Solidarity and Another v Armaments Corporation of South Africa (Sco) Ltd and Others (JA40/17) [2018] ZALAC 39; [2019] 3 BLLR 248 (LAC); (2019) 40 ILJ 535 (LAC) (27 November 2018)

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[2018] ZALAC 39
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Solidarity and Another v Armaments Corporation of South Africa (Sco) Ltd and Others (JA40/17) [2018] ZALAC 39; [2019] 3 BLLR 248 (LAC); (2019) 40 ILJ 535 (LAC) (27 November 2018)

IN THE LABOUR
APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA40/17
In the matter
between:
SOLIDARITY
First
Appellant
JM
JOUBERT

Second Appellant
and
ARMAMENTS
CORPORATION OF
SOUTH
AFRICA (sco) LTD

First Respondent
COMMISSION
FOR CONCILIATION
MEDIATION
AND ARBITRATION

Second Respondent
WILLEM
KOEKEMOER N.O.

Third

Respondent
Heard: 21
August 2018
Delivered: 27
November 2018
Coram:
Phatshoane ADJP, Davis JA and Murphy AJA
Summary:
Review
of arbitration awards –
employer’s
policies provide that
members
or employees may not be enrolled, appointed or promoted, receive a
commission or be retained as members or employees unless
they had
been issued with the appropriate or provisional grade of security
clearance by the Intelligence Division.
Employee’s
service terminated in that he was denied all grades of security
clearance.
Held:
that
s37 of the Defence Act makes it a prerequisite for an employee to be
issued with an appropriate grade of security clearance
in order to be
retained in its employ.
Further
- that i
t
is axiomatic that
employee’s
termination
of service was based on supervening impossibility of performance
which constituted a form of incapacity to fulfil the
attendant
contractual obligations.
The
court finding - that a
fair
procedure as set out in s39 read with s41 of the Defence Act and
Clauses 5.12.1 and 5.15 of
employer’s
Security
Clearance Practice A-Prac-2033 was designed to create a platform
where the grounds and reasons for the refusal, downgrading
or
withdrawal of security clearance would be provided to an aggrieved
employee so as to afford such an employee a reasonable opportunity
to
present information, make representations and/or statements to the
Review Board regarding the decision to,
inter
alia
,
refuse the security clearance
.
S
ubstantive
fairness of the decision to terminate under s 37(2) could not have
been determined in the absence of reasons for the
decision not to
grant the security clearance.
The
termination letter was issued before
employer
had
finally established that it had become permanently and objectively
impossible for
employee
to
be retained in its service. In other words, the incapacity had not
yet been determined to be of a permanent nature that warranted
the
employee’s
dismissal.
As
far as relief is concerned, the court held - that reinstatement was
impracticable as employee
did
not hold the relevant security clearance certificate
.
Further holding that -
what
was a temporary supervening impossibility of performance become
permanent because the review of the decision to deny the employee
all
grades of security clearance came to naught.
The
Court concluding - that the maximum compensation was an appropriate
relief.
Labour
Court’s judgment was set aside and the appeal upheld with
costs.
JUDGMENT
PHATSHOANE
ADJP
[1]
This
appeal lies against part of the judgment and order of the Labour
Court (
per
Whitcher J) reviewing and setting aside the arbitration award
(GATW534-13) dated 24 August 2013 issued by Commissioner W Koekemoer

(“the commissioner”), the third respondent, under the
auspices of the Commission for Conciliation Mediation and Arbitration

(“the CCMA”), the second respondent; substituting it with
an order that the dismissal of Mr Jacobus Martinus Joubert
(“Mr
Joubert”), the second appellant, was substantively fair and
that Armaments Corporation of South Africa (SCO) Ltd
(“Armscor”),
the first respondent, pays Mr Joubert eight months compensation on
the basis that his dismissal was procedurally
unfair.
The
present appeal is with leave of the Labour Court. Its judgment has
since been reported as
Armaments
Corporation of SA (SOC) Ltd v Commission for Conciliation, Mediation
& Arbitration and Others
(2016)
37 ILJ 1127 (LC).
[2]
Mr
Joubert was in the employ of Armscor for more than three decades,
since 01 July 1981, throughout which he obtained the requisite

security clearance certificates, appropriate to his position, from
the Intelligence Division of the South African National Defence
Force
(“SANDF”). On 23 October 2006 he was issued with a grade
“
Secret
”
security clearance certificate which expired on 11 September 2011. In
accordance with Armscor’s Security Practice
Mr Joubert
submitted an application to renew his security clearance certificate
to Armscor’s Personnel Evaluation Division
(“APED”)
on 26 September 2011. For the period 11 September 2011 to 26 November
2012 Mr Joubert held a security clearance
certificate classified as
“
Confidential
”.
Thereafter, for reasons never explained to him or to Armscor the
vetting panel of the Intelligence Division of the SANDF
refused to
grant him all grades of security clearance, let alone at the highest
level he previously enjoyed.
[3]
Armscor’s
conditions of employment provide that an appointment of an employee
to its staff establishment is subject to “obtaining
and
maintaining” of an applicable security clearance. Those “who
fail to qualify for any grade of security clearance
as a result of a
negative vetting content will be dismissed or their contract of
employment terminated.”
[1]
Significantly, s 37(2) of the Defence Act, 42 of 2002 (“the
Defence Act&rdquo
;), which is central to this litigation provides:
‘
(2)
A member or employee contemplated in subsection (1)
(a)
may not be enrolled, appointed or promoted, receive a commission
or
be retained as a member or employee
,
unless such member or employee has been issued with the appropriate
or provisional grade of security clearance by the Intelligence

Division.’
(My
emphasis)
[4]
On
07 December 2012 APED addressed a letter to Mr Dawie Griesel, acting
general manager, Acquisition Department, informing him of
the outcome
of Mr Joubert’s application for security clearance; bringing to
his attention certain provision of Armscor policies;
and further
requesting him to convey a message of the results of the vetting
process to Mr Joubert. On 18 December 2012 Mr Griesel
addressed a
letter of termination to Mr Joubert in these terms:
‘
In
terms of para 6.6.1 of the Armscor Conditions of Employment Practice,
A-Prac-2021
[2]
and further in
terms of paragraph 5.5.1 of Armscor Security Clearance Practice,
A-Prac-2033,
[3]
an appointment
and employment of an employee are subject to obtaining and
maintaining of an applicable security clearance.
Furthermore,
in terms of paragraph 5.15.2.4 of A-Prac-2033,
persons who fail to
qualify for any grade of security clearance as a result of negative
vetting content will be dismissed or their
contract of employment
terminated
. You are hereby informed that you have been refused
all grades of security clearance. Consequently, your contract of
employment
is terminated with immediate effect.
You
are further advised of your right to appeal within 30 days from the
date of this letter, the decision to refuse you all grades
of
security clearance should you so wish, by personally requesting a
review of the clearance by lodging a written request via APED
to the
Personnel Security Review Board (PSRB).’
[5]
The
aforesaid letter effectively terminated, with immediate effect, Mr
Joubert’s services with Armscor on 18 December 2012.
Having
been advised of his right to review the decision to refuse him all
grades of security clearance he pursued that course.
[6]
On
20 December 2012 Solidarity, the first appellant, a trade union
acting on behalf of Mr Joubert, directed a letter to Armscor

recording that: Mr Joubert had not received reasons for the refusal
of his security clearance; he had not been afforded any opportunity

to state his case in response to the refusal; and that Armscor did
not follow any pre-dismissal process in terminating his services.
Solidarity
demanded that reasons be provided to Mr Joubert to enable him to
formulate a reply or representations to the negative
vetting content.
It further put Armscor on terms to reply by 04 January 2013. On the
next day, 21 December 2012, Mr Joubert wrote
a letter to APED in the
same vein.
[7]
By
means of
a
letter dated 07 January 2013 Mr Joubert lodged an urgent revision of
his security clearance with APED.
[4]
Following this, correspondence was exchanged between the parties but
no reasons were forthcoming for the refusal of any of the
grades of
security clearance by the Intelligence Division. His application for
the review or revision remained pending with no
end in sight.
[8]
In
the end, Mr Joubert referred an unfair dismissal dispute to the CCMA
for conciliation and arbitration. At arbitration the parties
agreed
that the matter would be determined by way of exchange of written
heads of argument. The only evidence that was led was
that of Mr
Joubert in respect of his employment status and earnings post his
dismissal.
[9]
The
commissioner, in his assessment of the evidence and argument, was of
the view that the provisions of the Labour Relations Act,
66 of 1995
(“the LRA”) had to be interpreted “
by
casting the net wide to draw employees into protection of the LRA
”
so as to conform with the right to fair labour practice as expressed
in s23 of the Constitution.
[5]
He rejected Armscor’s argument that it did not dismiss Mr
Joubert in that the termination of his services came about by the

operation of the law, viz
s37(2)
of the
Defence Act. He
further
rejected its contention that it had no discretion in the matter but
to terminate Mr Joubert’s services.
[10]
The
commissioner was of the view that Armscor could have placed Mr
Joubert on suspension or considered alternative sanctions short
of
dismissal. He found that Armscor opted to terminate Mr Joubert’s
services by merely issuing a notice to that effect without
providing
reasons for the termination of employment as envisaged in
s188
of the
LRA. The commissioner reasoned that Armscor was required to decide on
a fair reason for the dismissal and to act in accordance
with the
procedures laid down in the LRA.
[11]
The
commissioner found that Armscor did not prove a fair reason for the
dismissal and concluded that Mr Joubert’s dismissal
was both
substantively and procedurally unfair. He reinstated him
retrospectively on the same terms and conditions of employment
that
applied prior to his dismissal, with back-pay equivalent to his nine
months’ remuneration in the amount of R737 280.00
[12]
Dissatisfied
with the outcome of the arbitration process Armscor lodged a review
application with the Labour Court contending, as
it were, that the
commissioner’s decision, on the substantive and procedural
fairness of the dismissal and the relief granted,
was one that a
reasonable decision-maker could not have reached.
[13]
The
review required the consideration of the substantive fairness of the
dismissal and relief awarded by the commissioner. Armscor
conceded
the procedural unfairness of the dismissal and consequently it did
not require any determination.
[14]
The
Labour Court found that the commissioner failed to consider Armscor’s
alternative defence that Mr Joubert had been dismissed
for
incapacity. In the premises, the commissioner did not consider the
material facts and submissions placed before him and accordingly

committed a material irregularity. The Court found that incapacity
was the correct categorisation of the basis for Mr Joubert’s

dismissal. As support for its conclusion the Court invoked the
following passage from Brassey
Commentary
on the
Labour Relations Act
at
para A8-76 which was approved by this Court in
Samancor
Tubatse Ferrochrome v Metal & Engineering Industries Bargaining
Council & Others:
[6]
'Incapacity
may be permanent or temporary and may have either a partial or a
complete impact on the employee's ability to perform
the job. The
Code of Good Practice: Dismissal conceives of incapacity as
ill-health or injury but
it
can take other forms. Imprisonment and military call-up, for
instance, incapacitates the employee from performing his obligations

under the contract. The dismissal of an employee in pursuance of a
closed shop is for incapacity; so is one that results from a
legal
prohibition on employment.'
[15]
The
Court
a
quo
held that Mr Joubert’s dismissal was fair because it resulted
from a legal prohibition on further employment brought about
by
s37(2)
of the
Defence Act and
the corresponding Armscor’s
internal policies. The Court found the injunction (that employees who
fail to qualify for any
grade of security clearance as a result of a
negative vetting outcome will be discharged from their services) to
be patently fair
and reasonable. The Court was of the view that
failure to consider these legal issues resulted in the commissioner
producing an
unreasonable outcome on the substantive fairness of the
dismissal.
[16]
In
respect of the contention that it was premature to dismiss Mr
Joubert, absent a finding that it had become permanently and
objectively
impossible for Mr Joubert to be retained in his position,
the Court agreed with Armscor that Mr Joubert could not be deployed
elsewhere
because his security clearance was removed in its entirety.
Further, that it would be unreasonable to expect Armscor to keep a
high earning employee in its employ with no work to perform pending
the review process, the duration of which was unknown to Armscor.
[17]
The
Labour Court found the commissioner’s award, insofar as it
reinstated Mr Joubert, to be incompetent and unsustainable
because
the commissioner failed to bring his mind to bear on the fundamental
aspect that in law a party cannot enforce a contract
that is in
contravention of a statutory provision, in this case
s37(2)
of the
Defence Act.
[18
]
As
already alluded to, the Court concluded that the dismissal was
substantively fair. In view of the fact that Armscor conceded
that
the dismissal was procedurally unfair, the Court upheld the
commissioner’s award in that respect. It found an award
of
eight-months compensation to be just and equitable, regard being had
to Mr Joubert’
s 31
years of service with Armscor and the abrupt
manner in which Armscor set about terminating his services without
following the pre-dismissal
procedural steps.
[19]
Before
us Solidarity and Mr Joubert (the appellants) contended that:
19.1
The
Labour Court erred in finding that Armscor relied on the provisions
of the
Defence Act in
terminating Mr Joubert’s employment. It
was argued that, on the contrary, Armscor relied on its own policies
in laying down
the basis for termination of employment and in
terminating Mr Joubert’s employment. It did not rely on the
operation of the
law, in particular
s37(2)
of the
Defence Act, as
a
motivation for the termination.
19.2
The
Labour Court held that the commissioner erred in not accepting
submissions concerning the alleged incapacity of Mr Joubert.
The
Court ought to have held that the commissioner correctly applied the
law by refusing to allow Armscor to rely on the alternative
reason
for dismissal not communicated to Mr Joubert at the time of his
dismissal as the basis for termination.
19.3
The
Labour Court ignored the principle enunciated in
Fidelity
Cash Management Services v CCMA (
Fidelity
Cash Management Services )
[7]
that the fairness or otherwise of the dismissal of an employee must
be determined on the basis of the reasons for the dismissal
which the
employer gave at the time of the dismissal.
19.4
The
Court failed to record the relationship between the procedural
unfairness of Armscor’s decision and the substantive basis
for
the termination of employment. The procedural fairness, that is,
refusing to provide reasons for the failed security clearance
and
declining to allow Mr Joubert to complete the review of the adverse
security clearance, created the substantive basis for the
dismissal
that the Judge in the Court
a
quo
relied on.
19.5
The
Court ought to have taken into account that in Armscor’s
policies provision is made for requesting a revision of security

status and that clause 5.12.1 of Armscor’s Security Clearance
Practice treats the denial of Security clearance, in the first
round,
as conditional so that the legal impediment to employment had not
been finally determined.
19.6
The
Court ought to have considered
s39(3)
of the
Defence Act which
provides that: “
No
security clearance or specific grade of security clearance may be
refused, downgraded or withdrawn without the member or employee
who
will be affected thereby being afforded reasonable opportunity to
present information regarding such matter
”
and further
s 39(2)(a)
which stipulates that: “…
(T)he
Secretary for Defence must, in writing, furnish every member or
employee whose security clearance or particular grade of security

clearance has been refused, downgraded or withdrawn with the grounds
and reasons for such refusal, downgrading or withdrawal
.”
19.7
The
Court failed to appreciate that determination of security clearance
under the
Defence Act is
not a unilateral exercise during which
clearance can be denied, without reasons, in the absence of
representation by a person potentially
adversely affected by the
decision. Lastly,
19.8
The
Labour Court erred in the application of the review test. The
conclusion reached by the commissioner, it was argued, is one
that a
reasonable commissioner could have reached.
[20]
Mr
Myburg SC, for Armscor, contended that properly construed, the policy
provisions relied upon by Armscor in dismissing Mr Joubert
equated to
him being incapacitated. He argued that this is not a case of an
employer dismissing an employee on one ground and seeking
to defend
the decision on a different ground. Therefore, the
Fidelity
Cash Management Services
principle
relied upon by the appellants, he argued, finds no application in
this case. He further contended that the absence of
reasons for the
decision could not be laid at the door of Armscor. It was the
decision not the reasons therefor that caused Mr
Joubert to be
incapacitated. He further argued that the appellants’ reliance
on para 5.15.2.1 of Armscor Security Clearance
Practice which
provides for a right to request “a revision” of the
security clearance decision cannot assist them because
when para 5.15
is read in its entirety it is clear that the dismissal of an employee
who fails to qualify for any grade of security
clearance is not
subject to the outcome of the revision process by PSRB.
[21]
Mr
Myburg further argued that
s37(2)
operated so as to render continued
employment of Mr Joubert by Armscor unlawful. Insofar as
s37(2)
provides that an employee of Armscor “
may
not
”
be retained as an employee “
unless
[he/she] has been issued with the appropriate...grade of security
clearance by the Intelligence Division”,
cognisance must be taken that the words “
may
not
”
in this context are not permissive but peremptory. The policies of
Armscor adopt this form of interpretation. Furthermore,
he argued
that
s39
which provides for,
inter
alia
,
an opportunity to present information; to be provided with reasons;
and to review negative decision, was misplaced because it
applies to
a “
member
or employee
”.
A “
member
or employee
”
in the definition section of the
Defence Act did
not cover the
employees of Armscor, it was contended.
Analysis
[22]
This
appeal lies, in the main, against the substantive fairness of Mr
Joubert’s dismissal
.
It remains to be considered whether the loss by Mr Joubert of all
levels of security clearance triggered impossibility of performance.

Put differently, whether the termination of Mr Joubert’s
services by Armscor was actuated by reasons of his incapacity.
If
the answer to the question is in the affirmative then it has to be
established
whether
the incapacity was temporary or permanent, and therefore, warranting
being visited with a sanction of dismissal.
[23]
The
CCMA’s awards are reviewed on the grounds of,
inter
alia
,
unreasonableness. The test is whether the decision reached by the
commissioner is one that a reasonable decision-maker could not
have
reached.
[8]
[24]
In
his work
Workplace
Law
,
[9]
Mr John Grogan posits, correctly in my view, that incapacity need not
arise from illness or injury. Employees may be dismissed
for
incapacity arising from any condition that prevents them from
performing their work. In other words, incapacity may give rise
to a
species of impossibility of performance.
[25]
The
following remarks in
National
Union of Mineworkers and Another v Samancor Ltd (Tubatse Ferrochrome)
and Others
[10]
are pertinent to
this case
:
‘
While
ordinary principles of contract permit a contracting party to
terminate the contract if the other party becomes unable to
perform,
that is not the end of the matter in the case of employment. The
question that still remains in such cases is whether
it was fair in
the circumstances for the employer to exercise that election. In
making that assessment the fact that the employee
is not at fault is
clearly a consideration that might and should properly be brought to
account.’
[26]
In
terms of
s37(1)
(a) of the
Defence Act t
he
Minister of Defence may prescribe different grades of security
clearance to be issued by the Intelligence Division for various

categories of members, the employees of Department of Defence
and employees of
Armscor. In terms of
s37(2)
those
members or employees may not be enrolled, appointed or promoted,
receive a commission or
be
retained as members or employees, unless they had been issued with
the appropriate or provisional grade of security clearance
by the
Intelligence Division
.
Section 37(4)
provides that the Intelligence Division must, on the
instruction of the Secretary for Defence, determine whether any
security clearance
or a specific grade of security clearance should
be issued to any member or employee concerned.
[27]
In
the letter of termination of service, referred to earlier, Mr Joubert
was informed that he had been refused all grades of security

clearance by the Intelligence Division and consequently that his
contract of employment was terminated with immediate effect.
The
argument by Armscor that the dismissal of Mr Joubert was actuated by
incapacity is not new. As correctly found by the Court
a quo, it was
one of the issues the commissioner was enjoined to determine.
[11]
As more fully appearing on the Pre-arbitration minutes amongst issues
that had to be considered by the commissioner was whether:
“
(T)he
true reason for dismissal falls within the definition of ‘incapacity’
as contemplated in the LRA. Further, whether
the reason for dismissal
had to be “classified as being due to incapacity.”
[28]
There
can be no question that
s37
of the
Defence Act makes
it a
prerequisite for an employee of Armscor to be issued with an
appropriate grade of security clearance in order to be retained
in
its employ. The policies relied upon by Armscor,
[12]
in effecting termination in this case, have the same import. They
also have their genesis in
s37
of the
Defence Act. The
argument by Ms
Engelbrecht, for Solidarity and Mr Joubert, that Armscor did not rely
on
s37(2)
of the
Defence Act, as
a motivation for the termination of
employment but on its employment policies, is therefore
unmeritorious. It is axiomatic that
Mr Joubert’s termination of
service was based on supervening impossibility of performance. This
constituted a form of incapacity
to fulfil the attendant contractual
obligations.
As correctly found by the Court
a
quo
Mr Joubert’s inability to perform his services, due to the
legal impediment imposed by
s37
of the
Defence Act and
Armscor’s
corresponding employment policies, falls squarely within the ambit of
a dismissal based on capacity. However, this
is not the end of the
enquiry.
[29]
Section
39(1)
of the
Defence Act requires
the Secretary for Defence to give
written notice to every member or employee in respect of whom a
determination, of whether any
security clearance or a specific grade
of security clearance should be issued, has been made by the
intelligence Division as envisaged
in
s37(4).
The Secretary is
further required, in terms of
s39(2)
, to furnish in writing to every
member or employee, whose security clearance or particular grade of
security clearance has been
refused, downgraded or withdrawn, the
grounds and reasons for such refusal, downgrading or withdrawal. Very
importantly, in terms
of
s39(3)
no security clearance or specific
grade of security clearance may be refused, downgraded or withdrawn
without
the member or employee
“
who
will be affected thereby being afforded reasonable opportunity to
present information regarding such matter
.”
Section 39(4)(a)
provides that the member or employee concerned may,
within 14 days after receipt of the grounds and reasons from the
Secretary
of Defence referred to above, lodge a written objection
against the refusal, downgrading or withdrawal, as the case may be,
with
the Secretary for Defence and further furnish the Secretary with
such written representations, statements and documents as the member

or employee deems necessary for a review by the Personnel Security
Review Board (“the PSRB”).
[30]
The
argument by Armscor that
s39
of the
Defence Act did
not apply to its
employees because they were not “
members
or employees
”
as defined in the
Defence Act is
devoid of substance. The Secretary
of Defence is charged with the responsibility of giving notice of
security clearance or refusal
thereof
to
“
every
member or employee
”
contemplated in
s37(4).
The “
members
or employees”
contemplated in 37(4) includes the employees of Armscor.
[13]
[31]
The
PSRB is established by the Minister of Defence
in
terms of
s40
of the
Defence Act. The
board is obliged to review any
objection against the refusal, downgrading or withdrawal of security
clearance, as the case may
be, referred to it in terms of
section
39(4)
(c).
[14]
It is further imbued with the power to confirm the determination of
security clearance made by the Intelligence Division or to
set it
aside and substitute it as contemplated in
s41(2)
of the
Defence Act.
[32]
So
far it is clear that the condition precedent introduced by
s37(2)
, to
the effect that
an
employee may not be retained in the services of Armscor unless he/she
had been issued with the appropriate or provisional grade
of security
clearance,
cannot
be implemented independently of
ss 39
and
41
of the
Defence Act,
particularly
in circumstances where an employee has lodged an
objection against the negative vetting outcome as in this case.
What
Armscor did, on the basis of its policies which are founded on
s37(2)
, was to terminate Mr Joubert’s services with immediate
effect for reasons that he had been refused all grades of security

clearance. This notwithstanding, Mr Joubert was advised of his right
to “appeal” the decision within 30 days from the
date of
receipt of the notice of termination.
[33]
Clause
5.12.1 of Armscor Security Clearance Practice, A-Prac-2033, issue 3
Provides:
‘
Any
person who regards himself /herself as having been wronged in the
conditional
issuing, downgrading or
denial
of a security clearance
,
has
the right
to
apply for revision of his/her security status by the PSRB. An
application for such an appeal to the PSRB must be made personally

and submitted via APED within 60 days after notification of the
clearance decision to the requesting body.’
[34]
An
employee’s right to apply for revision of the decision in
respect of the grade of security clearance by the Intelligence

Division is repeated in Clause 5.15. of A-Prac-2033, issue 3, which
provides in part:
‘
5.15.1
In the event of a clearance refusal, the requesting body will be
informed immediately whether a lower grade of clearance
was issued or
all grades of clearance refused. Reason(s) for the refusal will not
be disclosed in order to maintain confidentiality
regarding the
person concerned or references consulted.
5.15.2
Course of action then lies within the following options:
5.15.2.1
The person concerned may, within 30 days of notification by his/her
manager, exercise his/her right to request a revision
of the
clearance decision by personally lodging a written request, via APED
to the PSRB, for revision...’
[35]
The
argument by Armscor that Mr Joubert was disqualified from lodging an
objection in terms of its Security Clearance Practice because
he was
denied all grades of security clearance cannot be sustained for two
reasons. First, Armscor itself extended an invitation
to Mr Joubert
to file an objection if he wished to do so. Second, Clause 5.12.2 of
Armscor’s Security Clearance Practice-A-Prac-2033
sets out only
two categories of persons who are disqualified to lodge an objection.
This includes: persons who had been refused
security clearance during
the recruitment process and whose appointment had not yet been
confirmed prior to the denial of a security
clearance; and the
independent contractors, who tender to work on defence projects. Mr
Joubert did not fall into any of the two
categories and was therefore
entitled to lodge an objection.
[36]
Ms
Engelbrecht argued that the aforesaid clause 5.12.1, to the extent
that it provides that:
“
Any
person who regards himself /herself as having been wronged in the
conditional
issuing, downgrading or
denial
of a security clearance
,
has
the right
to
apply for revision of his/her security status by the PSR,”
treats
the denial of security clearance in the first round, before review of
the decision, as conditional.
The
net effect of this, she contended, is that the legal impediment had
not been finally determined. In countering this submission,
Armscor
contended that reliance on para 5.12.1 of the policy cannot avail the
appellants because it provides for an employee having
the right to
apply to the PSRB for revision of “the conditional issuing,
downgrading or denial of security”. The word
“conditional”,
it was argued, relates only to “the conditional issuing of
security clearance” and not “denial
of security
clearance”. The denial of security clearance to Mr Joubert was
not conditional, the argument continued.
[37]
As
I see it, nothing turns on the argument that denial of all grades of
security clearance by the Intelligence Division was conditional

pending the review of the decision. What is crucial here is that
there rested an obligation on the PSRB
to
review any objection referred to it in terms of
section 39
(4)
(c).
The
difficulty with this case is that
PSRB
never reviewed the decision of the Intelligence Division which
refused Mr Joubert all grades of security clearance and, worse,
the
reason(s) for the refusal of all the grades of security clearance
remains unexplained.
[38]
A
fair procedure as set out in
s39
read with
s41
of the
Defence Act and
Clauses 5.12.1 and 5.15 of Armscor Security Clearance Practice
A-Prac-2033 was designed to create a platform where the grounds
and
reasons for the refusal, downgrading or withdrawal of security
clearance would be provided to an aggrieved employee so as to
afford
such an employee a reasonable opportunity to present information,
make representations and/or statements to the PSRB regarding
the
decision to,
inter
alia
,
refuse the security clearance.
The
grounds or reasons for the refusal of a grade of security clearance
are, in my view, fundamental to the establishment of the
substantive
basis of a dismissal contemplated in
s37(2)
of the
Defence Act. In
other words, substantive fairness of the decision to terminate under
s 37(2)
could not have been determined in the absence of reasons for
the decision not to grant the security clearance.
[39]
The
procedure laid down in
s39
of the
Defence Act must
precede the final
adjudication of the review of the decision refusing the security
clearance by PSRB. In my view, if the final
determination has not
been made, then the substantive reason for the dismissal under
section 37(2)
has not been determined. In this case the termination
letter was issued before Armscor had finally established that it had
become
permanently and objectively impossible for Mr Joubert to be
retained in its service. It follows that, at the time of issuing the

letter of termination, the incapacity had not yet been determined to
be of a permanent nature that warranted Mr Joubert’s
dismissal.
It
was only once the review process had been completed, and resulted in
the confirmation of the decision of the Intelligence Division,
that
it could be said that Mr Joubert’s incapacity had become
permanent.
[40]
It is
common cause that two of Armscor’s employees were allowed or
retained in its service without the requisite security
clearance
certificates. In the final analysis, there could never have been any
rationality
to the decision by Armscor to terminate the employment of Mr Joubert
prematurely and prior to the determination of the
review. T
he
conclusion is irresistible that the
dismissal
was substantively unfair.
[41]
While
it is true that the dismissal came about as a result of the legal
impediment brought about by
s 37(2)
, the Court
a
quo
erred in holding that such a dismissal was fair without assessing the
impact of
s39
on the substantive fairness thereof. In
Head
of Department of Education v Mofokeng and Others,
[15]
this Court held that the reviewing court must consider whether, apart
from the flawed reasons of or any irregularity by the arbitrator,
the
result could be reasonably reached in the light of the issues and the
evidence. Mere errors of fact or law may not be adequate
to vitiate
the award. Although the commissioner did not devote his attention to
what the correct categorisation of the dismissal
could have been on
the available material before him, his conclusion, although
inelegantly put, that Armscor was required to prove
a fair reason for
the dismissal and to afford Mr Joubert a fair hearing is
unassailable.
[42]
On
the question of relief, as correctly found by the Court
a
quo
,
an award of
reinstatement
was not legally competent. This is so for the following reasons:
42.1
First, Mr Joubert did not hold the relevant security clearance
certificate and was therefore disqualified to hold the position
of
senior manager (technical) that he held at the time of his dismissal.
In these circumstances reinstatement would not be reasonably

practicable in terms of
section 193(2)(c)
of the LRA. In
Maepe
v Commission for Conciliation, Mediation & Arbitration and
Another,
[16]
this Court made this instructive illustration: If the evidence before
an arbitrator or the Labour Court in an unfair dismissal
dispute
between A and B, where A who had been employed by B as a driver,
established that his driver's licence was withdrawn after
his
dismissal with the result that he could no longer drive lawfully, it
would definitely be “reasonably impracticable”
within the
meaning of that phrase in
s193(2)
(c)
for the employer to reinstate him/her because in such a case the
employer would not be able to require the employee to perform
his
duties without requiring the employee to commit a criminal offence.
Mr Joubert’s position is analogous.
42.2 Second, what was a temporary
supervening impossibility of performance has become permanent because
the review of the decision
to deny Mr Joubert all grades of security
clearance came to naught.
[43]
The
Court
a
quo
cannot be faulted in concluding that t
he
commissioner committed a reviewable irregularity by reinstating Mr
Joubert into Armscor’s employ. The remedy available
to Mr
Joubert, under these circumstances, is that of compensation. Regard
being had to the egregious manner in respect of which
his termination
was effected, without providing a fair reason and following due
process, the maximum compensation allowed in terms
of
s194(1)
of the
LRA is justified.
[44]
Armscor
did not challenge a costs order that was made against it in respect
of the aborted review that was
instituted
under Case No: JR 1510/13. There can be no reason to upset the order
of the Court
a
quo
in respect of those costs. Concerning the costs in respect of this
appeal,
Mr
Myburg argued that this is not a case where a costs order was called
for. Ms Engelbrecht urged that costs follow the result.
Having had
regard to the requirements of law and fairness, I am inclined to
award costs. In the result, I make the following order.
Order
1.
The
appeal is upheld with costs;
2.
The
order of the Court
a
quo
is set aside and substituted with the following:
“
1.
The dismissal of Mr Jacobus Martinus Joubert, the fourth respondent,
was substantively and procedurally unfair;
2. The Armaments
Corporation of South Africa (SOC) Ltd (Armscor), the applicant, is
ordered to pay Mr Jacobus Martinus Joubert,
the fourth respondent,
compensation equivalent to his 12 (twelve) months’ salary;
3. There is no
order as to costs in respect of the review application filed under
Case No: JR 1961/13;
4.
Armscor is ordered to pay Solidarity and Mr Jacobus Martinus
Joubert’s, the third and fourth respondent’s, costs
in
respect of the review application instituted under Case No: JR
1510/13.
MV Phatshoane
Acting
Deputy Judge President - The Labour Appeal Court
Davis
JA and Murphy AJA concur in the judgment of Phatshoane ADJP
APPEARANCES:
FOR THE APPELLANTS:

Adv MJ Engelbrecht
Instructed
by Serfontein Viljoen & Swart Attorneys
FOR THE FIRST RESPONDENT:
Adv A Myburgh SC
Instructed by
Bowman Gilfillan Attorneys
[1]
This
is set out in para 6.6.1 of Armscor Conditions of Employment,
A-Prac-2021, issue 11 and para 5.5.1 of Armscor Security Clearance

Practice, A-Prac-2033, Issue 3.
[2]
A-Prac-2012
stipulates: “The appointment and employment of an employee are
subject to obtaining and maintaining of an applicable
security
clearance, and the employee must, on request, properly complete all
the necessary forms which may be provided.”
[3]
A-Prac-2033
provides: “an appointment in Armscor is subject to obtaining
and retaining a security clearance in relation
to the security
classification of the information to be accessed.”
[4]
This
is referred to
on
the record
as a
review
at times an appeal.
[5]
The
Constitution of the Republic of South Africa Act, 108 of 1996.
[6]
(2010)
31 ILJ 1838 (LAC) at 1842B-C para 10.
[7]
[2008]
3 BLLR 197
(LAC) at para 32.
[8]
Sidumo
and Another v Rustenburg Platinum Mines Ltd and
O
thers
(2007)
28 ILJ 2405 (CC)
[9]
Workplace
Law John Grogan- 12th Ed, 2017, ch 14-p 287.
[10]
(2011)
32 ILJ 1618 (SCA) at
1623
para 12.
[11]
See
Pre-Arbitration Minutes (Vol 3 page220) under the heading “Disputed
Facts” at para 3.9.
[12]
The
policies are quoted at fn 2 and 3
supra
.
The relevant clauses are: 6.6.1 of Armscor Conditions of Employment
A-Prac-2021, Issue 11; 5.5.1 and 5.15.2.4 of Armscor Security

Clearance Practice, A-Prac-2033, Issue 3.
[13]
See
s
37(1)(a)
of the
Defence Act.
[14
]
See s
41 (1) of the Defence Act.
[15]
(2015)
36 ILJ 2802 (LAC) at 2812D-G paras 31-32.
[16]
(2008)
29 ILJ 2189 (LAC) at 2201A-B para 18.