in the letter as intended to coerce Louw into
resigning without compensation. It opined
that the mere reporting of
the applicant to the police and the institution of civil proceedings
would have an “extremely
deleterious impact on the applicant.”
It reasoned as follows:
‘
Guilt,
innocence, criminal and civil liability are often not entirely
straightforward to establish as anyone in the legal profession
will
attest. It is quite understandable that an individual would not want
to become immersed in these potentially murky waters…It
is
highly undesirable in the context of an employment relationship that
the third respondent (the municipality) should offer to
excuse the
applicant from reporting him criminally and suing him civilly in
return for his resignation without recompense.’
[11] The Labour Court
then found that a reasonable man “guilty or not” would
not want to face the “dangerous”
prospects of criminal
and civil proceedings and thus Louw had established that he was
constructively dismissed. It, accordingly,
reviewed and set aside the
arbitration award and ordered the municipality to pay compensation
equal to three months’ remuneration
and the costs of the
application.
[12] The municipality
argues on appeal that Louw was not dismissed but voluntarily resigned
with the aim of avoiding the disciplinary
hearing and that the
commissioner was correct to dismiss the claim of constructive
dismissal.
[13]
The test for determining whether an employee was constructively
dismissed is well-established. The
onus
rests on the employee to prove that the resignation was not
voluntary, constituted a constructive dismissal and was not intended
to terminate the employment relationship. The enquiry is whether the
employer without reasonable and proper cause conducted itself
in a
manner calculated or likely to destroy or seriously damage the
relationship of confidence and trust between the employer and
employee. The court must look at the employer’s conduct as a
whole and determine whether its effect, judged reasonably and
sensibly, is such that the employee cannot be expected to put up with
it. The test does not require that the employee have no choice
but to
resign, but only that the employer should have made continued
employment intolerable.
[1]
[14] The question to be
answered in this case, therefore, is whether paragraph 4 of the
letter of 11 November 2008 constituted a
threat which made continued
employment intolerable.
[15] The threat of civil
and criminal proceedings in relation to financial misconduct cannot
reasonably constitute a threat rendering
continued employment
intolerable. By posing the threat, the municipality aimed at avoiding
what might have been a lengthy disciplinary
hearing; but also quite
legitimately signalled that it reserved its rights to pursue criminal
or civil proceedings in the event
of financial impropriety being
established at the disciplinary hearing. The municipality was
entitled to adopt this stance in that
it potentially had a legal
obligation to follow such a course. Its conduct was legitimate,
appropriate and defensible and of an
order that an employee might
reasonably be expected to put up with it. Any employee who is accused
of illegal activities or financial
impropriety may ordinarily expect
that the employer has various options, be they disciplinary, civil
and/or criminal.
[16] The standpoint of
the Labour Court that the municipality acted unreasonably in posing
such a threat is hence untenable. If
Louw were innocent, he could
have faced discipline and avoided criminal and civil proceedings. It
is clear that Louw made an informed
choice to resign in order to
avoid discipline and any civil or criminal proceedings that could
have followed upon his discipline.
By resigning, he pre-empted the
possibility of a proper investigation and determination of the
misconduct by the municipality.
Having made this choice, he was not
entitled to seek relief by way of compensation. The appeal must
accordingly succeed. However,
the circumstances of this case do not
justify awards of costs.
[17] The following order
is made:
17.1 The appeal is upheld
and the order of the Labour Court is set aside and substituted with
the following:
“
The
application for review is dismissed”
__________________
JR Murphy
Acting Judge of Appeal
Murphy
AJA (which whom
Phatshoane ADJP and Davis
JA concur)
APPEARANCES:
FOR
THE APPELLANT: Adv TJ Machaba
Instructed
by Ntanga Nkhuhlu Incorporated
FOR
THE THIRD RESPONDENT: Adv L Steenkamp
Instructed
by Lionel de Villiers Attorneys
[1]
Western
Cape Education Department v General Public Service Sectoral
Bargaining Council and Others
[2014] 10 BLLR 987
(LAC); and
Murray
v Minister of Defence
2009 (3) SA 130
(SCA) at para 67.