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[2019] ZALAC 57
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EOH Abantu (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (JA4/18) [2019] ZALAC 57; (2019) 40 ILJ 2477 (LAC); [2019] 12 BLLR 1304 (LAC) (15 August 2019)
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA4/18
In the matter between:
EOH ABANTU (PTY) LTD
Appellant
and
COMMISSION FOR
CONCILIATION,
MEDIATION AND
ARBITRATION
First
Respondent
BONGANI KHUMALO N.O.
Second
Respondent
BRETT DANNEY
Third
Respondent
Heard:
30 May 2019
Delivered:
15 August 2019
Summary:
Review application – employee dismissed for
distributing
valuable intellectual property
of
the employer to an acquaintance – commissioner
finding that the categorisation of the charge not competent and found
employee
not negligence- held that:
Employers
embarking on disciplinary proceedings, not being skilled legal
practitioners, sometimes define or restrict the alleged
misconduct
too narrowly or incorrectly.
Further that
there
is no requirement that competent verdicts on disciplinary charges
should be mentioned in the charge sheet - subject though
to the
general principle that the employee should not be prejudiced.
Evidence
proving that employee negligent and
wrongfully
distributed valuable intellectual property
–
appeal
upheld and Labour Court’s judgment set aside.
Coram:
Waglay JP, Murphy and Savage AJJA
JUDGMENT
MURPHY AJA
[1]
The appellant appeals against the judgment of the Labour Court
(Steenkamp J) in which
it dismissed the appellant’s application
to set aside the award of the second respondent (“the
commissioner”)
holding the dismissal of the third respondent
(“Danney”) to be substantively unfair and awarding him
compensation in
the amount of R600,000.00, being the equivalent of 10
months’ remuneration.
[2]
The appellant provides payroll administration services. Danney
commenced his relationship
with the appellant in 2006 by rendering
services to one of the appellant’s clients, Wesbank, but
through a company other
than the appellant. In September 2010, he was
employed by the appellant and continued from that time to render
services to Wesbank
as an employee. At the time of his dismissal in
September 2011, he was the team leader for the Microsoft server
administrators.
[3]
The issues in this appeal require some understanding of software
activation keys.
These keys are 25 character codes, including letters
and numbers. There are three relevant types of software licence
product activation
keys. First, a volume licence key used to activate
multiple installations of a software product on multiple computers.
Volume licence
media is required to use this software. Second, a beta
key which is used to activate pre-released software that is still
being
tested and is not commercially available on the market. It is
common for software development companies such as Microsoft to make
this software available for free download for technical people to
evaluate prior to its release. These keys are freely available
to the
public. Third, a KMS key, which is an activation key embedded in the
software product itself with the activation being done
on the
organisation’s internal server rather than on the internet.
[4]
Wesbank purchased from Microsoft 500 “multiple activation keys”
for Windows
7 Professional and 5000 multiple activation keys for
Windows Office 2010. The keys were intended for use by Wesbank
employees for
official purposes. Wesbank prohibited third parties
from utilising the software licences for which it had paid.
[5]
In 2011, Danney’s girlfriend, Monica Sabbioni (“Sabbioni”),
a database
administrator, asked him to assist with the installation
of Microsoft Office software on her mother’s personal computer.
On 20 June 2011, Danney sent two beta keys to Sabbioni’s mother
which he had privately downloaded. Sometime after sending
these beta
keys, Sabbioni asked Danney to resend them. In response to this
request, on 10 August 2011, Danney sent another e-mail
to Sabbioni’s
mother. This time he sent a volume licence key which he downloaded
from the appellant’s server. He said
he did so after checking
on the KMS server and thinking he was sending the beta key he had
previously sent. He explained that he
did not simply re-send the
original e-mail of 20 June 2011 containing the beta keys because he
could not find it in his e-mail
sent box.
[6]
The key did not work and Sabbioni’s mother was not able to
install the software.
Danny claimed that he thought this was because
the computer in question was out-of-date. It transpired later that
the volume licence
key was unusable because Sabbioni’s mother
did not have the requisite volume licence media and the key was
defunct.
[7]
The e-mail of 10 August 2011 was picked up by internal forensic
investigators a few
weeks after it was sent. Danney was called to a
meeting and asked by his manager (“Bruwer”) whether he
had ever sent
out a Wesbank’s key and he answered that he had
not. Bruwer suggested that he check. Danney recalled that he had sent
keys
to Sabbioni’s mother and assumed he had done nothing
wrong. He went to check with the desktop support personnel who
confirmed
that the key he had downloaded and sent on 10 August 2011
was, in fact, the volume licence key. He testified that he had not
picked
this up because the volume licence key did not appear on the
KMS server where he had checked. After learning that he had sent a
volume key, he informed the investigators of this.
[8]
Danney was suspended on 14 September 2011. A disciplinary hearing
took place on 19
September 2011. It is common cause that the
disciplinary policy of Wesbank applied to Danney. He was charged with
the following:
‘
1.
Contravention of section 4.2.1. of the Wesbank disciplinary code
namely, theft, fraud, dishonesty or the unauthorised removal
of any
material from the Bank, or from any person or premises where such
material is kept in that you dishonestly distributed the
Wesbank
Microsoft office licence keys to a Raymond Billson and Roberta
Sabbioni on 20 June 2011 and again on the 10
th
of August 2011.
2. Contravention of
section 4.2.9 of the Wesbank disciplinary code namely, being in
breach of the Bank’s confidentiality agreements
and/or by
divulging such confidential information, in that you divulged
information you obtained through your position as Team
Leader Server
Administration, to external unauthorised personnel.
3.
Contravention of section 4.2.19 of the Wesbank disciplinary code
namely, disregarding or breaching the bank’s code of ethics,
in
that you dishonestly distributed the Wesbank Microsoft Office licence
keys to a Raymond Billson and Robert Sabbioni on 20 June
2011
and again on the 10
th
August 2011.’
[9]
Danney was found to have committed the offences although it was not
established that
he had acted intentionally. He was dismissed on 29
September 2011 for gross negligence. He then referred a dispute
alleging unfair
dismissal to the second respondent (“the
CCMA”). The commissioner found the dismissal was procedurally
fair but substantively
unfair because Danney had been found guilty of
the offence of gross negligence with which he had not been charged.
He reasoned
as follows:
‘
It
is common cause that the chairperson of the disciplinary enquiry
could not find any dishonesty on the applicant’s part
but
instead he found the applicant’s actions grossly negligent. I
tend to agree with the applicant’s representative
that (a)
charges 1 and 3 required respondent to prove intent on the
applicant’s part (b) the test for negligence is whether
a
reasonable person in the position of the applicant would have
foreseen the harm resulting from the acts or omissions and would
have
taken steps to guard against that harm and (c) that the test for
dishonesty and negligence are mutually destructive. It is
trite law
that a chairperson cannot find the applicant negligent when he was
not alleged to have been negligent. It is irregular
for the
chairperson to find the applicant guilty on some charges, on one
hand, and having changed some of the charges after the
conclusion of
the enquiry on the other hand, but found negligence on the part of
the applicant……
Albeit it is apparent
that the charge in respect of 4.2.21 of the code, as contended by the
applicant, would have properly encompassed
the actions of the
applicant, I find the respondent is bound by the choices it made at
the time of charging the applicant.’
[10]
The commissioner did not canvass whether dismissal was an appropriate
sanction for the negligence
in question. However, it is clear that he
was favourably disposed towards Danney, whom he considered a
satisfactory and honest
witness for having admitted his error once he
had discovered it.
[11]
In dismissing the application for review, the Labour Court concluded:
‘
Perhaps
most importantly, Mr Lennox argued that the arbitrator placed too
much emphasis on the charge of dishonesty as opposed to
gross
negligence. He referred in this regard to
Myers
:
[1]
‘
Before
dealing with the issue of sanction, I need to re-emphasise that an
employer is not and cannot be expected to frame a charge
sheet in
respect of misconduct committed by an employee as one would prepare a
charge sheet in a criminal matter. The importance
of a so-called
charge sheet in a misconduct enquiry is to set out the allegation
that constitutes the misconduct so that the employee
is aware of the
case he or she is required to answer. It is the allegations that
constitute the misconduct which must be considered
and a conclusion
arrived
thereon.’
That much is trite. But
in this case, the employee was charged with dishonesty. That is the
case he went to meet and that is the
case that the employer could not
prove. The arbitrator correctly found that the employer did not
discharge the onus of proving
intent, and thus could not prove the
misconduct that it had alleged. That is why the dismissal was unfair.
That conclusion is not
so unreasonable that no other decision-maker
could come to the same conclusion.’
[12]
The essence of the charge against Danney was “theft, fraud,
dishonesty or the unauthorised
removal of any material from the Bank,
or from any person or premises where such material is kept in that
you dishonestly distributed
the Wesbank Microsoft office licence
keys”. The finding of both the commissioner and the Labour
Court was to the effect that
gross negligence and negligence were not
competent verdicts on the charge and that the dismissal was
substantively unfair because
the element of dishonesty had not been
proved.
[13]
The appellant contends that the decision of the commissioner was
unreasonable and tainted by
a material error of law. It submitted
that Danney was aware of the alleged conduct comprising the charge of
which dishonesty was
only one element and thus was adequately
informed of the case he had to meet. The charge, it argued,
essentially comprised the
unauthorised appropriation of the licence
keys which were the property of Wesbank.
[14]
The appellant submitted also that Danney’s version was
implausible and that the commissioner
erred in concluding that his
honesty was confirmed by his reporting of the error. There may be
merit in these contentions, especially
considering how the offence
came to be discovered by Wesbank’s forensic investigators.
However, for reasons that follow,
the issue may be confined to
determining whether the commissioner acted unreasonably in concluding
that a finding of negligence
was not a competent verdict under the
charge.
[15]
One of the key elements of fairness is that an employee must be made
aware of the charges against
him. It is always best for the charges
to be precisely formulated and given to the employee in advance of
the hearing in order
to afford a fair opportunity for preparation.
The charges must be specific enough for the employee to be able to
answer them. The
employer ordinarily cannot change the charge, or add
new charges, after the commencement of the hearing where it would be
prejudicial
to do so.
[2]
However, by the same token, courts and arbitrators must not adopt too
formalistic or technical an approach. It normally will be
sufficient
if the employee has adequate notice and information to ascertain what
act of misconduct he is alleged to have committed.
The categorisation
by the employer of the alleged misconduct is of less importance.
[3]
[16]
Employers embarking on disciplinary proceedings, not being skilled
legal practitioners, sometimes
define or restrict the alleged
misconduct too narrowly or incorrectly. For example, it is not
uncommon for an employee to be charged
with theft and for the
evidence at the disciplinary enquiry or arbitration to establish the
offence of unauthorised possession
or use of company property. The
principle in such cases is that provided a workplace standard has
been contravened, which the employee
knew (or reasonably should have
known) could form the basis for discipline, and no significant
prejudice flowed from the incorrect
characterisation, an appropriate
disciplinary sanction may be imposed.
[4]
It will be enough if the employee is informed that the disciplinary
enquiry arose out of the fact that on a certain date, time
and place
he is alleged to have acted wrongfully or in breach of applicable
rules or standards.
[17]
In short, there is no requirement that competent verdicts on
disciplinary charges should be mentioned
in the charge sheet -
subject though to the general principle that the employee should not
be prejudiced. Prejudice normally will
only arise where the employee
has been denied knowledge of the case he had to meet. Prejudice is
absent if the record shows that
had the employee been alerted to the
possibility of a competent verdict on a disciplinary charge he would
not have conducted his
defence any differently or would not have had
any other defence.
[5]
[18]
The finding of the commissioner that it was not competent to sanction
Danney for negligence was
accordingly a material error of law and
unreasonable, and the Labour Court erred in upholding it.
[19]
The requirements for a dismissal based on negligence are that the
employee failed to exercise
the standard of care that can reasonably
be expected of him through conduct that caused loss or potential loss
to the employer.
[20]
The evidence establishes that Danney was at least negligent. He
wrongfully distributed valuable
intellectual property of one of the
appellant’s main clients to an acquaintance. Before sending the
second e-mail, he downloaded
a volume licence key. As the team leader
working daily with software applications, he was required to observe
a high standard of
care in dealing with the intellectual property
under his control. His conduct could have caused reputational harm to
the appellant
in that Wesbank might reasonably have concluded that
its intellectual property was not in safe hands.
[21]
Danney submitted that had he been charged with negligence (as a main
or alternative charge) the
evidence led would have been different,
including different submissions in mitigation and aggravation in the
event of a guilty
finding. He failed, however, to identify what that
different evidence would have been. In any event, the negligence was
established
on Danney’s own version. He took insufficient care
when downloading the volume licence key. When it was put to him in
the
arbitration that he had been negligent, he denied that he was
guilty of negligence. That compounds his folly and intimates a lack
of appreciation of the reputational harm to the appellant his conduct
might have caused. He was entrusted as a custodian of the
intellectual property of one of the appellant’s clients and
misappropriated it in a manner that could have damaged the trust
underlying the commercial relationship.
[22]
The fact that the codes could not be used without certain media is
neither here nor there. The
potential for reputational harm and
perhaps a breach of the licensing conditions by Wesbank remained.
[23]
The record in this matter is incomplete and was partially
reconstructed. In particular, there
is no record of the disciplinary
hearing and its decision on sanction. The parties nevertheless agreed
to proceed on the evidence
before us. Given the nature of the
offence, the seniority and role of Danney and his short period of
service in the employ of the
appellant (less than one year), the
appellant justifiably lost trust in the continuation of an employment
relationship. Dismissal
was an appropriate sanction in the
circumstances.
[24]
The appellant does not seek costs.
[25]
In the premises, the appeal is upheld and the order of the Labour
Court is substituted with the
following:
‘
The
award issued by the second respondent on 13 April 2012 is reviewed
and set aside and the dismissal of the third respondent is
declared
to have been both substantively and procedurally fair.’
________________
JR Murphy
Acting
Judge of Appeal
I agree
________________
B Waglay
Judge
President
I agree
__________________
K Savage
Acting Judge of Appeal
APPEARANCES:
FOR THE
APPELLANT:
Adv M A Lennox
Instructed by Botoulas
Krause & Da Silva Inc
FOR THE THIRD RESPONDENT:
Adv T Venter
Instructed
by: Allardyce & Partners
[1]
National
Commissioner, SAPS v Myers
[2012] 7 BLLR 688
(LAC) at para 97.
[2]
Transport
and General Workers Union and another v Interstate Bus Lines (Pty)
Ltd
(1988) 9 ILJ 877 (IC).
[3]
Durban
Confectionary Works t/a Beacon Sweets v Majangaza
(1993) 14 ILJ 663 (LAC); and
National
Commissioner, SAPS v Myers
[2012] 7 BLLR 688
(LAC) at para 97.
[4]
See Le Roux and Van Niekerk:
The
South African Law of Unfair Dismissal
(Juta 1994) 102 and 157.
[5]
The principle is derived from our law of criminal procedure –
see
S v
Mwali
1992 (2) SACR 281
(A).