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[2011] ZALCJHB 278
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Harding v Petzetakis Africa (Pty) Ltd (JS1024/2009) [2011] ZALCJHB 278 (14 September 2011)
IN
THE LABOUR OF SOUTH AFRICA
(HELD
AT BRAAMFONTEIN)
JS
1024/2009
Reportable
In
the matter between:
MICHELLE
HARDING Applicant
and
PETZETAKIS
AFRICA (PTY)
LTD Respondent
JUDGMENT
LAGRANGE,
J:
Head
notes:
Automatically unfair
dismissal - refusal to comply with an unlawful instruction - senior
employee.
Introduction
1.
The
order and summary of my findings which appear at the end of this
judgment were issued on 14 August 2011. What follows hereunder
is the
full judgment.
The
applicant’s claims
Automatically
unfair dismissal or unfair retrenchment
2.
The
applicant in this matter, Ms M Harding, is claiming an automatically
unfair dismissal in terms of section 187 Labour Relations
Act. In the
alternative, she claims that she was unfairly retrenched. In either
event she is also claiming certain contractual
payments which she
claims are due to her.
3.
The
applicant says that her dismissal was automatically unfair because
she refused to summarily terminate the services of two employees
contrary to instructions to that effect from the chairman and CEO of
the company. The applicant believed that if she complied with
the
instruction she would have acted in breach both the Labour Relations
Act 66 of 1995 (‘the LRA’), and the Companies
Act 61 of
1973 (‘the Companies Act’). Consequently, she contended
that she was dismissed because the respondent acted
contrary to
section 5 (2) (c) (iv) of the LRA. That section read with section 187
(1) deems a dismissal to be automatically unfair
if an employer acts
contrary to that section because it dismisses the employee because of
that employee’s "...past,
present or anticipated...
failure or refusal to do something that an employer may not lawfully
permit or require an employee to
do;..."
4.
The
respondent company admits that it summarily dismissed the applicant,
but denies that it did so for an impermissible reason or
that it
retrenched her. However, at the time the applicant’s services
were terminated on 2 July 2009 the respondent provided
no reason for
the termination. The termination letter of that date merely stated,
"We regret to inform you that your employment
at Petzetakis
Africa is hereby terminated with immediate effect." The letter
also contained an offer of a severance package
of 10 months’ of
the applicant's total cost to company remuneration on the basis that
she accepted the same in settlement
of all her claims against the
company arising out of her employment or termination thereof
5.
.In
the respondent’s answering statement filed in October 2009 it
advanced alternative justifications for the applicant's
dismissal.
Principally,claimed it had lost confidence in the applicant in view
of the company's loss-making situation by mid-2009,
which
demonstrated her ineffectiveness and/or negligence in failing to curb
the losses. Secondly, it said the applicant failed
in her duties as
the company's managing director in a number of respects namely: loss
of market share; increased inventory levels;
cost under-recoveries;
losses on bad debts; competition commission penalties; inability to
increase margins; negative cash flows;
loss of major customers, and
insufficient attention had been paid to improving the firm’s
BEE status all of which the applicant
failed to improve. At the time
of filing its answering statement, the respondent was reticent about
articulating what specific
reason for dismissal it relied upon. It
was only when the pre-trial minute was concluded that it stated
expressly that it terminated
the applicant's services for "poor
performance and/or misconduct".
Contractual
claims
6.
By
the end of the trial, the respondent had conceded the applicant’s
entitlement to two of her contractual claims. The first
was her claim
for a
pro rata
payment
of a so-called "guaranteed" bonus as at 30 June 2009 and
leave pay. The respondent tendered payment of R93,000-00
in respect
of the bonus. Secondly, the respondent conceded it owed the applicant
six days’ remuneration for leave pay. Apart
from these claims,
the applicant persisted with a claim for three months’ notice
pay in terms of her contract of employment,
as amended in March 2004.
She also claimed outstanding salary for the month of July 2009 on the
basis that it was a practice of
the company to pay employees a full
salary for the month in which they were dismissed. Alternatively to
this, the applicant claimed
seven days payment for the period from 25
June 2009 to 2 July 2009, which she claims she was not paid for.
7.
In
respect of the claims which the respondent was prepared to concede,
the applicant maintained that she was entitled to a guaranteed
bonus
amounting to R155,000-00. The difference between this sum and the
amount tendered and subsequently paid by the respondent,
was based on
the three month notice period, which the applicant relied on. In
respect of the leave pay claim, the applicant still
claims an
additional six days leave over and above the six days tended by the
respondent.
The
material evidence
8.
The
hearing lasted five days and the applicant was the sole witness. I do
not intend to set out all the evidence, which was considerable.
For
the sake of evaluating the merits of the parties' contentions about
the reasons for, and fairness of, the applicant's dismissal,
the
following summary of the evidence in chronological order will
suffice.
9.
The
respondent company is a virtually wholly owned subsidiary of AG
Petzetakis, an Athens based holding company, which has an operating
division in Greece and also owns subsidiaries in Spain and Germany.
The respondent manufactures plastic hose and pipe systems and
has a
significant share of the local South African market for such
products.
10.
At
the time of her dismissal, the applicant was managing director of the
local company. She was first employed as a bookkeeper in
1987 by when
the company was called Megapipe. Over the years she worked her way up
from being a bookkeeper to cost accountant,
financial manager and
general manager of certain factories within the divisions of the
firm, eventually rising to be the financial
director of Megaflex,
which at that time was a division of Murray and Roberts. Murray and
Roberts sold the company to AG Petzetakis,
and in April 2001 it
acquired its current name, Petzetakis Africa (Pty) Ltd (‘PA’),
which clearly designated it as
a subsidiary of the Athens-based
parent company. In July 2002, at the applicant was appointed as sales
and marketing director of
PA.
11.
In
May 2006 the applicant was appointed Managing Director of the
respondent, following the resignation of the previous MD, Mr T
Dean
who had served in that capacity for four years. She reported to the
group chief executive officer, Mr I Spanudakis. As group
CEO he was
also the Executive Director and Chairperson of the respondent. Prior
to that, between 2001 and 2006 the position was
held by Mr G
Petzetakis (‘Petzetakis’). Petzetakis again replaced
Spanudakis in December 2008 when he re-assumed the
position of CEO of
the group and chairman of the board of directors. He was holding
these positions when he dismissed the applicant
in 2009. At all times
when the applicant was MD, the position of chief executive officer
was held by another person appointed by
the holding company.
12.
The
applicant was cross-examined closely on the financial performance of
the company during that time she occupied the position
of managing
director. This was in order to try and persuade the court that the
real reason for the applicant’s dismissal
lay in the company’s
financial performance. It is true that the company suffered net
losses in 2006, 2008 and 2009. The losses
did not end with the
departure of the applicant, as the company also suffered a net loss
in 2010.
13.
As
is set out in more detailed below, the fundamental difference between
the applicant and the respondent in the interpretation
of those
losses is that for the most part these losses occurred not as a
result of operational weaknesses in the South African
operation, but
owing to the addition of various ‘below the line’ items
in the compilation of the financial statements.
The applicant was
adamant that her performance was assessed on what might be referred
to as gross operating profit measured in
terms of net earnings before
income tax and depreciation (‘EBITDA’). Indeed her
variable bonus was calculated on this
basis and not on the basis of
net after tax income which is includes various items of
non-operational expenditure.
14.
For
the financial year ending 31 December 2006, PA achieved targets for
earnings before income tax and depreciation (EBITDA). These
targets
had only been finalised in August 2006. However, even though these
targets for the operational management accounts were
met and resulted
in a gross profit of approximately R 9.7 million, this achievement
was eclipsed by various adjustments which had
to be made when the
full financial statements were drawn up. These reflected the
company's net profitability for the year and showed
that, despite
achieving an operational profit of R40 million, this had to be offset
against a write-off of approximately R 32.5
million for bad debts, R
9 million in settlement of product liability claims, R 2.5 million
for expenses incurred in the disposal
of non-performing subsidiaries,
and some executive retrenchment packages of R 4,8 million. Thus there
was an accumulated total
of extraordinary expenditure of R 51,8
million in 2006. The applicant pointed out that these adjustments
were mainly necessary
because of so-called 'legacy issues' carried
over from previous financial years, which had to be brought to book.
Moreover, the
CEO at the time, Spanudakis, had agreed to the
inclusion of these items as extraordinary expenditure in the
financial statements
for that year as part of a clean-up of the
company's financial picture.
15.
The
applicant maintained that her own performance was evaluated on EBITDA
and therefore the net loss reflected in the financial
statements had
no impact on her own performance indicators. Indeed her bonus was
based on these operational indicators.
16.
In
2007, operating profit improved to R 431 million and net profit after
tax to R 31,46 million, which meant that the company achieved
96.1%
of its original budget and 99.8% of the revised budget for that year
measured by EBITDA. During the same year, after consulting
with
Spanudakis, the applicant ended the company's collusive relationship
with other competitors in the South African pipe sector
and applied
for a reduced penalty under the corporate leniency policy of the
Competition Commission for providing information to
the commission on
the collusive practices in that sector.
17.
According
to the applicant's testimony, the firm had been involved in
price-fixing activities with local competitors in the piping
industry
at least since 2002 and the scheme fell apart in 2005. In its
answering statement of case the company suggested that the
price-fixing had been at the instance of the applicant herself when
she was a Sales and Marketing Director and that her activity
had come
to its attention, without stating exactly when it became aware of
this. In her evidence, the applicant refuted the suggestion
that the
company was not aware of the practice, in which the managing director
at the time was directly involved in.
18.
The
applicant testified that the annual price-fixing was determined in a
meeting of the managing directors of the various competitor
companies. She admitted that in her capacity as Sales manager in
those years she was aware of the practice. However, within less
than
a year of her appointment as MD she took steps to put an end to it.
In March 2007 she attended a Nation Transformation conference
in
which businesses were challenged to "clean up their act"
and directors were urged to take responsibility in stopping
bribery,
corruption, collusion and any other and ethical practices,
collectively referred to as the "Unashamedly Ethical"
approach to business. The applicant signed up to the programme and
pledged the company to adhere to the Unashamedly Ethical policy
in
the conduct of its business.
19.
At
the end of May 2007 she held a special meeting of all sales managers
to advise them that the company would no longer participate
in any
collusive practices with any of its competitors at any level. Before
that she also held a meeting with the other competitors
who had
participated in the price-fixing arrangement and advised that the
company would no longer be party to any of the former
practices. On
the basis of its cooperation with the Competition Commission the
company was able to negotiate a provisional penalty
of 5.3% of its
turnover in its non-hose business, which amounted to R 27million. A
provision for this amount then had to be made
in the 2008 financial
year. However, the applicant testified that since she left the firm,
the Competition Commission could not
obtain some of the information
it needed from the Company and the penalty increased to 6.5% of the
company’s total turnover,
amounting to R59 million. At the time
of the hearing on the applicant was due to testify in forthcoming
proceedings before the
competition Tribunal.
20.
In
2008 the EBIDTA figure was in the region of R 37 million, but a net
loss of R 46.8 million still occurred. Part of this loss
can be
attributed to R 27.2 million which was brought into account in the
income statement, in anticipation of paying the penalty
to the
Competition Commission discussed above. Even so, the loss would still
have been in the region of 21, 5 million. However,
towards the end of
2008, the global slump impacted on all the group's operations both in
Europe and South Africa. Before that,
gross profits were being
squeezed by rises in raw material prices. With the onset of the
recession raw material prices started
falling rapidly and the company
attempted to retain some of the benefits of the price reduction for
itself by not passing on all
price reductions to customers. This
assisted in improving gross profits on sales in the sense of improved
margins, but the applicant
cautioned that the improvements in margins
would unfortunately be affected by under- recovery of costs owing to
low demand in November
and an early shutdown.
21.
The
new chief executive officer and executive chairman Petzetakis, who
took over from Spanudakis in December 2008, insistent that
the
applicant should improve gross profit margins at a time when the
applicant believed the priority was to maximise sales volumes
in
order to minimise under-recovery of costs. In the market conditions
prevailing at the time the applicant maintained that it
was very
difficult to maintain, let alone raise prices to preserve margins
when competitors were reducing their prices. The Independent
auditor's report on the financial statements for the year ending 31
December 2008 noted as a concern that there was a net after
tax loss
of 46.8 million which translated into an accumulated loss of R 22.6
million and that PA was dependent on funding for ongoing
operations
including a rollover of existing funding, a return to profitable
operations and finalising the penalty payable to the
competition
commission. The applicant's explanation was that the situation facing
the company reflected a difficult trading environment
within the
context of a dismal macro-economic outlook.
22.
In
2009 the trend continued. According to the applicant, the downward
trend was experienced equally by the respondent’s major
South
African competitors and in the Greek operations of the parent
company. Thus, the gross sales revenue at 31 March 2009 stood
at R
119,292-00 compared with R164,190-00 for the same period in 2008. In
mid-May 2009, Petzetakis accepted that the objective
of expanding
margins was not possible due to the heavy under-recoveries. He
referred to similar situations of declining volumes
in all of the
group’s plants. He indicated that it was not the group's
intention to reduce staff headcount, but that it was
now management's
duty to prepare a restructuring plan to address the low volume market
situation. He expressed the hope that progress
in May and June would
not make it necessary to implement such a plan. He also requested the
applicant to present a plan addressing
the issue during his planned
visit in the middle of June that year. It must be mentioned that
between November 2008 and March 2009,
the applicant had already
reduced staff numbers by 83.
23.
The
applicant responded to Petzetakis on 18 May 2005. She agreed with the
need to reduce fixed cost structures and further advised
him on
continued poor conditions in the local market and PA’s efforts
to devise a solid and beneficial BEE structure for
the company which
might have some benefits during the year. The applicant confirmed
that the company management would present an
action plan for a
worst-case scenario during the visit. Petzetakis thanked her for the
response endorsing it as the "right
approach to the challenges
we face today."
24.
There
was also a further brief exchange between applicant and Petzetakis on
the question of inventory levels. On 18 May 2009 Petzetakis
advised
the applicant that in the light of depressed sales levels the
inventory number had to come down quicker and in absolute
terms as
well. On 19 May the applicant advised Petzetakis that very specific
action plans in inventory reduction had been adopted
at a special
inventory meeting the previous day and inventory management had been
assigned to the firm's internal auditor. Petzetakis’s
response
to this news was not very enthusiastic and he did not express much
faith in the action plan adopted. He emphasised that
what was needed
was to see actual results. From this point on Petzetakis’s
communications became more demanding and critical.
The applicant
conceded that there was a change in the tone of his emails around
this time.
25.
On
29 May 2005, Dr D Razis, the company Vice Chairperson representing
Greek management in South Africa, sent an instruction by e-mail
to
the PVC plant supervisors and production team advising them that as
from the following Monday, 1 June 2009 Messrs A Karakontakis
and
Takis would be in charge of the PVC production plant in Rosslyn and
that everyone was expected to follow their decisions failing
which
disciplinary action would be taken against them. This direction was
issued without any consultation with the MD. She complained
that the
instruction issued by Razis had not been discussed with her at all
and asked for Petzetakis’s approval not to distribute
the
notice. It is evident from the tone of the e-mail that the applicant
felt she had been severely undermined by Razis’s
unilateral
decision on such a fundamental operational issue. Petzetakis's
response was to seek to excuse Razis’s conduct
on the basis
that he probably acted due to the shared disappointment everyone felt
over the continued problems at the plant. Nevertheless,
Petzetakis
did confirm the lines of authority must be followed in future. He
instructed the applicant and Razis to collaborate
and rectify the
issue themselves. I mention this because it was a recurrent theme in
the applicant’s evidence of acts of
direct interference in PA’s
operations by other directors appointed by the holding company
without conferring with her. While
she might have been the MD, she
was not free to make all operational decisions as she saw fit.
26.
Starting
on 9 June 2009, there was a series of e-mail communications between
the applicant and Petzetakis relating to the May monthly
Sales and
Marketing report which the applicant forwarded to Petzetakis. The
applicant reported realised sales of R 57.4 million
for that month at
a trading gross profit of 22.5% as against budgeted sales of R 74.3
million and what she described as an ‘unrealistic’
budgeted gross profit of 24%. Another feature of the report was that
it mentioned that the firm's lack of BEE credentials resulted
in it
losing a significant order for a project of Richards Bay Minerals.
The author of the report was the Sales and Marketing Director,
Peter
Kerr-Fox, who urged the board to consider adopting a BEE strategy on
shareholding. In her own evidence, the applicant expanded
on this
issue explaining that the board had not got to grips with the need to
demonstrate its BEE credentials at the level of shareholding,
and
that the smaller BEE projects the company had been focusing on were
not going to yield significant results. The firm had also
been
reluctant to consider discounting the price of any share acquisition
by a BEE group in consideration for the expected value
BEE
participation would bring to the firm.
27.
Petzetakis
responded to the Sales and Marketing report in the following terms:
"
I am deeply disappointed on
both the performance as well as the content of the report
.”
He then mentioned two points that he regarded as indicative of the
nature of his concerns, namely the loss of the contract
due to the
firm's BEE status and the loss of a contract in Angola because the
firm's PVC piping price was too high. On the first
issue, he
effectively accused the applicant and Sales Director of having made
no proposals to implement a BEE strategy for the
company. His brief
e-mail ended on an ominous note:
"
The
only statement I would wish to make at this point is the following if
you want to stay with Petzetakis, you better change your
performance
and your attitude and the sooner you do that the better will be.
"
(
sic
)
28.
The
applicant responded promptly to the two points made by Petzetakis.
She defended the efforts made to increase BEE participation
in the
sales structures of the company through, amongst other things, the
formation of four BEE sales companies. At the same time
she expressed
her frustration at the perceived reluctance of the board to consider
BEE participation at shareholder level, which
she clearly believed
would be far more beneficial than the structures established in
marketing. She believed the latter ventures
were unsustainable and
cost the firm more than the benefit it might have obtained from them.
29.
The
applicant also specifically mentioned efforts she made as far back as
2007 when prospective BEE partners were identified and
shortlisted.
This had resulted in one potential investor making a formal offer to
purchase shares in the company, which was rejected
by the holding
company. The applicant also tried to explain that it was not the
company which lost the Angola project but the middleman
who was not
tendering at competitive prices.
30.
Petzetakis
reverted once more to the applicant. However, this time he made no
further mention of the Angola project and acknowledged
that efforts
had been made on the BEE front. Nevertheless, he emphasised that what
mattered was that the company was going to implement
a successful BEE
strategy in 2009. He then shifted the focus of his concern to the
current margins of the company, and expressed
his disappointment that
PA was not able to take advantage of falling raw material prices in
the first five months of the year in
the same way the firm's European
operations had done. He complained that despite explicitly setting
increased margin targets for
the company to achieve, these had not
materialised and under-recoveries were so low that they had in fact
resulted in a declining
margin.
31.
Closing
his e-mail Petzetakis stated: “
I
will be coming to SA the last week of June where we will address all
the proper restructuring work required to be done in order
to achieve
the initial targets. I will not be leaving your country until I'm
convinced that the proper strategies in place to make
up for the lost
time.
”
32.
Responding
the same day, the applicant confirmed her appreciation of the need to
implement structural changes to escalate cost savings
"to the
next level". She confirmed that she had already commenced the
legal process under the LRA and had taken legal
advice on the
restructuring process. A notice to staff about prospective
retrenchments was to be issued on 22 June 2009. The applicant
also
said that representations would be made through SEIFSA to try to
obtain an exemption from paying the 8.8% increase due to
staff on 1
July 2009 in terms of the applicable bargaining council agreement.
Two responses to this e-mail were received, one from
the group chief
financial officer, Mr P Petrolekas, on the same day, and another from
Petzetakis, five days later, on 17 June 2009.
The CFO queried whether
such steps would be sufficient in the light of production volumes
which had dropped by 37% compared to
May 2008.
33.
The
more detailed response from Petzetakis on 17 June 2009 starts off by
making it clear that the applicant should not start any
process until
his visit to South Africa, a week later, on 25 June. Petzetakis’s
stated reason for stopping the process was
that he wanted to ensure
that certain strategic initiatives were included in the restructuring
plan, two of which he mentioned.
The first was the development of a
lean organogram with fewer layers of authority. The second was to
hold a one-day sales meeting
to ensure that the sales force was
properly motivated without which he believed no restructuring plan
would succeed. Having instructed
the applicant to stall the
restructuring process, Petzetakis nevertheless instructed the
applicant to "...
dismiss
immediately
the
operations manager Mr Craig Herbst.
”
(original emphasis). He explained that this step was in line with his
objective of achieving a lean structure and also was
linked to the
problem of production inefficiencies and under recoveries. He further
asked the applicant to inform other employees
of the reasons why the
operations manager was being dismissed “
so
that they would know that from now on all the employees are evaluated
against their contribution to the company.
”
34.
Two
days after the instruction to summarily dismiss Herbst, Petzetakis
also instructed the applicant to summarily dismiss one Maritha
van
der Vyfer. His e-mail of 19 June 2009 read as follows:
"
Michelle,
Regrettably
I have to inform you that you are requested to terminate, effective
immediately, the employment of Maritha, since she
denied to give
salary information to Dimitris. You may recall that my clear
instructions to you were that Dimitri was allowed to
have access to
ALL information.
May
I suggest that if you like to continue work for me to follow my
instructions, as I'm not prepared to repeat them.
Thank
you.
"
(
sic
)
35.
In
an email reply to Petzetakis the same day, the applicant made it
clear that Maritha had acted on her instructions to send salary
information to herself first, which she would then forward.
36.
During
the course of that Friday the applicant also had three telephone
conversations with Razis, who impressed Petzetakis’s
instructions on her. At 14h30 when the applicant arrived at the
Rosslyn plant, Razis said he had received a call from John Futturios,
one of the senior managers in Greece, who wanted to know if she had
started to implement Petzetakis’s instructions. The applicant
advised Razis that she had not done so and was not planning to
implement the summary dismissals. Razis told her that she'd better
do
it because "they will not let it go." This was clearly a
reference to the management in Greece. At that stage, the
applicant
was still of the view that if she could communicate the difficulty
posed by the two instructions to Petzetakis, she might
be able to
persuade him to reconsider this course of action contemplated.
37.
A
couple of hours later, Razis phoned again to ask if she had taken
steps to implement the decision, and her response was the same
as
before. The applicant left the plant at 19h00 and decided she would
try and reach Petzetakis on the phone to ask him if the
matter could
be dealt with when he arrived in South Africa on 25 June. She hoped
she could bring “some sense into the situation”
without
unduly upsetting the company.
38.
That
night, at 21h30, Razis phoned yet again to find out if the applicant
had complied with the instructions. He told her that Futuros
had
phoned him several times and said that if she did not do what was
expected of her he would fly to South Africa that weekend
and do it
on her behalf. On Saturday the applicant went to the office and tried
to contact Petzetakis at 11h00. She received a
text message in reply
from Petzetakis’s secretary saying she should not bother him at
that time and should wait until 25
June. The applicant persisted and
eventually got hold of Petzetakis who was very irritable. She asked
him if he was aware of the
calls from Futturios to Razis.
Petzetakis’s response was simply to ask her what she didn't
understand and that she must just
do as she is told. During this
conversation he apparently repeated the instruction to dismiss Herbst
immediately over the weekend
or at the latest on Monday morning. The
applicant, in turn, appealed to him to allow her to follow the
correct procedure and discuss
the matter with a labour lawyer in
order to protect the company against litigation.
39.
The
applicant said her mind was in turmoil but she was not prepared to
dismiss the two employees unlawfully. Once more she was phoned
by
Razis, who warned her that Petzetakis and Futuros must not arrive in
South Africa. He told that Futturios had said that this
was a test
and if she fired them she would save her job. The applicant confirmed
that she could not do so.
40.
The
applicant says that, after considering the situation and realising
that Petzetakis had a history of regularly firing people
she started
to clear out her personal belongings from the office. Despite her
misgivings, she decided that she must make an effort
to persuade
Petzetakis why it would be unlawful to summarily dismiss the two
employees. Therefore, on Sunday, she drafted a lengthy
e-mail
explaining the reasons why she believed she could not do so.
41.
In
the e-mail response she acknowledged that Petzetakis was the chairman
and CEO and that she had to follow instructions. She then
briefly
summarised the steps taken in 2009 to cut expenditure by R34 million
and not to award staff a scheduled 8% salary increase
in March.
42.
The
applicant then moved on to the heart of what was troubling her,
namely the instructions to summarily dismiss the two employees
in
question. She reiterated that she had been advised by the firm's
labour law adviser that dismissing Herbst summarily would be
unlawful, but that she was prepared to initiate disciplinary
procedures against him in terms of the LRA on Monday.
43.
In
relation to Van der Vyfer, she appealed to Petzetakis to reconsider
the instruction to dismiss the employee because she had been
acting
on the applicant's own instruction not to provide salary information
to anyone except through the applicant herself. Consequently,
there
were no legal grounds for her dismissal. The applicant also pointed
out that the delay in forwarding the information to Dimitris
which
had arisen was merely two hours. She reminded Petzetakis too that he
had confirmed that everything in the South African operation
should
be communicated through her. From the content of her email it appears
that the instruction to dismiss Maritha had also been
reiterated over
the course of the weekend. She concluded her e-mail by reiterating
her commitment and loyalty to the company but
also said:
"
I
have spent many hours in turmoil this weekend, and I have come to the
realisation that, for the first time in my 22 years, I have
been
placed in an impossible position. You have warned me on Friday that
if I want to continue working for you, that I have to
follow these
instructions.
But
these two demands are not reasonable or unlawful and therefore
un-executable, they represent ultimatums that will force me to
breach
both the Companies Act and the
Labour
Relations Act. I
have
to fulfil my fiduciary duty as an Executive Director of the
company.
"(
sic
)
44.
The
applicant received no response from Petzetakis to these
representations. By now the die was cast, as subsequent events
revealed.
45.
In
the early afternoon of Monday 22 June, following the usual production
meeting at the Rosslyn plant, Razis spoke with the applicant
alone.
He advised her that he had very bad news for her, namely that
Petzetakis had instructed him to find a lawyer to fire her,
preferably without any remuneration. The applicant said she was at a
loss for words and only managed to ask Razis what he was going
to do.
He confirmed he would do as he'd been told. Later that day, the
applicant was asked for the company's articles of association
which
were forwarded to the firm's lawyers, Van Huyssteen’s. The
following day the applicant received a copy of a legal opinion
from
the laywer’s. The opinion was broad in nature and considered
amongst other things: the question of the applicant's removal
as a
director; a potential damages claims arising from the removal of a
director; and the substantive and procedural requirements
for a fair
dismissal. It is clear from the opinion that the attorneys were not
given full instructions about the possible reason
for the applicant's
dismissal at that stage. When she questioned Razis about the reason
for the contemplated dismissal he said
that that would be discussed
with the attorneys when Petzetakis arrived.
46.
It
should be mentioned in passing that on the same day the applicant
conducted a searching meeting with the plant manager, Herbst,
in
which she emphasised the importance of achieving a break even
situation and reversing and recoveries as well as emphasising
the
importance of maintenance. She further instructed him to revise the
savings forecast in preparation for a meeting with Petzetakis
once he
had arrived in South Africa.
47.
By
Wednesday that week the applicant had also learnt that Petzetakis had
already approached the former HR manager at the company,
Ms C Van
Rensburg, who left the firm in 2006, to replace her as managing
director at PA. Van Rensburg had politely declined the
offer.
48.
The
applicant also testified that normally Petzetakis would liaise with
her to make arrangements for his stay and to agree on an
itinerary,
but she had not heard from him. When Petzetakis eventually arrived at
the plant he went straight to Razis’s office
without so much as
greeting the applicant. The applicant then saw the firm's attorneys
entering and leaving the office. Thereafter
she was called in and
Petzetakis started to attack her on the limits of authority. She
believed that this was part of an attempt
by Petzetakis to find a
reason to justify dismissal. A discussion ensued about the applicable
limits of authority and the applicant
claimed that once she had
pointed out the existing position, Petzetakis could not identify a
limit of authority which she had not
complied with. It appears that
Petzetakis had been under the impression that the limits of authority
had already been revised in
2008, but came to realise that the draft
revisions of the limits had never formally approved. The applicant
tried to discuss the
proposed application for exemption from the wage
increases with him but Petzetakis was not interested.
49.
The
applicant tried to arrange another meeting with Petzetakis and had a
fleeting one with him before the weekend. He was clearly
reluctant to
discuss the content of their previous e-mail to him and said he was
in a hurry and that he would see her on Monday.
When she asked if she
could meet him over the weekend he responded that his weekend was
full.
50.
On
Monday, 29 June 2009, a sales meeting was held, which was attended by
salespersons from 24 branches. At that meeting the applicant's
successor was also in attendance, but at the time she thought that he
was a consultant. The meeting was also attended by Petzetakis.
When
the applicant attempted to talk to Petzetakis at the end of the
meeting he said his car was waiting and he would speak to
her
tomorrow he left the meeting with Razis and the applicant's
successor.
51.
Eventually
on Tuesday, 30 June 2009, Petzetakis came to the applicant's office.
The applicant told him that she knew he had come
to fire her. He
responded that her time as MD "was up". When she asked him
why he wanted her to go, he simply reiterated
that it was "time
for her to go". He then told her that he had so much respect for
her that he would make her a non-executive
director and give her
projects but then she would have to agree to a restraint. The
applicant said she needed time to respond and
Petzetakis advised her
that he would arrange a meeting with the lawyers and Razis to look at
details.
52.
Following
this brief meeting she was advised in an e-mail from the company's
lawyers to report to their offices for a follow-up
meeting the next
day. The body of the letter read:
"
In
light of your recent discussions with Mr Petzetakis on the way
forward for Petzetakis Africa, and your involvement in the process
and employment with Petzetakis Africa, we invite you to a meeting to
be held at our offices tomorrow at 14:00 hours. The following
agenda
points had been determined between yourself and our Mr Johann van
Huyssteen:
1.
Severance package;
2.
The date of termination of employment and termination directorship;
3.
Consultation fees for future assistance in any project;
4.
Restraint of trade;
5.
Other matters to be discussed.
"
The
e-mail also mentioned that the meeting was to be held on a without
prejudice basis.
53.
When
she attended the meeting the next day only Razis was present from the
company together with the attorneys. She was advised
that the meeting
had been called to discuss the dismissal process. Razis said that
Petzetakis had met with her and advised her
she could no longer be MD
and she had agreed to this. This statement angered the applicant, who
related what Petzetakis had told
her, namely that ‘her time was
up’. She questioned how she could be dismissed in this way
without any procedure been
followed and said that the process had to
start at the beginning. The partner chairing the meeting acknowledged
that there was
clearly ‘adisconnect’ between the company
and herself. The applicant asked for a meeting with the attorneys and
Petzetakis,
but Razis reported that he was already on his way to the
airport. The applicant then left the meeting.
54.
The
next day the applicant received her letter of termination from the
firm, together with an offer of 10 months’ salary on
the basis
that she abandoned any claims she might have against it arising from
her employment or dismissal.
Legal
principles
55.
The
test for proving that dismissal is automatically unfair has been
considered by the Labour appeal Court on a few occasions. In
the case
of
Kroukam v SA
Airlink
(
Pty
)
Limited
(2005)
26
ILJ
2153
(LAC)
, two slightly different
approaches were adopted by the authors of the two judgments of the
court in determining whether or
not an employee had discharge the
onus of proving that the reason for a dismissal was automatically
unfair. Davis JA followed the
approach taken in
SA
Chemical Workers Union and others v Afrox Ltd (1999) 20 ILJ 1718
(LAC)
, in holding that in order
to succeed an employee must show not only that the reason was a
factor in the dismissal, but that it
was the main or dominant reason
for the dismissal:
"
[26]
Mr Snyman placed considerable emphasis upon the judgment of this
court in SA Chemical Workers Union and others v Afrox Ltd
(1999) 20
ILJ 1718 (LAC) at para [32] where Froneman DJP set out an approach in
respect of an enquiry relating to an automatically
unfair dismissal
in terms of s 187(1)(a) of the Act as follows:
'The
enquiry into the reason for the dismissal is an objective one, where
the employer's motive for the dismissal will merely be
one of a
number of factors to be considered. This issue (the reason for the
dismissal) is essentially one of causation, applied
in other fields
of law should not also be utilized here (compare S v Mokgethi and
others 1990 (1) SA 32 (AD) at
39D–41A; Minister
of Police v Skosana 1977 (1) SA 31 (AD) at 34). The
first step is to determine factual causation:
was participation or
support, or intended participation or support, of the protected
strike a sine qua non (or prerequisite) for
the dismissal? Put
another way, would the dismissal have occurred if there was no
participation or support of the strike? If the
answer is yes, then
the dismissal was not automatically unfair. If the answer is no, that
does not immediately render the dismissal
automatically unfair; the
next issue is one of legal causation, namely whether such
participation or conduct was the 'main' or
'dominant', or
'approximate' , or 'most likely' cause of the dismissal. There are no
hard and fast rules to determine the question
of legal causation
(compare S v Mokgethi at 40). I would respectfully venture to suggest
that the most practical way of approaching
the issue would be to
determine what the most probable inference is that may be drawn from
the established facts as a cause of
the dismissal, in much the same
way as the most probable or plausible inference is drawn from
circumstantial evidence in civil
cases. It is important to remember
that at this stage the fairness of the dismissal is not yet an
issue…. Only if this test
of legal causation also shows that
the most probable cause for the dismissal was only participation or
support of the protected
strike, can it be said that the dismissal
was automatically unfair in terms of s 187(1)(a). If that probable
inference cannot be
drawn at this stage, the enquiry proceeds a step
further.'
[27]
The question in the present dispute concerned the application of this
test. The starting-point of any enquiry is to be found
in chapter VII
of the Act. Thus, if an employee simply alleges an unfair dismissal,
the employer must show that it was fair for
a reason permitted by
section 188. If the employee alleges that she was dismissed for a
prohibited reason, for example pregnancy,
then it would seem that the
employee must, in addition to making the allegation, at least prove
that the employer was aware that
the employee was pregnant and that
the dismissal was possibly based on this condition. Some guidance as
to the nature of the evidence
required is to be found in Maund v
Penwith District Council
[1984]
ICR 143
,
where Lord Justice Griffith of the Court of Appeal held at 149 that:
'It
is not for the employee to prove the reason for his dismissal, but
merely to produce evidence sufficient to raise the issue
or, to put
it another way, that raises some doubt about the reason for the
dismissal. Once this evidential burden is discharged,
the onus
remains upon the employer to prove the reason for the dismissal.'
[28]
In my view, section 187 imposes an evidential burden upon the
employee to produce evidence which is sufficient to raise a credible
possibility that an automatically unfair dismissal has taken place.
It then behoves the employer to prove to the contrary, that
is to
produce evidence to show that the reason for the dismissal did not
fall within the circumstances envisaged in section 187
for
constituting an automatically unfair dismissal
"
(at 2206F–2207G).
56.
By
contrast, Zondo JP, held that it was sufficient if the employee
established that the impermissible reason played a significant
part
in the decision to dismiss the employee:
“
[103]
However, even if the reasons that I have found to constitute the
dominant or principal reason or reasons for the dismissal
did not
constitute the principal or dominant reasons for the appellant's
dismissal, I would still find that the dismissal was automatically
unfair if such reasons nevertheless played a significant role in the
decision to dismiss the appellant. In my view for policy
considerations, where such reasons have influenced the decision to
dismiss to a significant degree, the dismissal should be dealt
with
as an automatically unfair dismissal in order to deter as many
employers as possible from entertaining such illegitimate matters
as,
for example, racism and the exercise of rights conferred by the Act
as factors in their decisions to dismiss employees"
(at 2188)
”
57.
Van
Niekerk J in
Van
der Velde v Business & Design Software (Pty) Ltd &
another
[2006]
JOL 18363
(LC)
noted
that:
“
Willis
JA, delivering the third judgment in Kroukam, noted that Zondo JP and
Davis AJA had, albeit by different routes, arrived
at the same
factual conclusion ie that the applicant in that matter had been
dismissed primarily for reasons related to his union
activities, and
concurred in that conclusion on the facts without expressing a view
on the approaches respectively adopted by Zondo
JP and Davis AJA. ...
I do not think that there is any inherent conflict in the approaches
adopted by Zondo JP and Davis AJA respectively.
”
58.
In
the subsequent LAC decision in
New
Way Motor & Diesel Engineering (Pty) Ltd v Marsland
(2009)
30
ILJ
2875
(LAC)
, the full bench of the court
did not attempt to decide whether either of the two approaches were
more preferable than the other,
because the facts of that case led to
the same result whichever test was applied:
“
[22]
In the heads of argument prepared by the parties, there is a careful
analysis of the indicated approach to determine the basis
for such a
dismissal. For the purposes of this judgment, it is not
necessary, C however, to prefer either of the two
approaches set out in Kroukam v SA Airlink (Pty) Ltd
(2005)
26 ILJ 2153 (LAC)
to
determine whether respondent was automatically unfairly dismissed.
The reason is that, on either of the tests set out in the
Kroukam
judgments, this court must arrive at the same conclusion
” (at
2882)
[1]
Evaluation
59.
As
mentioned above, when the respondent finally settled on reasons for
dismissing the applicant it plumped for a dismissal arising
from a
loss of confidence in her suitability as an MD based on incapacity or
misconduct. The summary narrative of evidence on the
firm's
performance set out above was canvassed at trial in an effort to
establish that indeed it had dismissed the applicant for
legitimate
reasons as set out in the respondent’s answering statement and
clarified in the pre-trial minute.
60.
Because
the respondent fielded no witness to confirm that it had indeed
dismissed the applicant for an entirely legitimate reason,
the
respondent sought to extract a legitimate explanation for her
dismissal through cross-examination alone, without exposing its
own
reasoning to scrutiny, despite being best placed to tender direct
evidence on it.
61.
Obviously,
the persons best placed to give evidence on what actuated the
applicant’s dismissal, and in particular to rebut
the
prima
facie
evidence of the applicant
that she was dismissed for an impermissible reason, were one of the
directors who was privy to the events
of the fortnight leading up to
the dismissal as that would have been something peculiarly within
their knowledge.
62.
It
is trite law that the mere fact that a party does not lead evidence
in its defence does not entitle a court to draw an adverse
inference
against it. However, if as in this case, the applicant has
established a
prima facie
case
that she was dismissed for an impermissible reason and the respondent
is best placed to rebut this evidence by giving direct
evidence of
what led it to take the decision it seems to me that an adverse
inference can be drawn from its failure to lead that
evidence in
rebuttal. Schreiner JA, in
Galante
v Dickinson
1950
(2) 460 (AD)
at 465, expressed
the principle in the context of a claim for damages arising from
negligent driving:
“
In
the case of the party himself who is available, as was the defendant
here, it seems to me that the inference is, at least, obvious
and
strong that the party and his legal advisors are satisfied that ,
although he was obviously able to give very material evidence
as the
cause of the accident, he could not benefit and might well, because
of the facts know to himself, damage his case by giving
evidence and
subjecting himself to cross-examination.
”
63.
In
Galante
the
court was loathe to prescribe a general principle about the effect of
a party not giving evidence of matters peculiarly
within its
knowledge, but said the following in the context of that case:
“
...it
seems fair at all events to say that in an accident case where the
defendant himself was the driver of the vehicle the driving
of which
the plaintiff alleges was negligent and caused the accident, the
court is entitled, in the absence of evidence from the
defendant, to
select of two alternative explanations of the cause of the accident
which are more or less equally open on the evidence,
that one which
favours the applicant as opposed to the defendant.
”
[2]
64.
Assuming
for the moment that there are two plausible alternative explanations
of the reasons for the applicant’s dismissal,
which I believe
is being generous to the respondent, the same considerations ought to
apply in this matter in evaluating the effect
of the failure of the
respondent to give evidence. Quite apart from not exposing its actual
reasoning to direct scrutiny, even
if the reasons advanced in the
respondent’s pleadings and the pre-trial minute might have been
capable of sustaining a dismissal
of the applicant for lawful
reasons, there are a number of other difficulties in accepting these
reasons were indeed the ones which
probably caused the respondent to
dismiss her.
65.
The
first difficulty is that even though the respondent took legal advice
at least a week before formally announcing the applicant's
dismissal,
it still could not articulate any potentially legitimate reason for
the dismissal by the time she was issued with the
notice of the
summary termination on 2 July 2009. The first time it committed
itself to a reason was only in October 2009 after
it already had
considerable time to reflect on the matter. Furthermore, the
unchallenged evidence of the applicant about the course
of events
between receiving the first instruction from Petzetakis to dismiss
Herbst and being told by Razis on 22 June 2009 that
he had been
instructed to obtain a lawyer in order to dismiss her, demonstrates
that the critical decision was taken at that time.
66.
Taking
into account the express nature of the instructions in the e-mails
from Petzetakis to comply with his orders to summarily
dismiss the
two employees in question, and the relentless calls made by Razis
pressurising the applicant to comply and warning
her that it was ‘a
test’ that would cost her job if she failed it, it is very hard
to avoid the conclusion that it
was the applicant’s failure to
implement these two instructions which in fact actuated the
respondent’s decision to
dismiss her. Everything points to the
respondent having drawn a line in the sand at that juncture that
would decide the continuation
of the applicant’s employment
relationship. It may have been so that if it had not done this it
might have eventually proceeded
to dismiss the employee on the
grounds it subsequently relied on, but the fact remains that even if
it was losing confidence in
her, her response to the two instructions
at that stage was a decisive factor in determining her fate. The
employer’s actions
after she would not back down confirm this.
67.
It
is also important in evaluating the employer’s defence to bear
in mind that the reasons for dismissal which fall to be
scrutinised
are the reasons which the employer relied on at the time of the
dismissal:
“
It
is an elementary principle of not only our labour law in this
country, but also of labour law in many other countries that the
fairness or otherwise of the dismissal of an employee must be
determined on the basis of the reasons for dismissal which the
employer
gave at the time of the dismissal. The exception to this
general rule is where, at the time of the dismissal, the employer
gave
a particular reason as the reason for dismissal in order to hide
the true reason such as union membership. In such a case, the court
or tribunal dealing with the matter can decide the fairness or
validity of the dismissal not on the basis of the reason that the
employer gave for the dismissal but on the basis of the true reason
for dismissal.
”
[3]
68.
In
this instance, the only explicit indication of the employer’s
reasons for dismissing the applicant appears from the ultimatums
it
gave her to summarily dismiss the employees in question or face her
own dismissal. The respondent tried to make much of Petzetakis’
subsequent cryptic statement that ‘it was time’ the
applicant left, as indicative that it had decided to terminate
her
services because it had lost confidence in her ability to manage the
company. However, it was only some months’ later
that the
respondent was able to formulate alternative permissible reasons for
its decision, which it then sought to validate at
trial by adducing
evidence on which it might have relied to justify its action at the
time.
69.
The
inference that performance was not the reason for the applicant’s
dismissal is reinforced by consideration of events after
22
nd
of
June 2009. When Petzetakis finally confronted the applicant,
immediately after meeting with the firm’s attorneys,
the issue
which he raised with her was whether she had been acting within the
firm’s limits of authority. When the applicant
brought to his
attention that the limits of authority, which he was relying on, had
not been finalised this ceased to be an issue
and was never advanced
afterwards as a reason for her dismissal. This tends to suggest that
even after taking legal advice the
respondent was still searching for
a legitimate reason to justify the dismissal. The evidence of the
applicant that the respondent
had already identified her successor
before she was dismissed also reinforces the inference that the
decision to terminate her
services was taken even before she met with
Petzetakis and they debated the Limits of Authority policy.
70.
Moreover,
when Petzetakis was pressed by the applicant to provide the reason
for her dismissal, all he could manage was to say that
it was ‘time’
she left.
71.
All
of the factors mentioned above, in my view, support the conclusion
that the employer most probably decided to dismiss the applicant
when
she did not unhesitatingly comply with the instruction to summarily
dismiss Herbst and Van der Vyfer. The issue which vexed
the CEO at
the time was whether or not she accepted his authority
unquestioningly even when his instructions required her to do
something unlawful and which, in her understanding was not in the
best interests of the company to which she owed a fiduciary
responsibility as a director.
72.
In
the circumstances, the reasons advanced for the dismissal in the
respondent’s answering statement appear to have been
essentially
ex post
facto
efforts to rationalise
the dismissal on legitimate grounds. If at the time, the respondent
had acted less impetuously and
imperiously, and if it had deliberated
more carefully before acting I accept that it might have taken a
decision to dismiss the
applicant on the basis of more plausible and
legitimate reasons. However, such reasons that it might, with the
benefit of hindsight,
have relied upon cannot be retrospectively
inserted into the historic chain of causation which resulted in her
dismissal at the
time.
73.
It
was suggested in argument, that applicant's refusal to dismiss the
two employees without due process was merely the final straw
and
accordingly cannot be construed as anything more than the last factor
which had a bearing on the company's decision to dismiss
the
applicant. In this regard, the respondent relies on the increasingly
demanding and sharp tone of Petzetakis’ communications
to the
applicant from late May 2009 which the applicant conceded.
74.
The
difficulty I have with this argument is that even if the feedback on
the measures initiated by the applicant was increasingly
critical and
negative from this time, it seems inescapably clear from the
ultimatums given to the applicant that if she complied
with the two
instructions her job was
not
at
risk. Correspondingly, if she did not comply, she
would
be
facing dismissal. In these circumstances, it is difficult to see her
failure to comply with the instructions as anything
less than central
to the actual decision to dismiss her.
75.
Another
point which was raised by the respondent was that the applicant's
characterisation of the instruction she was given merely
reflected a
difference of opinion between two directors about whether summary
dismissal was permissible or not. However, it appears
to me that the
difference went much deeper than this. It is true that the applicant
clearly believed that there was no good reason
for Van der Vyfer’s
dismissal because she had been acting on the applicant's own
instructions at the time. Petzetakis did
not even engage with the
issue of whether summary dismissal would be lawful or not, so a
difference of opinion on that issue is
difficult to discern.
76.
Quite
apart from this, the fundamental difference between Petzetakis’s
instruction and the applicant's approach, is that Petzetakis
was
simply not willing to give the applicant an opportunity to even
attempt to comply with the requirements of the LRA to ensure
as far
as possible that the unfair dismissal provisions of the Act were not
flouted: it was not that he advanced any rationale
why it would not
be unlawful to proceed in the manner he wished.
77.
It
was also argued, though unsupported by any authority, that the
applicant had not demonstrated that it would have been unlawful
for
her to proceed with the summary dismissals as instructed. It might
have been true that, at least in the case of Herbst, a case
might
have been made out that her dismissal was substantively fair. However
in both instances, if the employees were dismissed
without a fair
hearing, the dismissals would in all likelihood have been in breach
of the requirements of a procedurally fair dismissal
under the LRA.
Even if the company had good substantive grounds for summary
dismissal, which is very unlikely in Van der Vyfer’s
case, if
the respondent wished to ensure that it did not flout the provisions
of the LRA governing the procedural fairness of dismissals
and the
associated constitutional right to fair labour practices, then it
could have acceded to the applicant's proposal that a
proper
disciplinary process be initiated. Instead, the instruction was to
forge ahead regardless.
78.
I
do not understand why such action would not be construed as unlawful
if it would entail a breach of a statutory and constitutional
right.
79.
It
must also be mentioned that a considerable effort was made by the
respondent to persuade the court in argument that it should
take a
robust view of the dismissal of an executive employee in the position
of the respondent. In this regard, the respondent
placed much
reliance on the LAC decision in
HPN
Brereton v Bateman Industrial Corporation Ltd &
Others
(Unreported
Case no JA 80/99)
. In essence, the
argument was that when it comes to the case of an executive employee
the court should be wary of applying stringent
standards in assessing
the procedural fairness of the dismissal. Similarly, because of the
degree of accountability that goes with
positions such as that of
CEO, if the incumbent fails to measure up to the performance
standards set by the employer, the court
should be slow to interfere
with the employer’s judgement in deciding to end the employment
relationship when the employer
decided that it had lost confidence in
that individual.
80.
However,
in this case because I believe it is clear on the evidence that the
employer has failed to displace the strong
prima
facie
case that principal
reason for the employee’s dismissal at the time was her refusal
to summarily dismiss the two employees
without a hearing, it does not
assist it to try and persuade the court that it did have grounds to
fairly dismiss the applicant
on the basis of poor performance or
misconduct, on the standards adopted in the Bateman case. There was
no evidence tendered by
the respondent which could explain away the
natural inferences to be drawn from the conduct of its senior office
bearers after
the instruction to dismiss Herbst was issued, which
could demonstrate that its actions were in fact founded on an
assessment of
the applicant’s performance over the course of a
number of years. It was best placed to substantiate what lay behind
its
actions in the fortnight leading to the applicant’s
dismissal, but chose not to do so. In the light of the evidence of
the
respondent’s actions over the fortnight leading to the
applicant’s dismissal context, the respondent’s
unwillingness
to expose its own reasoning at the time to scrutiny
substantially weakens its attempt to persuade the court that it
probably did
dismiss the applicant for a permissible reason which it
only articulated some months later.
81.
The
applicant made out a strong
prima
facie
case that what was at
stake at the critical time when the decision to dismiss her was
taken, was her unquestioning obedience to
the dictates of the CEO to
the point of implementing an instruction which required her to do
something unlawful. The respondent
has failed to address this issue
directly and the evidence for a performance based, or similar
legitimate reason for the dismissal,
does not answer the applicant’s
case.
82.
In
any event, I agree with the applicant’s submissions that her
position was not really on a par with the CEO in
Bateman’s
case.
The primary measure of her performance was the operational
performance of the firm. She did not have the autonomy to
make
decisions even in respect of operational issues and was always
subject to the dictates of detailed instructions from Greece.
Conclusion
83.
In
summary, I am satisfied that the applicant was asked to dismiss two
employees without any kind of hearing and that had she done
so she
would have breached the provisions of the LRA and the Constitution
governing an employee’s right to fair labour practices.
In this
sense she was expected to do something unlawful and, whatever
legitimate reasons might have been relied upon instead, it
was this
impermissible reason which was the principle cause of her dismissal.
Contractual
claims
84.
As
mentioned above, the unresolved contractual claims by the end of the
trial were the applicant’s claims for:
1.
three months’ notice pay;.
2.
the
pro
rata
portion of her bonus for
the notice period;
3.
salary for the period 25 June to 2 July 2009;
4.
twelve days’ leave pay.
85.
The
first two claims are clearly linked. In terms of clause 1.6 read with
clause 1.3 of her contract of employment the applicant
was entitled
to three months’ notice if her service was terminated for any
reason other than retrenchment or dismissal for
misconduct warranting
summary dismissal at common law. In view of my findings on the
reasons for her dismissal neither of the reasons
mentioned in clause
1.3 apply, and consequently the applicant was due three months’
notice pay.
86.
Clause
2.3.3. of the contract read with clause 2.3.2 guaranteed the
applicant a pro-rata portion of the annual bonus payable in
December
each year provided she was not dismissed for misconduct. The
respondent during the course of the trial tendered and paid
her the
pro-rata portion of her bonus up to the end of June 2009. In view of
the finding that her service should have endured a
further three
months, the applicant is also entitled to the
pro
rata
portion of the bonus for
the notice period.
87.
The
applicant was paid her last salary on 25 June 2009 and claims the
balance of her unpaid salary for the period between then and
2 July
2009. However, there was no evidence to suggest that she was not paid
a normal month’s salary in June 2009, albeit
that it was paid
before the end of the month as many employers do. Consequently, the
only unpaid portion is for the first two days
of July 2009, which is
due and owing to the applicant.
88.
The
dispute over the balance of leave pay owing to the applicant was
linked to a dispute over whether or not the applicant ought
to have
taken part of her annual leave due when she went on a business trip
to Australia. There was no dispute that if part of
her time in
Australia should not have been taken as leave, she still had 12 days
leave owing to her from her aggregate leave entitlements.
The
applicant testified that she was in Australia from 30 August to 10
September and that the trip which was principally to attend
a
world-wide mining indaba in Perth was approved by the CEO at the time
at Spanudakis. The applicant also met with PVC manufacturer’s
in Sydney who had technology which the respondent did not have. On
balance, I am satisfied that the trip was approved as a business
trip
and she did not have to take any of her accumulated leave
entitlements.
Relief
89.
The
applicant was employed for 22 years by the company and the manner in
which her services were terminated was understandably distressing
and
stressful. On the other hand, the respondent did try to soften the
blow of its peremptory action by offering 10 months’
remuneration and it is not inconceivable that if the applicant had
engaged with the respondent at the time a reasonable settlement
might
have been reached. There was no evidence before me that any
counterproposal had been made by the applicant.
90.
Further,
at the time of the dismissal the company was under substantial
pressure from adverse market conditions and a weak financial
position. The applicant was able to set up a consultancy which serves
another competitor of the respondent. In relation to the
severity of
the infringement of the applicant’s right not be dismissed for
refusing to dismiss the employees unlawfully,
the character of the
unlawful action she was asked to take also bears consideration. The
applicant was asked to infringe a statutory
and constitutional right
of the targeted employees insofar as a fair procedure was concerned.
The summary termination of Van der
Vyfer’s service without any
obvious material breach on her part of the employment relationship
which could justify summary
dismissal would have rendered her
dismissal unlawful in the contractual sense. Without detracting from
the seriousness of deliberately
dispensing with the employees’
right to a procedurally fair dismissal, the unlawful character of
what the applicant was expected
to do was civil not criminal, nor,
for example, did it entail requiring her to turn a blind eye to an
infringement of workplace
safety requirements. These are factors
which diminish the seriousness of the respondent’s infringement
of section 187 in
my view.
Costs
91.
To
canvass the evidence in support of the respondent’s putative
justification for her dismissal, would have required considerable
preparation and analysis of a variety of financial documents and
production information, as well as requiring knowledge of the
distinguishing features of management accounts and financial
statements.
92.
The
volume of documentary evidence to be canvassed was also significant
comprising filling as it did three lever arch files consisting
of
over 900 pages. Were it not for all this evidence which had to be
canvassed, the case would not have required laborious preparation
and
would not have taken so long. Given that all this preparation was
mostly necessary because of the respondent’s
ex
post facto
attempt to put a
respectable face on the dismissal, I believe this is an appropriate
case in which the respondent should pay the
applicant’s costs,
including that of two counsel.
93.
Moreover,
insofar as the contractual claims are concerned it should not have
been necessary for the applicant to litigate over most
of them in
order to obtain relief, which is an added reason for making a cost
award in the applicant’s favour.
Summary
of findings on the applicant’s claims
94.
The
applicant’s dismissal by the respondent on 2 July 2009 was an
automatically unfair dismissal in terms of section 187(1)(d)
read
with section 5(2)(c)(iv) of the LRA.
95.
The
applicant is owed twelve days’ leave pay and two days’
unpaid remuneration for 1 and 2 July 2009
96.
The
applicant was entitled to receive three months’ notice pay in
terms of her contract of employment.
97.
As
the respondent has tendered payment of the applicant’s bonus
for the period ending 2 July 2009 and because her employment
should
have terminated on 1 October 2009, the applicant is entitled to
the
pro rata
balance
of her bonus for the three month notice period.
Order
98.
Accordingly,
it is ordered that within 21 days of full reasons for the judgment
being filed, the respondent must pay the applicant
the following
amounts:
1.
compensation
equivalent to 13 months’ remuneration amounting to R
1,813,500-00;
2.
three
months’ notice pay amounting to R 418,500-00;
3.
the
pro-rata balance of her bonus for the three month notice period,
amounting to R 46,500-00;
4.
twelve
days’ leave pay amounting to R 55,800-00.
99.
The
respondent must pay the applicant’s costs, including the cost
of two counsel.
R
LAGRANGE, J
JUDGE
OF THE LABOUR COURT
Date
of hearing: 19 – 23 June 2010
Date
of order: 14 September 2011
Full
reasons filed on 15 September 2011
Appearances:
For
the applicant: H v R Woudstra, SC assisted by P H Kirstein instructed
by Couzyn, Hertsog and Horak
For
the respondent: C Todd of Bowman Gillfillan Inc.
[1]
Japie, AJ concurred with Davis, AJ and Zondo, JP also endorsed
Davis, AJ’s judgment except in respect of the appellant’s
entitlement to overtime pay.
[2]
at 465
[3]
Fidelity
Cash Management Service v CCMA & others
[2008]
3 BLLR 197
(LAC) at 206, [32].