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[2009] ZALCJHB 26
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South African Revenue Services v Commission for Conciliation Mediation and Arbitration and Others (JR984/08) [2009] ZALCJHB 26 (1 October 2009)
IN THE LABOUR COURT OF
SOUTH AFRICA
HELD AT JOHANNESBURG
CASE
NO:
JR984/08
HEARD: 1 OCTOBER 2009
DELIVERED: 23 OCTOBER
2009
REPORTABLE
In the matter between
SOUTH
AFRICAN REVENUE
SERVICES
APPLICANT
And
COMMISSION
FOR CONCILIATION, MEDIATION
AND
ARBITRATION
FIRST
RESPONDENT
COMMISSIONER
NOMSA MBILENINO SECOND
RESPONDENT
JACOBUS
JOHANNES
KRUGER
THIRD
RESPONDENT
JUDGMENT
PILLAY
D, J
Introduction
1.
In this review, the employee pleaded guilty
to the charge of twice referring to his team leader as a “kaffir.”
He was found guilty of using derogatory and abusive language.
2.
The chairperson of the disciplinary
inquiry, a panellist from Tokiso, appointed in terms of a collective
agreement regulating dispute
resolution, sanctioned the employee with
a final written warning valid for six months, suspension without pay
for 10 days and referred
him for counselling.
3.
Dissatisfied with the outcome the employer,
the South African Revenue Services (SARS) dismissed the employee
without a further hearing.
4.
The employee submitted his dismissal
dispute to the first respondent, the Commission for Conciliation,
Mediation and Arbitration
(the CCMA).
5.
The second respondent arbitrator found the
dismissal of the employee to be unfair and awarded him reinstatement
on the same conditions
imposed by the disciplinary chairperson.
Submissions
for SARS
6.
Mr
Bruinders, appearing for SARS, acknowledged that the provisions of
the collective agreement required SARS to implement the finding
and
the sanction of a dispute resolver who chairs a disciplinary hearing,
and that there is no provision in the collective agreement
permitting
SARS to interfere with the decision of the dispute resolver.
[1]
7.
Although
he acknowledged the sanctity of collective agreements he nevertheless
persisted that the arbitrator failed to ask the fundamental
question: Does the implied term of
trust and confidence, to which the collective agreement is subject,
permit the reinstatement of an employee of an organ of state if he is
guilty of insubordinate, racist, derogatory and abusive conduct?
If the arbitrator had asked this question, she could not have found
that SARS was not permitted to dismiss an employee simply because
the
collective agreement did not permit interference with the decision of
the disciplinary chairperson.
[2]
8.
A reasonable arbitrator would have found
that the collective agreement did not alter the law. SARS could
not be expected to
retain an employee in whom it had lost trust and
confidence because of his insubordinate, racist, derogatory and
abusive conduct
towards his black supervisor.
9.
Country
Fair Foods (Pty) Limited v Commission for Conciliation, Mediation and
Arbitration and Others
(2003)
355 LAC on which the arbitrator relied was different from this case
in that SARS did not review the decision of the chairperson
of the
inquiry. It dismissed the employee and the arbitration was a fresh
hearing.
[3]
10.
A
reasonable arbitrator could not rely on
Country
Fair Foods
to award reinstatement when she finds an employee guilty and the
employer adduces evidence that the employment relationship has
broken
down to the extent that the continued employment of the guilty
employee is intolerable.
[4]
11.
Country
Fair Foods
found
that it was procedurally unfair to interfere with the decision of a
chairperson of a disciplinary inquiry not to dismiss.
The LRA
does not permit reinstatement when a dismissal is only procedurally
unfair. Therefore, the dismissal of the employee was,
at worst, only
procedurally unfair.
[5]
12.
Mr Bruinders relied on
Ntshangase
v MEC for Finance KwaZulu Natal, MEC for Education for
KwaZulu Natal
, (SCA) (
per
Bosielo AJA) case number 402/08
unreported, delivered on 28 September 2009, three days
before the hearing in this matter,
to support his submission that the
decision of the chairperson is not final and binding, but
reviewable.
Although this application is not a review of the chairperson’s
decision, but a review of the arbitrator’s decision,
he urged
the Court to intervene nevertheless.
Submissions
for the Employee
13.
Mr Scheepers submitted for the employee
that the finding and sanction of the internal disciplinary hearing
had to be submitted to
the Employee Relation’s Department,
which was responsible for implementing its outcome. SARS had no
discretion to deviate
from its collective agreement. The decision of
the disciplinary hearing was peremptory and not advisory.
14.
The South African Revenue Services Act 34
of 1997 (SARS Act) also did not give SARS or its commissioner any
discretion or authority
to deviate from its disciplinary code and
procedure embodied in the collective agreement.
15.
The
employee had pleaded guilty at the disciplinary inquiry on advice
from his representative. He had also clarified that
although he
could not recall using the offensive word because he was stressed and
anxious, he did not deny using it because he
did not think that his
team leader, Mr Mboweni, would have lied under oath.
[6]
16.
The
chairperson of the disciplinary hearing, Advocate Z Mdladla,
had applied SARS’ disciplinary code and procedure,
which
endorses the concept of progressive or corrective discipline rather
than punitive discipline.
[7]
17.
SARS
had submitted at the arbitration, but not at the disciplinary
hearing, that the employee’s conduct struck at the heart
of the
employment relationship and resulted in a complete breakdown of
trust, thus rendering the employment intolerable.
[8]
SARS tendered no evidence that the trust between the parties had
deteriorated to the extent that continued employment was
intolerable.
[9]
On the contrary,
Mr Moodley, who had initiated discipline on behalf of SARS
accepted the sanction imposed by the disciplinary
chairperson.
[10]
18.
The
chairperson of the disciplinary inquiry had found that SARS adduced
no evidence that the employment relationship between the
parties was
irreparably damaged.
[11]
19.
By altering the sanction to summary
dismissal SARS acted irregularly and
ultra
vires
since so justification existed
for such a serious deviation from SARS’ policies and
procedures.
20.
Although the arbitrator had to determine
the substantive and procedural fairness of the dismissal, only the
procedural fairness
was in issue to the extent that SARS had to
justify overturning the sanction of the chairperson. The guilt
of the employee
was not in issue. He did not ask to be cleared of any
wrongdoing.
21.
Country
Fair Foods
confirmed
that an employer cannot overturn a sanction imposed by a chairperson
of a disciplinary inquiry unless the Disciplinary
Code and Procedure
permits it.
[12]
The
Issues
22.
The questions for the Court are the
following:
a.
Does the collective agreement regulating
dispute resolution permit SARS to substitute the decision of the
independent panellist
who chaired the disciplinary inquiry with its
decision to dismiss?
b.
Is SARS allowed to dismiss the employee if
it failed to present full evidence and argument for dismissal at the
disciplinary hearing?
c.
If the collective agreement permits SARS to
dismiss the employee, must SARS afford the employee a hearing before
dismissing him?
d.
If the answer to the preceding questions is
yes, is the award nevertheless reviewable?
The
Collective Agreement
23.
The
collective agreement is silent about whether the decision of the
chairperson of the disciplinary inquiry is final. It
has no
express provision that permits SARS to substitute the chairperson’s
decision with its own. Instead, the collective
agreement
obliges SARS to implement the decision of the disciplinary
chairperson.
[13]
24.
When
SARS concluded the collective agreement it must have been mindful
that the SARS Act lists the maintenance of discipline as
one of the
responsibilities of its Commissioner.
[14]
It retained that responsibility by recording in the collective
agreement the principle that discipline is a management function.
[15]
Although its Commissioner could assign or delegate his powers he
could do so only to an employee of SARS; and even when he does
so, he
is not divested of his responsibility.
[16]
25.
These considerations would have influenced
the balance of forces at play when the parties negotiated and
concluded the collective
agreement. SARS elected to execute its
responsibility for discipline by conducting a disciplinary enquiry,
chaired by one of its
own managers or an independent panellist. SARS
did not reserve for itself the right to substitute the decision of
the chairperson
of the inquiry with its own.
26.
As the collective agreement is silent about
whether SARS can substitute the decision of the chairperson of the
enquiry with its
own decision, the most reasonable inference is that
the parties did not intend to grant to SARS the power of
substitution. To infer
otherwise would be to interfere with the
bargain and to make an agreement which the parties either never
intended or could not
make for themselves. Such interference would be
the antithesis of the freedom to contract and bargain collectively.
27.
This
case is similar to
Country
Fair Foods
.
In that case the Labour Appeal Court (LAC) confirmed that without a
provision in the employer’s code permitting the
managing
director to interfere with the decision of the chairperson, such
interference was unjustified.
[17]
28.
Country Fair Foods
(distinguishable from
BMW
(SA) (Pty) Ltd v Van der Walt
(2000) 21
ILJ 113 (LAC)) applies to this case. As SARS did not reserve for
itself the right to substitute the decision of the chairperson
of the
inquiry with its own, it was bound to implement the decision of the
chairperson. However, if it disagreed with the chairperson’s
decision, it had another remedy.
The
Remedy
29.
Although SARS could not substitute the
decision of the chairperson of disciplinary enquiry, it could also
not be saddled with an
egregious decision. This much became common
cause during the hearing, especially in the light of the facts in
Ntshangase
.
If, therefore, in principle or as a matter of fairness and justice,
it should be possible to reject the decision of the chairperson
of
disciplinary enquiry, does the law permit it?
30.
Section
195 of the Constitution of the Republic of South Africa Act 108 of
1996 articulates the basic values and principles governing
public
administration.
Chirwa
v Transnet Ltd and Others
(2008) 29 ILJ 73 (CC) confirmed that although section 195
provides valuable interpretive assistance, it does not found a
right
to bring an action.
[18]
The CC redirected Chirwa to look to the LRA for a remedy.
[19]
31.
In
Ntshangase,
the chairperson of the disciplinary enquiry had issued a final
written for gross misconduct involving unauthorised expenditure
in
excess of R1,5m. The Supreme Court of Appeal (SCA) found a process in
section 158(1)(h)
of the
Labour Relations Act 66 of 1995
for
remedying an egregious decision of a chairperson of a disciplinary
enquiry. The section conferred on the Labour Court the power
to
“review any decision taken or any act performed by the State in
its capacity as employer, on such grounds as are
permissible in law”.
32.
The SCA came to this finding after
enquiring whether the decision of the chairperson was administrative
action and, if it was, whether
it was reviewable. It answered
both questions affirmatively. The employer, it found, was an
organ of state. It
exercised public power in its capacity as
the State when it appointed the chairperson of the inquiry.
Therefore, the chairperson
acted
qua
the State as employer.
33.
Although the relevant provision in
Ntshangase
,
namely Resolution 2 of 1999 of the Public Service Co-ordinating
Bargaining Council, which regulated the disciplinary procedure,
had
been negotiated and agreed with the trade unions, the employer
retained the power to appoint the chairperson of the inquiry.
34.
A similar situation prevails in this case
in which the collective agreement provides as follows:
“
10.4.1
The disciplinary hearing will be chaired by a delegated and an
authorised management representative, or alternatively one
of the
SARS dispute resolvers at the employer’s cost.”
[20]
35.
Irrespective
of whether the chairperson of the enquiry was an independent
panellist or one of SARS managers, she executed SARS’
responsibility for discipline. As such, the chairperson of the
disciplinary enquiry, acted
qua
SARS as the employer. In so assigning his responsibility to the
chairperson, the Commissioner could not divest himself of his
responsibility.
[21]
36.
SARS is an organ of state exercising public
power and performing public functions. As the chairperson of the
disciplinary enquiry
acts in place of SARS, her decision is
reviewable as a decision of SARS as employer under
section
158(1)(h).
37.
When
the LAC heard Ntshangase’s case,
[22]
it could not decide whether the chairperson of the enquiry
“perform(ed) a function on behalf of the employer or whether he
was performing such function as an independent tribunal”; it
preferred instead to determine whether the decision of the
disciplinary chairperson was administrative action.
[23]
The LAC was not referred to
Chirwa,
which had been issued barely a month earlier on November 28, 2007.
38.
At
the SCA, however, the appellant in
Ntshangase
referred to
Chirwa.
In
Chirwa
the
minority opinion of Ngcobo J, endorsed
orbiter
by the majority, was that dismissal was not administrative action.
Nor was it justiciable under PAJA.
[24]
At the very least
Chirwa
was persuasive; but the SCA did not apply it.
39.
In concluding that a disciplinary enquiry
is administrative action both the SCA and the LAC relied on
Sidumo
v Rustenberg Platinum Mines (Pty) Ltd
.
(2007) 28 (IOJ) 2405 CC, in which the majority held that arbitration
under the auspices of the CCMA is administrative action.
40.
Section 158(1)(h)
does not prescribe as a
prerequisite for review that the decision or act of the employer must
amount to administrative action.
Correctly therefore, this court,
unlike the SCA, and probably the LAC before it, is not invited to
determine whether the decision
of the disciplinary chairperson or
SARS’ decision to dismiss amounted to administrative action.
41.
Subsequently,
the controversy about what constitutes administrative action in
employment has been put to rest. In a judgment issued
after this
matter was heard, the CC settled the controversy on 7 October 2009 by
declaring that “(g)enerally, employment
and labour relationship
issues do not amount to administrative action within the meaning of
PAJA”.
[25]
In
Gcaba
v Minister of Safety and Security and Others
Case
CCT64/08
(2009) ZACC 26
para the CC confirmed the
obiter
and minority opinions in
Chirwa
[26]
that dismissal is not administrative action. Nor are dismissal and
other employment and labour relationship issues justiciable
under
PAJA.
[27]
Dismissal, like the
failure to promote and appoint an employee, is therefore not
administrative action.
[28]
Grounds
and Standard of Review
42.
If decisions and acts of the State as
employer are reviewable, what then are the grounds of review?
43.
Section
158(1)(h)
does not prescribe the grounds of review. Although in
Ntshangase
[29]
the SCA acknowledged that the grounds of review are those
“permissible in law”, it did not identify the applicable
law. Having found that the disciplinary hearing was administrative
action, the SCA probably had in mind grounds of review applicable
to
administrative acts. However, such grounds could not have been
sourced from the Promotion of Administrative Justice Act 3 of
2000
(PAJA) because the SCA decided that the review was not in terms of
PAJA but section 158(1)(h). Also, now that it is resoundingly
established that employment decisions are not administrative acts,
the grounds of review do not have to be sourced from administrative
law.
44.
Furthermore, because the power to review in
section 158(1)(h) is located within the LRA it also does not follow
that the grounds
for reviewing arbitration awards under section
154(1) will apply automatically to review under section 158(1)(h).
45.
The law determining the grounds of review
under section 158(1)(h) must therefore be sourced from the common
law. Case by case, the
courts must develop the common law to
determine the grounds of review under sub-subsection (h), just as
they developed the grounds
of review under sub-subsection (g) of
section 158(1). Predictably, as with sub-subsection (g), the grounds
of review are likely
to be similar to sub-subsection (g) and section
154(1).
46.
Even
though the SCA did not specify either the applicable law or the
grounds of review, it did, however, set the test for review
to be
fairness, rationality and reasonableness.
[30]
One
Cause, Two Processes?
47.
Does section 158(1)(h) duplicate processes
for a single cause of action?
48.
Textually,
section 158(1)(h) invites a broad interpretation of “any”
decision or act of the State as employer. Contextually,
the section
is narrowed by a purposive interpretation. In
Chirwa,
Ngcobo J, supported by the majority, urged that the LRA be
interpreted purposively. Applying a purposive interpretation the
learned
judge (as he then was) opined that the manifest objects of
the LRA is to subject all employees, public and private, to its
provisions.
[31]
The CC
unanimously endorsed this opinion when it emphasized the following in
Gcaba
:
“
The
legislature is sometimes specifically mandated to create detailed
legislation for a particular area, like equality, just administrative
action (PAJA) and labour relations (LRA). Once a set of
carefully-crafted rules and structures has been created for the
effective
and speedy resolution of disputes and protection of rights
in a particular area of law, it is preferable to use that particular
system.”
[32]
49.
One of the primary purposes of the LRA was
to create a predictable dispute resolution system accessible to all.
A key feature of
the “carefully-crafted” system is the
filtering of labour disputes through compulsory conciliation. Another
compelling
purpose was instilling parity in dispute resolution
systems for the private and public sectors. These purposes of
the LRA
will be thwarted if every decision or action of the State as
employer is challengeable on review under section 158(1)(h).
50.
Furthermore, section 158(1)(h) does
privilege parties in public employment over private employment. Hence
to preserve and protect
the scheme of the LRA, section 158(1)(h)
should be interpreted narrowly and purposively. Therefore, a review
under section 158(1)(h)
should be available only when the LRA does
not prescribe another procedure.
51.
Following a narrow approach to section
158(1)(h), the word “review” should also be strictly
interpreted to mean “reconsider,
re-examine, reassess,
re-evaluate”. Therefore, a party seeking a review may not raise
new matter, that is, matter not produced
for consideration to the
initial decision-maker.
Findings
52.
The dismissal of the employee was
substantively unfair because the decision to dismiss was not one that
SARS could validly make;
the collective agreement barred it from
substituting the decision of the disciplinary chairperson.
Procedurally, the dismissal
was also unfair because the process of
dismissing the employee was not available to SARS; if it was
available, then SARS should
have afforded the employee a
pre-dismissal hearing. That it did not do.
53.
The award is therefore reasonable and not
reviewable.
54.
Accepting
the invitation from Mr Bruinders to not put form over substance and
to treat this application to review the award also
as an application
to review the decision of the disciplinary chairperson, the court
finds that SARS must fail in this review too.
SARS did not make out a
case for irretrievable breakdown in the employment relationship at
the disciplinary hearing.
[33]
It attempted to make this case out at arbitration and in this
application, emphasising that SARS is an organ of state and as such,
should not be seen to be employing persons guilty of such serious
misconduct.
55.
In
Edcon Ltd v
Pillemer NO and Others
(191/08)
(2009
ZASCA 135
(5 October 2009) (unreported), yet another the judgment of
a superior court issued after the hearing in this case, the SCA held
that in the absence of evidence showing damage in the trust
relationship, the decision to dismiss was unfair.
56.
As SARS did not make out a case for
irretrievable breakdown at the disciplinary hearing there is nothing
for this court to review
in terms of section 158(1)(h). Furthermore,
Edcon Ltd
clarifies that an employer resisting reinstatement must prove the
irretrievable breakdown in the relationship.
57.
The application is dismissed with costs.
Pillay
D, J
APPEARNCES:
For
the applicant
:
Mr Bruinders SC
Instructed
by
: Routledge Modise
For
the third respondent : Mr G
Scheepers
Instructed
by
:Jana Beukes
[1]
Paragraph 13 of the heads of argument for SARS
[2]
Paragraph 15-16 of the heads of argument for SARS
[3]
Paragraph 18 of the heads of argument for SARS
[4]
Paragraph 20 of the heads of argument for SARS
[5]
Paragraph 17 & 21 of the heads of argument for SARS
[6]
Paragraph 4 of the heads of argument for the employee
[7]
Paragraph 6
of
the
heads of argument for
the
employee
[8]
Paragraph 27 of heads of argument for the employee
[9]
paragraph 30
and 34 of the heads of argument for the employee
[10]
paragraph 31
and 32 of the heads of argument for the employee
[11]
Paragraph 7
of the heads of argument for the employee
[12]
Paragraph 6 of the heads of argument for the employee
[13]
paragraph 10.6.6
of the collective agreement
[14]
section 9
of the SARS Act
[15]
Paragraph
4.3 of the collective agreement
[16]
Section 10
of the SARS Act
[17]
paragraph.23
of Country Fair Foods
[18]
Chirwa
v Transnet Ltd and Others
(2008) 29 ILJ 73 (CC) para 76 and 195
[19]
Chirwa
v Transnet Ltd and Others
(2008) 29 ILJ 73 (CC) para 77
[20]
Page
72 of the record
[21]
Section 10
of the SARS Act
[22]
The
Member of the Executive Council for Finance, KwaZulu Natal and other
v Dorkin and Ntshangase Case no: DA16/05
[23]
The
Member of the Executive Council for Finance, KwaZulu Natal and other
v Dorkin and Ntshangase Case no: DA16/05 para 10
[24]
Chirwa
v Transnet Ltd and Others
(2008) 29 ILJ 73 (CC) para 73 and 142
[25]
Gcaba
v Minister of Safety and Security and Others
Case
CCT64/08
(2009) ZACC 26
para 64
[26]
Gcaba
v Minister of Safety and Security and Others
Case
CCT64/08
(2009) ZACC 26
para 67
[27]
Chirwa
v Transnet Ltd and Others
(2008) 29 ILJ 73 (CC) para 73 and 142;
Gcaba
v Minister of Safety and Security and Others
Case
CCT64/08
(2009) ZACC 26
para 64
[28]
Gcaba
v Minister of Safety and Security and Others
Case
CCT64/08
(2009) ZACC 26
para 66 and 68
[29]
Ntshangase
v MEC for Finance KwaZulu Natal, MEC for Education for
KwaZulu Natal
,
case number 402/08 unreported, delivered 28 September 2009
(SCA) para 18.
[30]
Ntshangase
v MEC for Finance KwaZulu Natal, MEC for Education for
KwaZulu Natal
,
case number 402/08 unreported, delivered 28 September 2009
(SCA) para 20.
[31]
Chirwa
v Transnet Ltd and Others
(2008) 29 ILJ 73 (CC) para 99-101, at 102
[32]
Gcaba
v Minister of Safety and Security and Others
Case
CCT64/08
(2009) ZACC 26
para
34 and 56
[33]
Para 9.4 of Outcome of disciplinary hearing; Page 282 of record