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[2011] ZALCCT 5
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Nitrophoska (Pty) Ltd v Commission for Conciliation Mediation and Arbitration and Others (C109/2010) [2011] ZALCCT 5; [2011] 8 BLLR 765 (LC) (4 March 2011)
1
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT CAPE TOWN
CASE NO: C109/2010
In
the matter between:
NITROPHOSKA
(PTY) LIMITED
…...................................................................
Applicant
and
THE
COMMISSION FOR CONCILIATION, MEDIATION
AND
ARBITRATION
….........................................................................
First
Respondent
DANIEL
DU PLESSIS,
N.O.
….........................................................
Second
Respondent
B
L JACOBS
…....................................................................................
Third
Respondent
JUDGMENT
STEENKAMP J:
INTRODUCTION AND BACKGROUND
This is an unopposed application to
review and set aside an arbitration award (“the award”)
issued by the second respondent
(“the commissioner”)
under the auspices of the first respondent (“the CCMA”).
It deals with the procedural
fairness of a dismissal in the absence
of a formal disciplinary hearing.
In terms of the award, the
commissioner found that the applicant’s dismissal of the third
respondent (the employee, “Jacobs”)
was substantively
fair but procedurally unfair. The applicant was ordered to pay him
compensation in an amount of R69 600, 00
(about 3 months’
salary). The review application is concerned with the commissioner’s
finding on procedural unfairness
and the concomitant award of
compensation.
The relevant facts preceding the
dismissal, which were common cause between the parties, may be
summarised as follows:
The employee was previously employed
by the applicant as a regional manager, responsible for the
Swellendam area. Only three
people worked in this regional office,
namely Jacobs, his wife and Mrs Singleton.
In or around March 2008, it emerged
that Mrs Singleton had perpetrated fraud and theft against the
applicant. Effectively, she
had given the applicant’s
customers her banking details for the purposes of making payments,
as opposed to the applicant’s
banking details.
Upon further investigation, it
transpired that the fraud had been conducted over a number of years
and on a massive scale.
1
It was also established that Mrs
Jacobs had shared in the spoils by receiving payments amounting to
not less than R300 000,
00 from Mrs Singleton.
Both Mrs Singleton and Mrs Jacobs
were subsequently convicted in criminal proceedings of fraud and
theft. Both left the employ
of the applicant.
Jacobs was dismissed on account of
his gross neglect and dereliction of his duties as a senior
manager. (It was never the applicant’s
case that Jacobs had
participated in the fraud.)
The commissioner’s findings on
the substantive fairness of the dismissal are instructive. In
essence, the commissioner held
that:
Most of the facts were common cause;
Jacobs conceded that he had not done
his job properly;
It was clear that he had neglected
his function as regional manager;
He had not bothered to control files
and he did not go through financial statements;
If he had done his job properly and
gone through client files, even only through a selection every now
and then, he would have
detected the fraud.
THE PROCEDURE FOLLOWED
Upon the initial discovery of the
fraud, the applicant’s managing director (Dr Beyers) met with
Jacobs at the applicant’s
Swellendam office. This meeting took
place on 6 March 2008. At this point, Mrs Singleton was the only
suspect.
Two days later (8 March 2008), Jacobs
met with Beyers in Stellenbosch. Jacobs confirmed that his wife had
also been involved in
the theft and fraud. He tendered to resign on
the basis that he was the person with overall accountability. The
office fell under
his control and was his responsibility. Jacobs
acknowledged that there could be no trust relationship under these
circumstances.
Beyers indicated that, before any decision was taken,
all the facts should be unearthed through an investigation.
The criminal investigation ensued, as
referred to above.
On 5 March 2009, Jacobs addressed a
letter to Beyers, in which
inter alia
he conceded that:
he did not know how the fraud could
have been carried out “under his nose” without his
knowledge;
he had failed as a manager;
he doubted his ability to work with
people and felt unable to carry out his duties.
Mrs Jacobs entered into a plea
agreement with the state which was finalised at the end of June
2009.
Jacobs met with Beyers and the other
company directors on 16 July 2010, in order to discuss
inter alia
the continuation of Jacobs’s employment with the applicant in
light of what had transpired. At this meeting, Jacobs stated
that he
was at a crossroad. If the trust relationship was broken, there
could be no workable solution. (“As daar nie vertroue
in hom
is nie, dan sê hy loop die pad na die ander kant toe, dank an
daar nie ‘n werkbare situasie wees nie.”)
At the conclusion of the meeting,
Jacobs was requested to put his views on the matter into writing.
Jacobs produced a letter on
20 July 2009. This document contained a
proposal as to how Jacobs could repay the R300 000 due to the
applicant in terms of his
wife’s plea agreement. However, it
did not deal with the primary issue,
2
namely the trust relationship going
forward, at all.
A third meeting to discuss the matter
took place on 30 July 2009. Jacobs was informed that the parties had
to consider the full
conspectus of circumstances, including the
impact of his conduct within the company and in the eyes of the
public and clients
in particular. Specifically, the parties
discussed the impact of the abovementioned events on the employment
relationship. Jacobs
was informed that, in the applicant’s
view, a continued trust relationship was not possible.
Jacobs requested the opportunity to
consult with a labour advisor before responding, which he then did.
With the assistance of
his advisor, Jacobs addressed further
submissions in writing to the applicant on 5 August 2009, in which
he stated, in response
to the discussion that had taken place on 30
July 2009:
“
Ek
het niks verkeerd gedoen nie en bestaan daar [
sic
]
geen substantiewe billike rede waarom die diensooreenkoms tussen
myself en Nitrophoska beëindig moet word nie.”
Aside from this bald denial, which
was in marked contrast to the stance he had previously adopted,
Jacobs advanced no reasons
as to why he allegedly considered the
trust relationship was not at an end.
Under the circumstances, the
applicant responded in writing on 14 August 2009. Jacobs was
informed
inter alia
that the applicant had considered his
submissions but remained of the view that, as a result of his
neglect of duty, the employment
relationship could not continue.
WAS A FAIR PROCEDURE FOLLOWED?
The Code of Good Practice: Dismissal
(Schedule 7 to the Labour Relations Act 66 of 1995 (“the LRA”)
(“the code”)
sets out the guidelines for a fair
pre-dismissal procedure. In essence, the employee should be given an
opportunity to state
his case. The employer should conduct a form of
investigation; however, this need not be formal inquiry.
The code was intended to do away with
the rigid “criminal procedure style” provisions that had
proliferated under
the previous dispensation. Regrettably, the
flexibility introduced by the code has not always been recognised by
arbitrating
commissioners. Halton Cheadle, in his article “Regulated
Flexibility: Revisiting the LRA and the BCEA”
3
points out that:
“
Despite
the clear direction given in the code, employers, consultants,
lawyers, arbitrators and judges have continued to over-emphasize
pre-dismissal procedures and in so doing have imposed an unnecessary
burden on employers without advancing the protection of workers.”
These views were elaborated upon by
the Labour Court in
Avril
Elizabeth Home for the Mentally Handicapped v CCMA & Others
4
where Van Niekerk J held that there
was clearly no place for formal disciplinary procedures that
incorporate all of the accoutrements
of a criminal trial.
5
Regarding the requirement to be heard
prior to dismissal:
6
“
When
the code refers to an opportunity that must be given by the employer
to the employee to state a case in response to any allegations
made
against the employee, which need not be a formal enquiry, it means no
more than that there should be dialogue and an opportunity
for
reflection before any decision is taken to dismiss.”
These principles have even greater
application where senior managerial employees are involved. It has
been held that the form
of observance of the
audi
alteram partem
rule may be
relaxed in the case of a senior manager.
7
In the present matter, the
commissioner held that the procedure followed was unfair on one
narrow ground: Jacobs did not know
what the allegations against him
were.
Having regard to the evidence that
served before the commissioner, the finding that Jacobs was unaware
of what he had allegedly
done wrong is entirely unjustifiable in
relation to the evidence him.
From as early as March 2008, Jacobs
conceded that, as the accountable manager, he had failed in his
duties towards the applicant.
He was perfectly aware of what
standard he was required to meet, and how he had fallen short. This
concession was repeated in
writing in his letter dated 5 March 2009.
In that letter, Jacobs writes:
“
Ek weet tot
nou toe nog nie hoe so-iets onder my neus kon plaasvind sonder dat ek
dit nie [
sic
]
agtergekom het nie. Ek moet as die verantwoordelike bestuurder op
Swellendam, die verantwoordelikheid van hierdie problem die
res van
my lewe met my saamdra... Ek twyfel in my eie vermoë om met
mense te werk en voel onbekwaam om my pos te vervul.”
It was accordingly common cause
between the parties that Jacobs had neglected his duties as a
manager, and there was no dispute
concerning the relevant facts
giving rise to this conclusion. Even if it may have been preferable,
there was no need to hold
a formal inquiry into these allegations.
All that remained was to determine
what the impact of the misconduct should be on the employment
relationship. In this regard,
Jacobs was aware from the outset that
his misconduct was severe enough to destroy the requisite trust
relationship between the
parties.
Specifically, Jacobs was told to put
any representations in writing following the 16 July 2009 meeting
with the applicant’s
board. He failed to address the issue of
the ongoing trust relationship in his response at all.
Jacobs was presented with another
opportunity to state his case at the meeting on 30 July 2009, in the
full knowledge that the
applicant was contemplating his dismissal.
He was thereafter given time to consult a labour advisor and made
further representations
in writing (although these effectively
amounted to a bald denial).
At no stage (prior to the CCMA
proceedings) did Jacobs complain that he was unaware of what case he
had to answer. Jacobs’s
submissions were taken into account by
the applicant’s board prior to its decision. However, the
applicant remained of
the view that the trust relationship had
irretrievably broken down.
Under these circumstances, it is
inconceivable that Jacobs was not aware of the allegations against
him. He had an opportunity
to state his case, albeit that formal
disciplinary “charges” were never laid against him.
CONCLUSION
In light of the aforegoing, I agree
that the commissioner’s finding that Jacobs was unaware of the
case against him, and
that the dismissal was procedurally unfair on
this ground, was grossly unreasonable and unsustainable in relation
to the evidence
before him.
The commissioner’s finding on
procedural unfairness accordingly falls to be reviewed and set
aside. It is submitted that
this finding should be substituted with
a finding that the dismissal was procedurally fair.
Mr
Stelzner
, who appeared for
the applicant, indicated that he would not persist in his prayer for
costs, given that the application was
heard on an unopposed basis.
I therefore make the following order:
The arbitration award of 21 December
2009 under CCMA case number WEC 12523/09 is reviewed and set aside.
The award is substituted with a
finding that the dismissal of the employee, Jacobs (the third
respondent) was fair.
There is no order as to costs.
_________________________
ANTON STEENKAMP
Judge of the Labour Court
Date of hearing: 2 March 2011
Date of judgment: 4 March 2011
For the applicant: Adv Robert Stelzner
SC
(heads of argument having been drafted
by Adv Graham Leslie)
Instructed by: Frikkie Erasmus
1
Investigations
revealed at least 232 fraudulent transactions over a period of 3
years. Over R1,8 million had been stolen.
2
Beyers
testified that he had expected Jacobs to place on record whether or
not he saw a viable employment relationship, based
on trust, going
forward, and to provide reasons for his view.
3
(2006)
27
ILJ
663 p 687 para [85]
4
(2006)
27
ILJ
1644
(LC)
5
1652G
6
1654A
7
JDG
Trading (Pty) Ltd t/a Price ‘n Pride v Brundson
(2000)
21
ILJ
501
(LAC) paras 61-62 and 76. See also
Somyo
v Ross Poultry Breeders (Pty) Ltd
[1997]
7 BLLR 862
(LAC)