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[2019] ZALAC 74
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Edumbe Municipality v Putini and Others (DA20/16) [2019] ZALAC 74; (2020) 41 ILJ 891 (LAC); [2020] 5 BLLR 496 (LAC) (11 December 2019)
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, DURBAN
Reportable
Case no: DA20/16
In the matter between:
EDUMBE
MUNICIPALITY
Appellant
and
THABO PUTINI
First
Respondent
NHLANHLA MATHE
N.O
Second
Respondent
THE SOUTH AFRICAN
LOCAL GOVERNMENT
BARAGAINING
COUNCIL Third
Respondent
Held:
22 August 2019
Delivered:
11 December 2019
Coram: Waglay JP, Musi
JA and Kathree-Setiloane AJA
JUDGMENT
KATHREE-SETILOANE
AJA
[1]
This is an appeal against the judgment of
the Labour Court (Cele J) dismissing a review application against an
award of the second
respondent (“the arbitrator”), made
under the auspices of the South African Local Government Bargaining
Council (“the
Bargaining Council”), dismissing an unfair
labour practice claim against the Endumbe Municipality (“the
Municipality”)
[2]
The unfair labour practice dispute
concerned the alleged unfair suspension of the first respondent, Mr
Thabo Putini (“Mr Putini”),
by the Municipality.
Background
[3]
Mr Putini was employed by the Municipality as its Municipal Manager
in terms of a
fixed-term contract that was intended to run from 6
August 2008 to 31 December 2011.
[4]
On 1 December 2010, the Municipality suspended Mr Putini in terms of
clause 14 of
his contract of employment which provides that:
‘
14.1
The Municipality may suspend the employee on full pay if
he is alleged to have committed a serious offence, and
the [the
Municiplaity] believes that his presence at the workplace might
jeopardize any investigation into the alleged misconduct
or endanger
the wellbeing or safety of any person or municipal property.”
14.2
The employee who is to be suspended shall be notified, in writing, of
the reasons for his suspension
simultaneously or at least 24 hours
after the suspension, he shall have the right to respond within seven
(7) working days.
14.3
If the employee is suspended as a precautionary measure, the employer
must hold a disciplinary hearing
within (60) days, provided that the
chairperson of hearing may extend such period, failing which the
suspension shall terminate
and the employee shall return to full
duty.’
[5]
The Municipality placed Mr Putini on a
precautionary suspension with full pay.
[6]
Following complaints against Mr Putini during 2010, the Council of
the Municipality
resolved on 10 November 2010 to suspend Mr Putini.
The Council wrote to Mr Putini on the same day in order to inform him
of the
resolution to suspend him and gave him seven days to make
submissions on why he should not be suspended.
[7]
Mr Putini was apparently on sick leave and did not receive the
letter. On return from
sick leave on 1 December 2010, he was handed
another letter advising him that he was suspended on full pay, with
immediate effect,
pending an investigation into allegations of
misconduct against him. He was not told what those allegations were.
[8]
The letter of suspension did not invite Mr Putini to make
representations. It peculiarly
informed him of the opportunity he was
given, in the letter of 10 November 2010, to make submissions on why
he should not be suspended,
but that the Municipality was unable to
hand him that letter as it could not locate him.
[9]
In response, Mr Putini did not request an opportunity to make
representations on why
he should not be suspended but informed the
Municipality in writing, on the same day, that he would “accept
the suspension”.
[10]
His suspension received some publicity in the local press.
[11]
On 4 January 2011, the Municipality instructed a firm of auditors,
KPMG, to conduct an investigation
of the complaints against Mr
Putini. Pursuant to this investigation, KPMG prepared a report which
raised
prima facie
irregularities involving Mr Putini in
procurement, revenue management, financial management irregularities,
irregular appointments
and promotions, salary increases and his
consistent absence from Council meetings.
[12]
The Municipality failed to act on the findings of the KPMG
investigation and did not institute disciplinary
proceedings against
Mr Putini which it was obliged to hold within 60 days of his
suspension unless that period was extended by
the Chairperson of the
Council.
[13]
By virtue of clause 14.3 of Mr Putini’s employment contract,
his suspension terminated on or
about the end of January 2011. He was
then obliged to “return to full duty” but did not do so.
However, prior to this,
on 12 January 2011, Mr Putini referred an
unfair labour practice dispute to the Bargaining Council claiming the
upliftment of his
suspension and compensation.
[14]
In the interim, following on the 2011 municipal elections, there was
a change in the political control
of the Municipality’s
Council. Those councillors who had elected to take disciplinary
action against Mr Putini were now out
of office. At its first
meeting, the newly constituted Council, having considered the
position of Mr Putini and the unfair labour
practice dispute which he
had initiated, resolved,
inter alia
, that his suspension be
uplifted with immediate effect.
[15]
The unfair labour practice dispute was set down for hearing in the
Bargaining Council on 4 June 2011.
However, on 1 June 2011, a
settlement agreement was concluded between Mr Putini, represented by
his attorney, and the Council,
represented by a certain Mr MNS
Makhoba (“Mr Makhoba”), in terms of which the
Municipality agreed to pay Mr Putini
an amount of R3.5 million “in
full and final settlement of any and all matter arising from the
suspension”. The suspension
was formally uplifted in terms of
this agreement.
[16]
Mr Putini brought an application to enforce the “settlement
agreement” in the Kwa Zulu
Natal High Court. The Municipality,
by way of counter-application, sought an order setting aside the
settlement agreement on the
grounds of unlawfulness, as Mr Makoba
(its duly authorised representative) was only authorised to enter
into a settlement agreement
in relation to the upliftment of Mr
Putini’s suspension and his reinstatement. In other words, Mr
Makhoba was not authorised
to enter into any agreement to pay the sum
of R3.5 million or any amount to Mr Putini as part of the settlement
agreement.
[17]
As it turned out, Mr Makhoba was a junior officer in the housing
office. Accordingly, the High Court
found that the settlement
agreement had not been properly authorised and dismissed the
application.
[1]
Mr Putini
applied for leave to appeal against this decision. Leave to appeal
was refused by both the High Court and the Supreme
Court of Appeal.
[18]
The argument advanced by the Municipality in the High Court was that
as a previous head of the administration,
Mr Putini would have been
aware that specific authority was required and that it was clear from
its resolution, of 31 May 2011,
that it was never its intention that
he should be paid R3.5 million. In short, the Municipality contended
that Mr Putini had abused
the lack of knowledge of Mr Makhoba, whom
he was aware was a housing clerk.
[2]
Consequent upon Mr Putini’s purported misconduct in relation to
the settlement agreement, the Municipality suspended Mr Putini
on new
charges of misconduct on 21 June 2011.
[19]
Mr Putini’s fixed-term contract of employment was, however, due
to expire on 31 December 2011.
In the circumstances, the Municipality
was advised by the Provincial Government that it would serve little
purpose in commencing
a disciplinary enquiry that would not likely be
completed before the end of Mr Putini’s term of employment.
Consequently,
on 24 August 2011, the Municipality and Mr Putini
concluded an agreement terminating his employment contract by mutual
consent.
It was agreed that Mr Putini would be paid out for the
unexpired portion of the contract and was in fact paid out.
[20]
This notwithstanding, Mr Putini challenged the consensual termination
of his employment contract by
lodging an unfair dismissal claim with
the Bargaining Council, This claim was dismissed on the grounds that
his termination of
employment was consensual.
[3]
[21]
Having suffered this defeat, and the earlier one in the High Court
relating to the enforcement of the
R3.5 million settlement, Mr Putini
then sought to revive the unfair labour practice dispute concerning
his alleged unfair suspension
which he had referred to the Bargaining
Council, three years earlier, on 12 January 2011.
[22]
At the arbitration, the Municipality led evidence to show that Mr
Putini was suspended for reasons
set out in an undated “Caucus
Complaints” document which raised allegations of serious
misconduct against him. The
allegations against Mr Putini included
mismanagement of funds, nepotism, the irregular appointment of staff,
gross dereliction
of duty, absenteeism, unauthorised wasteful
expenditure and poor revenue management. In addition, it was alleged
that the Municipality’s
accounting systems were in disarray;
the Auditor-General was regularly issuing disclaimers in respect of
the Municipality’s
financial statement and it was not far from
being placed under administration. As the Municipality’s
accounting officer,
Mr Putini was considered to be responsible for
this state of affairs.
[23]
However, Mr Mbhekiseni Mncube (“Mr Mncube”), who was the
Speaker of Council at the time
of Mr Putini’s suspension,
testified that Caucus Complaint document was a party (Inkhata Freedom
Party) caucus document and
was not in existence at the time that the
Council took the decision to suspend Mr Putini.
[24]
Mr Sipho Thomas Mthethwa (“Mr Mthethwa”), the acting
Mayor at the time of Mr Putini’s
suspension, testified that
although he was aware of the document, he could not say how or when
it was made. He said that the complaints
against Mr Putini came from
members of the community and were brought to the attention of
councillors who were divided according
to their political persuasion.
In the Arbitration
Hearing
[25]
The arbitrator heard the unfair labour practice dispute in January
2014. The arbitrator found that
the suspension was both substantively
and procedurally unfair and he ordered the Municipality to pay Mr
Putini compensation in
the sum of R480, 305.43, being an amount equal
to nine months’ remuneration at Mr Putini’s rate of pay.
He also ordered
the Municipality to pay costs on the highest
magistrates’ court scale on a party and party basis.
[26]
During the arbitration proceedings, the Municipality’s
representative had attempted to cross-examine
Mr Putini on the merits
of the allegations or “complaints” as set out in the
“Caucus Complaints document. Mr
Putini’s representative
objected to the cross-examination. The objection was upheld and the
arbitrator consequently disallowed
any evidence that was intended to
prove that Mr Putini was guilty of the misconduct allegations set out
in that document. In arriving
at this conclusion, he reasoned as
follows:
‘
On
29 January 2014 I ruled that whereas the Bargaining Council should be
cautious in preventing evidentiary material from being
presented,
bearing in mind that what may appear irrelevant at first may turn out
to be relevant at a later stage, the Bargaining
Council should, at
the same time, be alive to what the issues are and be loath to allow
evidence that that is not relevant to the
issues to be determined. I
ruled that all questions that sought to inquire into whether Mr
Putini was guilty of the allegations
recorded in the caucus document
of the IFP were not relevant to the issue that the Bargaining Council
was required to determine
in this dispute. Whether or not Mr Putini
was guilty of those allegations was not the centre of the case to be
determined. Therefore
in cross-examining Putini, the representative
of the employer was not to traverse in detail whether or not Putini
as guilty of
the allegations contained in the caucus complaints
documents.
[27]
Having heard the evidence, the arbitrator found that the suspension
was both procedurally and substantively
unfair. In relation to the
substantive unfairness of the suspension, the arbitrator found that:
‘
The
caucus complaints document was a political discussion document. It
was not disclosed to the employee. Mncube accepted during
cross-examination that the caucus complaints document did not allege
that the employee had committed misconduct. According to Mncube,
when
Kheswa [the Mayor] and Makhoba returned from seeing the IFP attorney
in Durban towards the end of November 2010, the complaints
document
had not come into existence. It appears that the document would have
been created between 9 December 2010 and 4 January
2011 when it was
presented to the forensic investigators, not at the time of the
suspension of the employee. The disclaimers that
the Municipality was
getting from the auditor-general were ongoing. They did not commence
when the employee became municipal manager.
The employee’s
evidence that he had implemented a turnaround strategy was not
gainsaid. Mncube conceded that there was no
justifiable reason to
suspend the employee.
The Bargaining Council is
not required to decide the motive for the suspension of the employee.
Therefore, in passing, it seems
that the new political power wanted
to purge the municipality of both the officials and politicians
deemed not loyal to the new
order. Putini was perceived to be
Hlatshwayo’s boy. On Mthethwa’s evidence it seemed that
the employee was suspended
because he did not accept instructions
from politicians.’
[28]
In relation to compensation, the arbitrator found that the unfair
suspension had effectively damaged
Mr Putini’s reputation and
awarded him compensation in the sum of R480 305.43 which was
equivalent to nine months of Mr Putini’s
remuneration.
In the Labour Court
[29]
Aggrieved, the Municipality instituted review proceedings against the
decision of the arbitrator to
not allow its legal representative to
cross-examine Mr Putini on whether he was guilty of the misconduct
allegations set out in
the Caucus Complaints document and by
extension the KPMG report. It contended that this constituted a gross
irregularity in the
proceedings. It also challenged the excessive
nature of the compensation that the arbitrator awarded as being
grossly irregular.
In addition, it contended that the evidence to
prove that Mr Putini was guilty of the underlying allegations was
also relevant
to whether Mr Putini was entitled to compensation, and
if so what amount.
[30]
In relation to the KPMG investigation report, the Labour Court held
as follows:
‘
The
investigation was conducted by the auditors…and a report was
subsequently filed. If the [Municipality] had conducted
a
disciplinary hearing one would be better placed to understand the
seriousness of the misconduct because then…[t]here would
be
allegations levelled against [Mr Putini] and evidence would be led at
the hearing. He would be given a chance to challenge it,
he would
give his own evidence and out of that process one would then have a
foundation to understand the circumstances under which
he was
suspended. In the absence of that disciplinary hearing… it
clearly followed that any evidence about the forensic
report became
inadmissible.
What the [Municipality]
sought to do in this case was to eat the cake and still have it. It
is the [Municipality] that decided not
to charge [Mr Putini] with
misconduct up until he left the employment and when it was then left
with no clear indications that
would support the reason for charging
him, it sought to rely on the report itself. As I have indicated
already, this report was
not of a final nature and it was not
definitive. It was a report constructed without conducting an
interview with [Mr Putini].
When
one looks at the evidence of some of the witnesses that testified,
even at the arbitration, one begins to wonder whether it
was safe to
even look at this report. I think it is a Mr Mncube who said in his
evidence that there appeared to have been no justifiable
reason for
the suspension of [Mr Putini]. This is a witness that was called by
the [Municipality] who gave such favourable evidence
in favour of [Mr
Putini]. In my findings today, the ruling by the [arbitrator] was not
a misdirection. It was a very reasonable
decision that he made. It
can therefore not be faulted.’
[31]
In relation to the compensation that the arbitrator awarded to Mr
Putini, the Labour Court observed:
[4]
‘
I
may at this stage comment by end remark that I just read what
motivated the suspension in this case as on the date of suspension.
I
have indicated that clearly there were no clearly defined acts of
misconduct. We have politicians that sat in [C]ouncil and discussed
and decided to effect a suspension, but when it came to its
implementation, there clearly were no facts to substantiate such a
suspension…
That is why and one can
understand it, the applicant seeks to vindicate itself by reliance on
the auditor’s report. This is
a case where the commissioner in
issuing an award identified some of the salient considerations that
he took into consideration
when he looked at the appropriate
compensatory amount. This he said in paragraph 55 [of the arbitration
award] which reads thus:
“
Taking
into account among other things the fact that the employee employment
terminated in August 2011, he was on suspension for
nine months, the
fact that the employer was suspended with full pay the suspension was
unfair both substantively and procedurally.
The decision to suspend
the employee was taken while he was on sick leave. The employee was
not found guilty of any misconduct
as well as the fact that Keswa
treated the employee in a demeaning way. The Bargaining Council deems
that compensation equivalent
to nine months of the employee’s
salary is appropriate compensation.”
This
is an award where the [arbitrator] evinces through the award what
considerations he took into account when awarding this nine
month’s
compensation. It clearly was following the guide as has been shown in
the cases I have referred to [namely
ARB
Electrical Wholesal (Pty) Ltd v Hibbert
[5]
and
Minister
of Justice and Constitutional Development and Another v
Tshishonga
[6]
].
In my
view, the [arbitrator] conducted a proper inquiry that he was called
upon by the office he held. In my view the [arbitrator]
issued an
award and premised it on a decision which I believe a reasonable
decision-maker could have reached under the circumstances.
That being
the case I conclude this application for the review of the
arbitration award in this matter is not meritorious.’
[32]
The Labour Court accordingly dismissed the review application with
costs. The appeal against the order
of the Labour Court is with leave
of this Court.
In the Appeal
[33]
In the appeal, the Municipality argues that in preventing its counsel
from leading evidence that was
admissible and material on the
question of whether Mr Putini was guilty of the underlying
allegations set out in the Caucus Complaints
document (and by
extension the KPMG report), the arbitrator committed a gross
irregularity which prevented a fair trial of the
issues that he was
required to decide.
[34]
The Municipality furthermore argues that having disallowed it from
leading evidence that was admissible
and material, the arbitrator
made findings adverse to it, on matters to which the excluded
evidence was relevant, in particular,
the findings that Mr Putini’s
suspension was substantively fair; that his reputation was impaired
by the suspension, and
that he was entitled to a compensation award
just three months shy of the maximum permissible in terms of section
194(4) of the
LRA. It submits that these findings would not have been
sustainable had the Municipality been allowed to lead evidence to
prove
that Mr Putini was guilty of the allegations that had
precipitated his suspension. It, accordingly, submits that
evidentiary material
pertaining to the merits of the underlying
allegations was clearly relevant and that the Arbitrator’s
conduct in excluding
such material, amounted to a gross irregularity
as contemplated in section 145(2)(a)(ii) of the LRA.
[35]
It is a trite principle of law that for a defect in the conduct
of the proceedings to amount to
a gross irregularity as contemplated
by s 145(2)(a)(ii) of the LRA, the arbitrator must have misconceived
the nature of the enquiry
or arrived at an unreasonable result.
[7]
It is not only the unreasonableness of the outcome of an arbitrator's
award which is subject to scrutiny, the arbitrator “must
not
misconceive the inquiry or undertake the inquiry in a misconceived
manner”, as this would not lead to a fair trial of
the issues.
Mere errors in the law and fact as well as other process related
errors are not sufficient to show that the arbitrator
misconceived
the inquiry. It must be shown that “the arbitrator undertook
the wrong enquiry, undertook the enquiry in a wrong
manner” or
“arrived at a decision which no reasonable decision-maker could
reach on all the material that was before
him or her”.
[8]
[36]
It is submitted on behalf of Mr Putini that it was neither
unreasonable nor a misconception of the
inquiry for the arbitrator to
disallow the Municipality from cross-examining Mr Putini and leading
evidence which tended to show
that he was guilty of the allegations
contained in the Caucus Complaints’ document because that was
not the issue for determination.
That is, so it contended, because in
establishing the fairness of the suspension, the employer is not
required to prove that the
employee is guilty of the allegations of
misconduct that formed the basis for the suspension. I agree.
[37]
The arbitrator identified the issues relevant to the substantive
fairness of Mr Putini’s suspension
as follows:
‘
The
employer may suspend the employee on full pay if he is alleged to
have committed a serious offence and the employer believes
his
presence at the workplace might jeopardize any investigation into the
alleged misconduct or endanger the well-being or safety
of any person
or municipal property.”
The threshold for the
substantive fairness of the suspension is very low. All that is
required is that at the time of suspending
an employee there must be
allegations that an employee has committed serious offence/s and the
employer must reasonably believe
that the employee’s presence
at the workplace might jeopardize the investigation or endanger the
well-being or safety of
any person or property.’
[38]
It is clear from this that the arbitrator did not misconstrue the
issues for determination. Thus in
reviewing the award, the Labour
Court correctly found no fault with the arbitrator’s reasoning.
This is because an employer
is not required to prove the guilt of an
employee in an unfair labour practice dispute concerning the question
of whether an employee’s
suspension in procedurally and
substantively fair. The employer is only required show that at the
time of suspending the employee
there were allegations that he or she
had committed serious offence/s and the employer reasonably believed
that the employee’s
presence at the workplace might jeopardize
the investigation or endanger the well-being or safety of any person
or property.
[9]
The
Municipality’s legal representative conceded this during the
exchange between him and the arbitrator during the arbitration
proceedings:
‘
COMMISSIONER:
The question then is what would be appropriate in the circumstances
where the suspension is found
to be unfair but I do not believe that
it extends to considering the question whether the employee was
guilty or not. That is not
before us.
ADVOCATE CRAMPTON:
Ja, I agree
…
ADVOCATE CRAMPTON
Firstly at the outset, I can say that I agree with my learned friend
that at this enquiry
we are not required to determine whether or not
Mr Putini was guilty of the allegations that were referred to in the
KPMG report
so that is not why we are leading that evidence.’
[39]
As I understand it, the Municipality’s argument on appeal
conflates the substantive fairness
of dismissal with the substantive
fairness of Mr Putini’s suspension. It is the subsequent
disciplinary hearing that will
determine whether or not an employee
is guilty of misconduct allegations. The Municipality was
contractually obliged to institute
disciplinary proceedings against
Mr Putini within 60 days of his suspension. However, on its own
admission, the Municipality did
not institute disciplinary
proceedings against Mr Putini to answer to misconduct charges
following receipt of the KPMG report because
the Municipality’s
managers who were, at the time, responsible to act on the findings of
the KPMG investigation, failed to
do so.
[40]
Likewise, after suspending Mr Putini for the second time, due to his
involvement in seeking to enforce
a R3.5 million settlement which was
not authorised by the Municipality, it again elected not to institute
disciplinary proceedings
against him. This time, because his
fixed-term contract was due to expire on 31 December 2011, and a
disciplinary enquiry was not
likely to be completed before the end of
his term of employment.
[41]
In addition, neither the Caucus Complaints document nor the KPMG
forensic investigation report which
the Municipality sought to rely
on in proving Mr Putini’s guilt were in existence at the time
that the Municipality suspended
him. The Municipality led the
evidence of Mr Mncube. He was the Speaker of Council during the time
of Mr Putini’s suspension.
He was pertinently asked in
cross-examination about the undated Caucus Complaints document which
the Council purportedly relied
upon in resolving to suspend Mr Putini
pursuant to clause 14.1 of his employment contract. Mr Mncube said
that these allegations
were not in existence at the time of Mr
Putini’s suspension. In the same vein, Mr Mkhize testified that
he recognised the
Caucus Complaint’s document but did not know
how or when it was compiled.
[42]
In relation to the KPMG report, the Municipality commissioned it from
KPMG subsequent to suspending
Mr Putini. The testimony of the
Municipality’s legal advisor, Mr William Lawrence, reveals that
the KPMG report was a preliminary
report on some of the misconduct
allegations contained in the “Complaints Document” that
were purportedly considered
by the Council. The KPMG report was,
however, only compiled more than four months after the suspension on
4 May 2012. This was
before the investigators even had an opportunity
to interview Mr Putini or consult with Council.
[43]
It is clear from the evidence led on behalf of the Municipality, at
the arbitration proceedings, that
it was not denied the opportunity
to lead evidence on the gravity or seriousness of any misconduct
allegations against Mr Putini
that existed at the time of his
suspension, and formed the justification for the Council’s
resolution to suspend him in terms
of clause 14.1 of his employment
contract.
[44]
The evidence presented at the arbitration proceedings sustains the
reasonableness of the arbitrator’s
conclusion that Mr Putini’s
suspension was substantively unfair. Significantly, the Municipality
does not take issues with
the following findings of the arbitrator in
relation to the procedural and substantive fairness of Mr Putini’s
suspension.
‘
(a)
At no time did the employer notify the employee in writing of the
reasons for his suspension.’
‘
(b)
The employee was not informed why his presence in the workplace was
not desirable.’
‘
(c)
…Mncube accepted during cross-examination that the caucus
complaints document did
not allege that the employee committed
misconduct …It appeared that the document would have been
created between 9 December
2010 and 4 January 2011 when it was
presented to the forensic investigation, not at the time of the
suspension of the employee
Mncube conceded that there was no
justifiable reason to suspend the employee.’
[45]
I consider the arbitrator to have correctly found that the misconduct
allegations were not in existence
at the time that Mr Putini was
suspended. Mr Mncube conceded this in his testimony. This finding is
not challenged on appeal. It
would have been unreasonable, to my
mind, for the arbitrator to have allowed the Municipality to lead
evidence and to cross-examine
Mr Putini on the contents of the Caucus
Complaints document and the KPMG report in order to prove that he was
guilty of allegations
of misconduct when that was not the issue for
determination before him. Moreover, the evidence led by the
Municipality made it
plain that these documents did not exist at the
time of the suspension. The issues for determination in relation to
the substantive
fairness of the suspension concerned the existence or
otherwise of serious allegations of misconduct against Mr Putini at
the time
of his suspension, and whether the employer reasonably
believed that his presence at the workplace might jeopardize the
investigation
or endanger the well-being or safety of any person or
property. Hence neither the Caucus Complaints’ document nor the
KPMG
report was material and relevant to whether Mr Putini’s
suspension by the Municipality was substantively fair.
[46]
The Municipality persists in its contention that the arbitrator did
not admit the Caucus Complaints’
document into evidence. This
is not true as it is clear from the record that the arbitrator
admitted this document into evidence
and that counsel for the
Municipality cross-examined Mr Putuni extensively on its contents in
order to establish the gravity of
the so-called misconduct
allegations against him at the time of his suspension. Both Mr Mncube
and Mthethwa testified on the contents
of the document on behalf of
the Municipality.
[47]
It is also disingenuous for the Municipality to contend that the
arbitrator made a finding that Mr
Putini was not guilty of the
misconduct allegations against him. The arbitrator was, in my view,
very circumspect in relation to
the issues for determination before
him. He specifically and painstakingly refrained from venturing into
whether or not Mr Putini
was guilty of the allegations of misconduct
against him. Accordingly, the arbitrator did not misconceive the
nature of the inquiry
before him.
[48]
For these reasons, I conclude that the Labour Court did not err in
concluding that the arbitrator’s
decision, that the
Municipality’s suspension of Mr Putini was procedurally and
substantively unfair, is one that a reasonable
decision-maker could
have reached.
Quantum of
Compensation
[49]
The Municipality argues that quantum of compensation awarded to Mr
Putini by the arbitrator is so excessive
that the award is not one
that could have been made by a reasonable decision-maker.
The issue for determination in relation to the challenge to the
arbitrator’s award of compensation is whether the award of
nine
months’ compensation was just and equitable in the
circumstances?
[50]
The remedies available to an employee who has suffered an unfair
labour practice are provided for in
s193(4) read with 194(4) of the
LRA. Section 193(4) confers an arbitrator with the power to determine
any unfair labour practice
dispute referred to him or her on terms
which the arbitrator deems reasonable, which may include ordering
reinstatement, re-employment
or compensation. Section 194(4) in turn
provides that the compensation awarded to an employee in respect of
an unfair labour practice
dispute must be just and equitable in all
the circumstances, but not more than the equivalent of 12 month’s
remuneration.
[51]
The power of a court of review to interfere with the quantum of
compensation awarded by an arbitrator
under s194(4) of the LRA is
circumscribed and can only be interfered with on the narrow grounds
that the arbitrator exercised his
discretion capriciously, or upon
the wrong principle, or with bias, or without reason or that he
adopted a wrong approach or has
misconducted himself on the facts or
reached a decision in which the result could not reasonably have been
made by an arbitrator
directing himself to all the
relevant facts and principles. In the absence of one of these
grounds, a court has no
power to interfere with the quantum of
compensation awarded by the arbitrator. The court cannot interfere
simply because it would
come to a different decision.
[10]
[52]
The Labour Court applied the
Sidumo
[11]
(reasonableness test) to its review of the arbitrator’s
compensation award which was made in terms of section 194(4) of the
LRA. This was the wrong test. The correct test was to inquire whether
the arbitrator in awarding compensation in the amount of
R480 305.43
exercised his discretion capriciously, or upon the wrong principle,
or with bias, or without reason or that he adopted
a wrong approach.
Consequent upon this misdirection, this Court is at large to
reconsider the quantum of the compensation award
of the arbitrator.
[53]
It must be recalled that one of the contentions advanced by the
Municipality in relation to the quantum
of compensation awarded to Mr
Putini, is that the evidence to prove that he was guilty of the
underlying misconduct allegations
was also relevant to the question
of whether he was entitled to compensation and, if so, in what
amount. And that in disallowing
the admission of that evidence, the
arbitrator committed a misdirection.
[54]
I agree that evidence from any subsequent disciplinary proceedings in
which the employee was found
guilty of misconduct allegations, that
formed the basis for his suspension, would be relevant to the
question of whether an employee
should be awarded compensation as a
result of being unfairly suspended by his or her employer, and if so
in what amount. However,
in a dispute such as the current one, where
the employer did not institute disciplinary proceedings against the
employee, it would
be prejudicial to the employee for the arbitrator
to allow the employer to cross-examine the employee - not on evidence
that has
established his guilt- but on evidence that only tends to do
so. This would defeat a core objective of the LRA which is to give
effect to the right of employees to fair labour practices.
[55]
The arbitrator, in my view, did not commit a misdirection in
exercising his discretion against allowing
the Municipality from
cross-examining Mr Putini on evidence that sought to establish his
guilt as that evidence was not relevant
and material to the question
of the quantum of compensation to be awarded.
[56]
Turning then to the question of whether the quantum of compensation
awarded by the arbitrator was appropriate.
This Court has repeatedly
held that factors to be taken into account in determining the quantum
of compensation include the following:
‘…
the
nature and seriousness of the iniuria, the circumstances in which the
infringement took place, the behaviour of the defendant
(especially
whether the motive was honourable or malicious), the extent of the
plaintiff's humiliation or distress, the abuse of
the relationship
between the parties, and the attitude of the defendant after the
iniuria had taken place…’.
[12]
[57]
The factors to be taken into account are, however, not limited to
those stated above. The award of
compensation must be just and
equitable having regard to all the relevant factors.
[13]
Undue weight should not be given to factors that favour one party
only. In other words, the compensation granted must be fair and
just
to both the employee and the employer.
[58]
In
Kemp,
this Court held that all relevant factors must be
taken into account in awarding compensation to the employee. Despite
finding
the dismissal of the employee to be both substantively and
procedurally unfair on appeal, in
Kemp
this Court set aside
the award of compensation because the dismissed employee refused to
accept “a genuine and reasonable
offer of reinstatement made to
her by the employer”. It is, therefore, not only the employer’s
attitude and conduct
subsequent to a suspension or dismissal which
must be taken into account in determining the quantum of compensation
to be awarded
to the wronged employee, but so too must the employee’s
conduct.
[59]
In reviewing the compensation award of the arbitrator, the Labour
Court failed to recognise that the
arbitrator did not take into
account all the relevant factors. It simply rubberstamped the factors
that the arbitrator took into
account that favoured granting an
excessive compensation award to the employee, and completely
disregarded the factors that pointed
to the contrary.
[60]
In doing so, the Labour Court ignored the following relevant factors:
on being informed of his suspension,
Mr Putini did not request an
opportunity to make representations but instead, in a letter dated 1
December 2010, stated that he
would “accept suspension”.
Although this does not mean that the employee waived his right to
challenge his suspension,
this is factor that the Labour Court ought
to have taken into account in evaluating whether the compensation
awarded by the arbitrator
was appropriate as it indicates that Mr
Putini could not have suffered any meaningful injury if he did not,
in the first place,
intend to contest his suspension.
[61]
In terms of clause 14.3 of Mr Putini’s employment contract, if
he is suspended as a precautionary
measure, then the Municipality
must hold a disciplinary hearing within 60 days, failing which the
suspension terminates and Mr
Putini is obliged to return to work. It
is common cause that the Municipality did not hold a disciplinary
hearing within the required
sixty-day period and the suspension was
terminated on 31 January 2011. Mr Putini was obliged to return to
full duty. The onus was
on Mr Putini to return to work or at least
tender his services. He did not do this.
[62]
As is clear from Mr Putini’s testimony, he was well aware of
clause 14.3 and he even alerted
his attorneys, at the time, to its
provisions. This notwithstanding, there is no evidence that Mr Putini
tendered his services
after his suspension had terminated by
operation of clause 14.3 of his employment contract. Nor is there
evidence that either Mr
Putini or his attorneys had brought it to the
attention of the Municipality that his suspension had terminated and
that Mr Putini
was, therefore, entitled and obliged to return to
work.
[63]
It follows from this that Mr Putini would be as much to blame as the
Municipality for not returning
to work following the termination of
his suspension by operation of clause 14.3 of his employment
contract. Although to his credit,
Mr Putini had, by that stage,
already referred an unfair labour practice dispute to the Bargaining
Council in which he claimed
the upliftment of his suspension and
maximum compensation.
[64]
A further factor which the Labour Court failed to consider in its
review of the compensation award
was Mr Putini’s involvement in
the R3.5 million putative settlement. Following the change in the
political control of the
Council, a settlement agreement was signed
in respect of Mr Putini’s unfair labour practice dispute which
was pending in
the Bargaining Council. The Council had resolved to
uplift the suspension with immediate effect and proposed that a
settlement
agreement be signed with him. The agreement was signed by
Mr Putini’s attorneys and by Mr Makhoba, the Council’s
duly
authorised representative.
[65]
In terms of the agreement, which was ultimately set aside by the High
Court on 15 May 2012 for lack
of authorisation by the Council, the
Municipality purportedly agreed to pay Mr Putini the sum of R3.5
million in full and final
settlement. Subsequent to the setting aside
of this agreement and on 21 June 2011, the Municipality suspended Mr
Putini for alleged
misconduct in “associating himself with and,
indeed attempting to enforce the unconscionable agreement”
which it did
not authorise.
[66]
Mr Putini’s fixed-term contract was due to expire on 31
December 2011. The Municipality was advised
that it would serve
little purpose in commencing a disciplinary enquiry that would likely
not be completed before the end of his
term of employment. It,
therefore, concluded an agreement with Mr Putini terminating his
employment contract by mutual consent.
He was paid out for the
unexpired portion of his contract.
[67]
Predictably, Mr Putini disputed this agreement and referred an unfair
dismissal dispute to the Bargaining
Council, which was dismissed on
the basis that Mr Putini had agreed to the termination of his
contract of employment. This was
a further factor which the
arbitrator failed to take into account in exercising its discretion
in favour of granting Mr Putini
compensation in the amount of R480
305.43. The award of the arbitrator (Prof. K. Govender) in the unfair
dismissal proceedings
was before the arbitrator in the unfair labour
practice dispute. It was also before the Labour Court in the review
application.
[68]
Although the award was subject to a pending review at the time of the
review application, it is clear
from the evidence led there that:
‘
When
asked by [the arbitrator] whether he would approve this amount had he
been the municipal manager, he replied somewhat evasively,
that he
would have attempted to renegotiate and reduce the amount. When he
was pressed for a response, he indicated that he would
have signed
off on this settlement agreement.’
[69]
Despite being cautioned by the Municipality that the settlement
agreement was in principle unlawful
because the Council had not
authorised Mr Makhoba to enter into any agreement to pay him R3.5
million or any sum of money in damages,
Mr Putini sought to enforce
the agreement in the High Court. Unsurprisingly, the High Court set
it aside.
[70]
That Mr Putini was prepared to endorse and bind the Municipality to a
settlement agreement of this
nature, certainly calls into question
his judgment and motive for not abandoning the putative agreement in
favour of the Council
uplifting his suspension in accordance with its
resolution, of 31 May 2011, to do so.
[71]
Mr Putini’s conduct in relation to the settlement agreement,
and his subsequent attempt to enforce
it is, to my mind, not above
reproach. Mr Putini was the Municipality’s manager at the time.
This obliged him to prevent
fruitless and wasteful expenditure. Given
that the maximum compensation he would have been entitled to receive,
in terms of section
194(4) of the LRA, for an unfair labour practice
was R750 000, it is inconceivable that any payment of R3.5 million to
Mr Putini
could be anything other than fruitless and wasteful
expenditure.
[72]
In his evidence in the arbitration proceedings, Mr Putini testified
that he should be compensated for
certain hardships that can be
attributed to the settlement that was concluded on 1 June 2011 with
the Municipality. He persisted
in the contention that in terms of the
settlement agreement he would have been entitled to receive a payment
of R3.5 million from
the Municipality.
[73]
Moreover, despite the finding by the High Court that Mr Makhoba was
not authorised by the Council to
enter into a settlement agreement
for payment of R3.5 million to Mr Putini, he doggedly insisted, under
cross-examination in the
arbitration proceedings, that Mr Makhoba was
authorised to enter into the settlement agreement. Mr Putini
maintained this version
in spite of the fact that the settlement was
set aside by the High Court, and leave to appeal was refused by both
the High Court
and the Supreme Court of Appeal. At best for Mr
Putini, his conduct reveals a reckless attitude toward public monies
and a complete
lack of remorse for the role that he played in seeking
to enforce an unauthorised and unconscionable settlement agreement.
[74]
All in all, any difficulties or hardships that Mr Putini experienced
after 31 May 2011, can only be
attributed to his involvement in the
R3.5 million settlement that he sought to enforce knowing full well
that it was not authorised
by the Council. As is apparent from the
Council resolution of 31 May 2011, his suspension would have been
lifted with immediate
effect. However, but for associating himself
with the unconscionable settlement agreement, the Municipality would
not have suspended
Mr Putini on 21 June 2011 for his alleged
misconduct in relation thereto.
[75]
It is clear from this that Mr Putini must take equal responsibility
for his suspension between 31 May
2011 and the mutual termination of
his employment contract on 24 August 2011 which dragged out his
suspension by a further three
months.
[76]
Had the Labour Court applied the correct test in reviewing the
quantum of the arbitrator’s compensation
award, it would have
had regard to the full conspectus of the evidence on the record, from
which it is plain that the compensation
which the arbitrator awarded
to Mr Putini was excessive and inappropriate.
[77]
This notwithstanding, I am of the view that Mr Putini is entitled to
some measure of compensation as,
on the Municipality’s own
version, there was no justifiable reason for his suspension on 1
December 2010 as the motive was
political. In addition, he was
treated in a demeaning manner by the Mayor and was humiliated and
embarrassed amongst his colleagues
and subordinates in the workplace.
His reputation was also impaired as a result of negative reports in
the press. In the circumstances,
I consider it just and equitable to
award Mr Putini compensation in the amount of R120 00.00.
Costs
[78]
The Municipality has only achieved partial success in the appeal. To
this end, I consider it fair and
just not to award it costs in the
appeal. On account of the same result in the review application and
the arbitration, I adopt
the same approach to the order of costs
there.
Order
[79]
In the result, I order that:
1.
The appeal is partially upheld with no
order as to costs.
2.
The order of the Labour Court is set aside
and replaced with the following order:
‘
(i)
The suspension of Mr Thabo Putini was procedurally and substantively
unfair and constituted
an unfair labour practice in terms of section
186(2)(b) of the Labour Relations Act 66 of 1995.
(ii)
The Endumbe Municipality is ordered to pay Mr Putini the sum of R120
000.
(iii)
Payment of the amount referred to in paragraph (ii) above shall be
paid into the trust account
of Mr Putini’s attorneys of record
within fourteen days of the date of this order.
(iv)
There is no order as to costs.
(v)
Both parties to the dispute shall jointly
pay the Bargaining Council’s fees and those incidental thereto
amounting to R4000.00
for the fourth day of the arbitration.’
3.
There is no order as to costs in the review
application.
_________________
F Kathree-Setiloane
Acting Judge of Appeal
I
agree
_________________
B Waglay
Judge
President of Appeal
I
agree
_________________
CJ Musi
Judge of Appeal
APPEARANCES
FOR THE APPELLANT:
Mr DP Crampton
Instructed by: PKX
Attorneys
FOR THE RESPONDENT:
Mr B
Magaga
Instructed
by: Garlicke & Bousefield Inc
[1]
Thabo
Putini v Endumbe Municipality
Case No. 11700/2011, 15 May 2012 (KwaZulu Natal High Court, Durban
(“the
High
Court case”
).
[2]
The
High
Court case
at
para 9.
[3]
Exhibit
C:
Award
by Prof K Govender, 16 November 2012
[5]
2015
(11) BLLR 1081 (LAC).
[6]
2009
(9) BLLR 862 (LAC).
[7]
Herholdt
v Nedbank
[2012]
BLLR 1074 (SCA).
[8]
Head
of
Department
of Education v Mofokeng
(2015)
36 ILJ 2802 (LAC) at paras 30-33.
[9]
Mogotlhe
v Premier North West Province
(2009)
30 ILJ 524 (LC) at para 39.
[10]
Kemp
at
paras 21 and 55.
[11]
Sidumo
and Another v Rustenberg Platinum Mines Ltd and Others
(2007)
28 ILJ 2405 (CC).
[12]
Minister
of Justice and Constitutional Development and Another v Tshishonga
(2009)
30 ILJ 1799 (LAC) at para 18;
ARB
Electrical Wholesalers (Pty) Ltd v Hibbert
(2015) 36 ILJ 2989 (LAC) at para 24
[13]
Kemp
t/a Centralmed v Rawlins
(2009)
30 ILJ (LAC).