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Pretoria Portland Cement Company Ltd v Commission for Conciliation, Mediation and Arbitration and Others (JR927/08) [2009] ZALCJHB 32 (24 April 2009)

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Labour Law
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Brief Summary

Labour Law — Unfair dismissal — Review of arbitration award — Applicant sought to set aside the award reinstating the Third Respondent following a finding of unfair dismissal for theft of scrap metal — The Arbitrator found the dismissal excessive despite evidence of misconduct and contradictory explanations from the employee — Legal issue concerned whether the Arbitrator's decision was one that a reasonable decision-maker could not reach — Court held that the Arbitrator's conclusion was unreasonable and set aside the award, emphasizing the importance of trust in the employer-employee relationship.

Comprehensive Summary

Summary of Judgment


1. Introduction


This matter concerned an opposed review application in the Labour Court in which the employer, Pretoria Portland Cement Company Ltd (the applicant), sought the review and setting aside of a CCMA arbitration award issued by Commissioner Timothy Boyce N.O. (the second respondent), acting under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA) (the first respondent). The employee, George Miyambo (the third respondent), opposed the review.


The procedural history was that the third respondent was dismissed on 24 October 2007 following an incident involving the removal of scrap metal without a required authorisation. The ensuing unfair dismissal dispute proceeded to arbitration at the CCMA, culminating in an award dated 18 March 2008 in which the commissioner found the dismissal substantively unfair and ordered reinstatement with retrospective effect, together with ancillary relief.


The employer then approached the Labour Court seeking to have the award reviewed and set aside. The dispute, in substance, concerned whether dismissal for the employee’s conduct (characterised in the arbitration as theft/dishonesty) was a fair sanction, and whether the commissioner’s outcome—despite factual findings adverse to the employee—was one that could be sustained on review under the reasonableness standard applicable to CCMA awards.


2. Material Facts


On 12 October 2007, the third respondent, who had been employed by the applicant since 30 April 1982, was subjected to a routine search at the pedestrian gate on the employer’s premises. During the search, a security guard found the third respondent in possession of “a few pieces of scrap metal” in his bag.


It was common cause (or at least not disputed by the third respondent in the arbitration) that the scrap metal was in his possession and that he had obtained it from what he described as a “waste bin.” It was also established in the evidence accepted by the court that there was a workplace rule requiring a gate clearance permit / pass-out for the removal of items from the premises. The rule applied to scrap metal, including scrap located in the waste bin, and evidence for the employer was that scrap metal was collected by a third party (Rand Metals), which paid for it.


The commissioner recorded that the employee provided contradictory explanations at different stages for not having a pass-out. The explanations recorded were that, on the day of the incident, he told the security guard he had forgotten to obtain a pass-out; at the disciplinary hearing, he claimed he did not obtain one because his supervisor was not present; and at arbitration, he contended that he did not believe a pass-out was required for the scrap metal in question.


On these facts, the commissioner made a clear factual finding that the employee knew a pass-out was required and concluded that the employer had discharged its onus to prove the employee was guilty of “theft of scrap iron from the waste bin.” The commissioner nevertheless held that dismissal was an excessive sanction, found the dismissal unfair, and ordered reinstatement.


The Labour Court treated the commissioner’s factual findings on guilt and knowledge of the rule as central to the review, and focused on the apparent tension between those findings and the commissioner’s sanction/outcome.


3. Legal Issues


The central legal question was whether, applying the review standard for arbitration awards articulated in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (2007) 28 ILJ 2405 (CC), the commissioner’s decision that dismissal was unfair (and that reinstatement was warranted) was a decision that a reasonable decision-maker could reach on the material before him.


Although the commissioner had made factual findings that the employee committed theft and acted with knowledge of the rule, the dispute on review primarily concerned the application of legal standards and evaluative judgment to those facts—specifically, whether the commissioner’s assessment of sanction and fairness, and his conclusion that dismissal was inappropriate, fell within the band of reasonableness contemplated by Sidumo.


A related issue was whether the commissioner’s outcome reflected a misapplication of principles relevant to misconduct involving dishonesty/theft, particularly the significance of the trust relationship and the limited weight often accorded to mitigating factors such as long service and a clean disciplinary record in such cases.


4. Court’s Reasoning


The Labour Court approached the review through the lens of the Sidumo reasonableness test, emphasising that a commissioner does not defer to the employer’s decision but must decide whether the dismissal was fair, and that the reviewing court asks whether the commissioner’s decision is one that a reasonable decision-maker could not reach.


The court highlighted that the commissioner had accepted that the misconduct was serious and had made decisive factual findings: that the employee knew the rule requiring a pass-out; that the “forgotten” explanation demonstrated knowledge of the requirement; and, ultimately, that the employer had proven the employee’s guilt of theft of scrap iron. The court considered these findings difficult to reconcile with the commissioner’s later conclusion that dismissal was “excessive and strikingly inappropriate,” that continued employment would not be intolerable, and that the employer had not shown a fair reason for dismissal.


In analysing the sanction, the court referred to authorities stressing that dishonesty strikes at the heart of the employment relationship because it undermines the trust on which the relationship depends. The judgment cited, in particular, statements approved by the Labour Appeal Court that an employer must be able to place trust in employees and that dishonesty is destructive of that trust. The court also relied on the principle that dismissal for dishonesty is not moral retribution but an operational response to risk management within an enterprise.


Against this jurisprudential background, the court addressed the commissioner’s reliance on mitigating factors (the employee’s long service and clean record) and the employer’s disciplinary code providing a range of sanctions. While acknowledging the commissioner’s reference to these considerations, the court held that prior decisions had critically discounted the significance of such mitigation where dishonesty is established. The court cited authority indicating that dishonesty “tilts the scales” such that even strong mitigating factors may have minimal impact on sanction, because restoration of trust is unlikely once dishonesty is proven.


The court also mentioned the employer’s contention that the employee showed no remorse, but regarded this as having little probative value given the employee’s denial. The decisive point for the court remained the inconsistency between the commissioner’s own factual conclusions—finding theft and knowledge of wrongdoing—and his remedial outcome reinstating the employee.


Having regard to the authorities, the evidence, and the commissioner’s factual findings, the Labour Court concluded that the commissioner’s final decision was not one that a reasonable decision-maker could have reached. It held that reinstatement in the circumstances could not be sustained, and it was appropriate not merely to set aside the award but to substitute a finding that the dismissal was procedurally and substantively fair.


5. Outcome and Relief


The Labour Court reviewed and set aside the arbitration award dated 18 March 2008 issued under CCMA case number GAJB37633/07.


The court replaced the award with an order that the employee’s dismissal on 24 October 2007 was procedurally and substantively justified and fair.


The court ordered that the third respondent (employee) pay the applicant’s costs.


Cases Cited


Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (2007) 28 ILJ 2405 (CC)


Shoprite Checkers (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2008) 29 ILJ 2581 (LAC)


Standard Bank of SA Ltd v CCMA and Others (1998) 19 ILJ 903 (LC)


De Beers Consolidated Mines Ltd v CCMA and Others (2000) 21 ILJ 1051 (LAC)


Hulett Aluminium (Pty) Ltd v Bargaining Council for the Metal Industry and Others (2008) 29 ILJ 1180 (LC)


Legislation Cited


Labour Relations Act 66 of 1995


Schedule 8 to the Labour Relations Act 66 of 1995 (Code of Good Practice: Dismissal)


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The Labour Court held that, on the commissioner’s own factual findings that the employee knew the pass-out rule and was guilty of theft of scrap metal, the commissioner’s conclusion that dismissal was unfair and that reinstatement was appropriate was unreasonable in the sense contemplated by the Sidumo review test.


The court further held that the award could not stand because the commissioner’s sanction decision was not reconcilable with the established principles governing dishonesty in employment and the centrality of the trust relationship, and because the outcome fell outside the range of decisions a reasonable commissioner could reach on the facts found.


Accordingly, the award was reviewed and set aside and substituted with a finding that the dismissal was procedurally and substantively fair, with costs awarded against the employee.


LEGAL PRINCIPLES


The Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (2007) 28 ILJ 2405 (CC) standard governs review of CCMA awards concerning dismissal disputes: the reviewing court asks whether the commissioner’s decision is one that a reasonable decision-maker could not reach, and the commissioner’s task is to decide fairness, not to defer to the employer nor to decide the matter afresh as if exercising the employer’s discretion.


Misconduct involving dishonesty/theft is treated as striking at the core of the employment relationship because it undermines the trust necessary for continued employment. As expressed in the cited authorities, a breach of trust through dishonest conduct is destructive of the relationship and is a legitimate basis for dismissal as an operational risk-management response.


Where dishonesty is established, mitigating factors such as long service and a clean disciplinary record may carry limited weight in the sanction enquiry, because the presence of dishonesty substantially alters the assessment of whether the employment relationship can be sustained.


A commissioner’s factual findings must be rationally connected to the ultimate outcome; where a commissioner finds theft/dishonesty proved yet orders reinstatement on the basis that dismissal is unfair, the resulting outcome may be reviewed and set aside if it falls outside the range of reasonable decisions contemplated by Sidumo.

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[2009] ZALCJHB 32
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Pretoria Portland Cement Company Ltd v Commission for Conciliation, Mediation and Arbitration and Others (JR927/08) [2009] ZALCJHB 32 (24 April 2009)

IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT JOHANNESBURG
CASE
NO: JR927/08
In
the matter between:
PRETORIA
PORTLAND CEMENT COMPANY
LTD                                                  Applicant
and
THE
COMMISSION FOR
CONCILIATION                                                    First

Respondent
MEDIATION
AND ARBITRATION
COMMISSIONER
TIMOTHY BOYCE N.O.
Second

Respondent
GEORGE
MIYAMBO
Third

Respondent
JUDGMENT
JAMMY
AJ
1.
This is an opposed application in which the
Applicant seeks an order reviewing and/or setting aside the
Arbitration Award handed
down by the Second Respondent, the
Arbitrator appointed under the auspices of the First Respondent to
determine the dispute between
the Applicant and the Third Respondent
relating to the Third Respondent’s alleged unfair dismissal by
the Applicant.
The Second Respondent’s
determination in that regard in the Award in question dated 18 March
2008, was that that dismissal
was unfair in his perceived absence of
a fair reason for that sanction and his consequent order was that the
Third Respondent was
to be reinstated with retrospective effect to
the date of his dismissal, with certain ancillary relief.
2.
It is the Applicant’s contention that
that finding and its consequence constituted an unreasonable
conclusion, a gross irregularity
in the conduct of the proceedings,
the exceeding by the Second Respondent of his powers under the Labour
Relations Act and a misapplication
of the legal principles applicable
to the matter.
THE EVIDENCE
3.
On 12 October 2007, the Third Respondent,
who had been in the employ of the Applicant since 30 April 1982 as
what the Applicant
describes as an “Operator Support” but
what he himself terms as a “Bulk Loader”, was found, when
routinely
searched by a security guard at the pedestrian gate on the
Applicant’s premises, to be in possession of “a few
pieces
of scrap metal” in his bag.
4.
It is an established rule in the company
that pass-outs are required for the removal of any of the Applicant’s
property leaving
its premises.   This is applicable to
scrap metal even if it is found, as the Third Respondent testified to
have been
the case, in what is known as the “waste bin”.
Evidence for the Applicant in that regard was that all scrap metal
is
placed in such a waste bin and is then collected by Rand Metals,
which pays for it.
5.
Testifying in that regard, the Applicant’s
Safety Officer quoted the relevant work instruction, the wording of
which is as
follows:
“
No
items/objects will be removed from these premises unless accompanied
by an approved gate clearance permit.  Contravention
of the
abovementioned standard can lead to disciplinary action”.
Employees were routinely
issued, she said, with pass-outs to remove certain items such as
scrap planks, scrap iron, plastic chairs
and so forth.  All
staff members, she said, know that pass-outs are required if any of
the employer’s property is to
be removed from its premises.
6.
The Third Respondent, in his testimony in
the Arbitration did not dispute that he had been found in possession
of the scrap metal
in question, which he had obtained from the waste
bin.  The Second Respondent pertinently records his explanation
for that
fact as follows –
“
In
the present matter the employee gave 3 contradictory explanations
regarding his failure to obtain the pass-out for the scrap
metal in
question, viz:
1.
on the day of the incident (12 October 2007) he told the security
guard (Ngcobo) that he
had forgotten to get a pass-out;
2.
at his disciplinary hearing, the employee claimed that he did not get
a pass-out since his
supervisor was not present;
3.
During the Arbitration he argued that he never believed that he even
required the pass-out
for the scrap metal in question”.
7.
The Second Respondent then proceeds to make
the following factual findings –
“
The
employee, in my view, knew that he required a pass-out to remove the
scrap metal and that is precisely why he told Ngcobo that
he had
forgotten to get a pass-out.  It stands to reason that the
employee would not have claimed that he had forgotten to
get a
pass-out if he genuinely believed (as he claimed during the
arbitration) that he did not need a pass-out.
Having regard to the
aforegoing, I am satisfied that the employer discharged the onus on
it to prove that the employee was guilty
of “theft of scrap
iron from the waste bin”.
THE LAW
8.
The unanimous decision of the
Constitutional Court of South Africa in what has become a leading
authority on the issue of the review
of Arbitration Awards, -
Sidumo
v Rustenburg Platinum Mines Ltd and Others (2007) 28ILJ 2405(CC)
was that, in deciding a
dismissal dispute, a Commissioner is not  required to defer to
the decision of the employer.
The Commissioner is, however, not
given the power to consider afresh what he or she would do but to
decide whether what the employer
did was fair.  The standard to
be applied when a decision by a Commissioner on a dismissal dispute
is sought to be reviewed
is the following: Is the decision reached by
the Commissioner one that a reasonable decision-maker could not
reach?
9.
The Third Respondent, referring to the Code
of Good Practice in Schedule 8 to the Labour Relations Act which
provides,
inter alia
,
that “generally it is not appropriate to dismiss an employee
for a first offence, except if the misconduct is serious and
of such
gravity that it makes a continued employment relationship
intolerable”, records that the second employee “had
a
clean disciplinary record and, in more than twenty five years of
employment, had not been found guilty of any misconduct whatsoever”.

This, he says, constitutes him as a first offender.  Accepting
however “that the misconduct in question was undoubtedly

serious”, he then enquires “whether the employee’s
conduct was so grave that it can be said, after properly considering

all the relevant circumstances, that the sanction of dismissal was
fair.
10.
The Labour Appeal Court in –
Shoprite
Checkers (Pty) Ltd v Commission for Conciliation Mediation and
Arbitration and Others (2008) 29ILJ 2581(LAC)
quoted
with approval the earlier dictum of the Labour Court in –
Standard Bank of SA Ltd v
CCMA and Others (1998) 19ILJ 903(LC)
to the
effect that –
“
It
is one of the fundamentals of the employment relationship that the
employer should be able to place trust in the employee…
a
breach of this trust in the form of conduct involving dishonesty is
one that goes to the heart of the employment relationship
and is
destructive of it”
A
further reference in the judgment, and one frequently quoted in this
Court and the Labour Appeal Court is the dictum in –
De
Beers Consolidated Mines Ltd v CCMA and Others (2000) 21ILJ 1051(LAC)
namely
–
“
A
dismissal is not an expression of moral outrage; much less is it an
act of vengeance.  It is, or should be a sensible operational

response to risk management in the particular enterprise.  That
is why supermarket shelf packers who steal small items are
routinely
dismissed.  Their dismissal has little to do with society’s
moral opprobrium of a minor theft; it has everything
to do with the
operational requirements of the employer’s enterprise”.
11.
In reaching his finding, the Second
Respondent, referring to the Applicant’s Disciplinary Code
which, with reference to a
schedule of offences which includes theft,
provides for a range of sanctions from a minimum of a final warning
to a maximum of
a summary dismissal, and to the further factor of
“the employee’s length of service (more than twenty five
years) and
his clean disciplinary record, … cannot see how
dismissal could have been a fair sanction and I am impelled to
conclude
that the employer did not exercise its discretion reasonably
when it decided to dismiss the employee”.  Those factors

have however been critically discounted in a number of decisions of
the Labour Courts.  In –
“
Hulett
Aluminium (Pty) Ltd v Bargaining Council for the Metal Industry and
Others (2008) 29ILJ 1180(LC)
the
Court comments that –
“
Turning
to the issue of the seriousness of the offence, the presence of
dishonesty tilts the scales to an extent that even the strongest

mitigating factors, like long service and a clean record of
discipline are likely to have minimal impact on the sanction to be

imposed.  In other words, whatever the amount of mitigation, the
relationship is unlikely to be restored once dishonesty has
been
established in particular in a case where the employee shows no
remorse.  The reason for this is that there is a high
premium
placed on honesty because conduct that involves corruption by the
employees damages the trust relationship which underpins
the essence
of the employment relationship”.
With regard to one aspect
of those comments, it is contended by the Applicant in this matter
that in the course of the arbitration,
the Third Respondent showed no
remorse for his alleged conduct, but that submission, in my view, is
one of little probative value
in the face of the Third Respondent’s
ostensible denial of the allegations against him.
12.
The respected writer and commentator on
Labour Law, Dr John Grogan in the December 2008 issue of his
publication Employment Law,
dealing with “
Sidumo
”
and the “Reasonable Commissioner Test”, comments, with
reference to,
inter alia
,
Hulett supra that –
“…
the
Labour Court found that the ‘
Sidumo
test’ did not preclude a reviewing Court from setting aside
awards in which employees dismissed for dishonesty were reinstated.

Before setting aside the award in
Hulett
Aluminium
, the Court cited a string of
pre-
Sidumo
judgments which support the proposition that ‘conduct that
involves corruption by the employees damages the trust relationship

which underpins the essence of the employment relationship”.
13.
Following a further review of decided
authorities, including
Shoprite Checkers
and
De Beers Consolidated Mines
(supra)
,
the following further comments are made:
“
The
common characteristic of all these judgments was that the Courts set
aside Commissioners’ decisions to reinstate employees
with long
service and clean disciplinary records for defrauding their employers
out of relatively insignificant amounts of money
or stealing property
of relatively insignificant value”.
14.
The Second Respondent, as I have indicated,
makes factual findings which, on any rational analysis, are difficult
to reconcile with
the conclusions and final determination reached by
him.  He records three “contradictory explanations”
offered
by the Third Respondent for his unauthorised possession of
the scrap metal in question.  He records the Third Respondent’s

knowledge of the rule requiring a pass-out for the removal of the
Applicant’s property and disbelieves the explanation of
his
having “forgotten” to obtain that authorisation.  In
the result he is “satisfied” that the employee
“was
guilty of theft of scrap iron from the waste bin”.
15.
This notwithstanding, he finds the sanction
of dismissal to have been “excessive and strikingly
inappropriate”, that
it was unfair and unreasonable and that
notwithstanding evidence to the contrary, a continued employment
relationship would not
be intolerable.  In the result, he
concludes, a fair reason for the third employee’s dismissal had
not been proved.
16.
In the face of the authorities to which I
have referred, the evidence adduced in the arbitration and the Second
Respondent’s
factual conclusions based thereon, I have little
hesitation in concluding that his final decision of the dispute was
not one that
a reasonable decision-maker could have reached and that
his reinstatement of the Third Respondent, in all the surrounding
circumstances
of the matter, cannot be sustained.  I accordingly
make the following order.
16.1
The Arbitration Award handed down by the Second Respondent on 18
March 2008 under the auspices of the First Respondent in its
Case No.
GAJB37633/07, is reviewed and set aside and is replaced with the
following –
“
The
dismissal of the employee by the employer on 24 October 2007 was
procedurally and substantively justified and fair”.
16.2
The Third Respondent is to pay the Applicant’s costs.
_______________________________________
B
M JAMMY
ACTING
JUDGE OF THE LABOUR COURT
24
April 2009

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