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[2014] ZALCJHB 67
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Minister of Correctional Services v General Public Service Sectoral Bargaining Council and Others (JR1197/09, JR1125/09) [2014] ZALCJHB 67 (18 February 2014)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not reportable
CASE
NO JR 1197/09; JR 1125/09
In
the matter between:
MINISTER
OF CORRECTIONAL
SERVICES APPLICANT
and
GENERAL
PUBLIC SERVICE SECTORAL
BARGAINING
COUNCIL 1
ST
RESPONDENT
AC
MANNDE NO
2
ND
RESPONDENT
POPCRU
obo J MATLOU & ANOTHER
3
RD
RESPONDENT
Application
argued: 6 February 2014
Judgment
delivered: 18 February 2014
JUDGMENT
VAN
NIEKERK J
Introduction
[1]
This is an application to review and set aside an arbitration award
made by the second respondent (the arbitrator) on 23 March
2009 under
case number PSGA 274-08/09. In his award, the arbitrator held that
the individual employees on whose behalf the third
respondent acts
were unfairly dismissed by the applicant. He ordered that they be
reinstated, with retrospective effect.
The
material facts
[2]
The third respondent acts on behalf of two of its members, Matlou and
Maake. Matlou was employed as a supervisor in the registry
office at
the Polokwane Correctional Centre. He was also appointed as a club
official at the Correctional Centre’s general
club. Maake was
similarly employed at the Correctional Centre. He was also appointed
as the club’s treasurer.
[3]
In February 2007, Maake left an amount of R 2340, 00, funds belonging
to the club, in a drawer in his office. On 12 February
2007, Maake
reported that R500 had gone missing, and could not provide an
explanation for the missing money. He undertook to replace
the money,
but failed to do so.
[4]
Later the same month, Maake deposited an amount of R11039, 75 into
the club’s account, having received R 11339.76. Maake
did not
report the R300 shortfall.
[5]
In early April 2007, Maake states that he had placed an amount of R
20 285 in a small safe situated in Matlou’s office.
Maake
stated that he had entrusted the money to Matlou, who was to bank it
on 3 April. Maake does not dispute that when the money
was entrusted
to Matlou, no handover was conducted. Matlou denies ever having been
made aware of the money in the safe, or having
undertaken to bank it.
The money went missing when the whole safe, which was not amounted to
a wall in the office despite screws
having been provided for this
purpose, was stolen.
[6]
On 18 April 2007, Matlou states that he received an amount of R22
780, being club funds, from the head of the correctional centre,
a
Mr. Mdhluli. Mdhluli states that he instructed Matlou to bank the
money. It is common cause that Matlou did not bank the money
but
instead put the money into a safe and went on leave until 23 April
2007. Matlou does not dispute that the leave was unauthorised.
On
Matlou’s return on 23 April, Matlou reported that the money had
been stolen during his absence.
[7]
After an internal investigation into irregularities at the club, the
employees were called to attend a disciplinary hearing.
Two charges
of theft alternatively, a charge of dereliction of duty, were brought
against Maake. The latter charge related to Maake’s
failure to
conduct a proper handover to Matlou on 3 April 2007. A charge of
dereliction of duty, alternatively theft, was brought
against Matlou.
[8]
After the disciplinary hearing, both Matlou and Maake were
dismissed.
The
grounds for review
[9]
The applicant submits that the arbitrator’s decisions in
respect of the following issues are decisions to which no reasonable
decision-maker could come on the available material:
a. That
the activities of the club fell outside of the scope of the
employment contract
b. That
any transgressions committed by the employees did not impact on the
department’s business
c. That
it was not proven beyond doubt that the money went missing
d. That
the employees’ dismissal was procedurally unfair because the
chair of the disciplinary enquiry was
of the view that the employees
were guilty of the alternative charges brought against them on
account of their having been found
guilty on the main charge against
them.
The
applicable legal principles
[10]
The test to be applied is that enunciated by the Constitutional Court
in
Sidumo v Rustenburg Platinum Mines Ltd
, recently affirmed
by the Supreme Court of appeal in
Herholdt v Nedbank
(701/2012,
5 September 2013). In the latter judgment the court summarised the
position as follows:
‘
[25]
In summary, the position regarding the review of CCMA awards is this:
A review of a CCMA award is permissible
if the defect in the
proceedings falls within one of the grounds in s 145 (2) (a) of the
LRA. For a defect in the conduct of the
proceedings to amount to a
gross irregularity as contemplated by s 145 (2)(a)(ii), the
arbitrator must have misconceived the nature
of the inquiry or
arrived at an unreasonable result. A result will be unreasonable if
it is one that a reasonable arbitrator could
not reach on all the
material that was before the arbitrator. Material errors of fact, as
well as the weight and relevance to be
attached to particular facts,
are not in and of themselves sufficient for an award to be set aside,
but are only of any consequence
if their effect is to render
the outcome unreasonable.’
[11]
The
Heroldt
decision clarifies the
Sidumo
test, at
least to the following extent:
a. The test to be applied
is cast in the negative- the court must ask whether the arbitrator’s
decision is one that could
not reasonably be reached on the available
material.
b. The test is concerned
primarily with the result of the arbitration proceedings and not the
arbitrator’s reasoning. The
arbitrator’s reasons are
relevant only in so far as they assist the court to determine how the
result was reached, and whether
the result can reasonably be reached
by that route.
c. A ‘latent
irregularity’ or ‘dialectical unreasonableness’ on
the part of the arbitrator (i.e. a failure
by the arbitrator to take
into account one or more material facts, or the taking into account
of irrelevant facts, or any unreasonableness
flowing from the
arbitrator’s process of reasoning) is not in itself a
sufficient basis for review. The arbitrator’s
conduct in this
regard is relevant only in so far as it renders the outcome of the
arbitration proceedings unreasonable.
[12]
In
Goldfields Mining South Africa (Pty) Ltd v
CCMA
(JA
2/2012, 4 November 2013) the Labour Appeal Court confirmed that the
applicable test does not admit what has been referred to
as a
“process-related review”, at least in the sense that it
is no longer open to a reviewing court to set aside an
arbitration
award only on account of a process- related irregularity on the part
of the arbitrator. This has the consequence that
the failure by an
arbitrator to mention a material fact in the award, or to deal with
any issue that has a bearing on the issue
in dispute, or any error in
regard to the evaluation of the facts presented at the arbitration
hearing, is of no consequence. Provided
that the arbitrator gave the
parties a full opportunity to state their respective cases at the
hearing, identified the issue that
he or she was required to
arbitrate, understood the nature of the dispute and dealt with its
substantive merits, the function of
the reviewing court is limited to
a determination whether the arbitrator’s decision is one that
could not be reached by a
reasonable decision-maker on the available
material.
[13]
At paragraph [20] of the judgment, the court stated:
‘
The
questions to ask are these: (i) In terms of his or her duty to deal
with the matter with the minimum of legal formalities, did
the
process that the arbitrator employed give the parties a full
opportunity to have their say in respect of the dispute? (ii)
Did the
arbitrator identify the dispute he was required to arbitrate (this
may in certain cases only become clear after both parties
have led
their evidence)? (iii) Did the arbitrator understand the nature of
the dispute he or she was required to arbitrate? (iv)
Did he or she
deal with the substantial merits of the dispute? and (v) Is the
arbitrator’s decision one that another decision-maker
could
reasonably have arrived at based on the evidence?
[21]
Where the arbitrator fails to have regard to the material facts it is
likely that he or she will
fail to arrive at a reasonable decision.
Where the arbitrator fails to follow proper process he or she may
produce an unreasonable
outcome (see
Minister
of Health and Another v New Clicks South Africa (Pty) Ltd and Others
2006 (2) SA 311
(CC)). But again, this
is considered on the totality of the evidence not on a fragmented,
piecemeal analysis. As soon as it is
done in a piecemeal fashion, the
evaluation of the decision arrived at by the arbitrator assumes the
form of an appeal. A fragmented
analysis rather than a broad-based
evaluation of the totality of the evidence defeats review
as a
process. It follows that the argument that the
failure to have regard to material facts
may potentially
result in a wrong decision has no place in review applications.
Failure to have regard to material facts must a
actually
defeat the constitutional imperative that the award must be rational
and reasonable - there is no room for conjecture and
guesswork.
[14]
The test to be applied clearly maintains the distinction between a
review and an appeal. The correctness of the commissioner’s
decision is not in issue, and the court is not entitled to interfere
only because it would have come to a different conclusion
on the same
material. It also requires the court to overlook any lapses in
reasoning on the part of the commissioner and to determine
whether
the outcome of the proceedings is nevertheless reasonable.
Analysis
[15]
I deal first with the finding that the employees’ dismissal was
unfair because the activities of the club fell ‘outside
the
employment contract’. The arbitrator’s reasoning is
reflected in the following paragraphs:
‘
[46]
It is not in dispute that the Department of Correctional Services is
a creature of the Correctional
Services Act number 11 of 1998. In the
same fashion the social club was created in compliance with its
constitution. The club is
joined voluntarily. The applicants joined
voluntarily. The club also calls upon retired employees to join. The
retired employees
are non-employees of the respondent.
[47]
The club has the chairperson who according to the constitution
represents a club in lawsuits.
This is an indication that the club is
a legal entity. The chairperson is the overseer of all club
activities. The club members
had to be updated from time to time as
to the affairs of the club. It is worth noting that the money which
initiated the hearing
is the club’s money. The money does not
belong to the respondent. The members join voluntarily serve the club
activities
could not be part of the employee’s contract of
employment.
[48]
I regard the club’s activities as activities outside of the
employment contract. The employer
may discipline the applicants if
their conduct impacted on the running of the respondent. The question
we have to ask ourselves
is whether the applicants conduct adversely
affects the working relationship.’
[16]
The arbitrator decided that the club was independently constituted,
and that the employees owed discrete obligations to the
club. It
is largely on this basis that he found that the applicant had an
insufficient interest in the conduct of the employees
in relation to
the club, and that their dismissals were therefore substantively
unfair.
[17]
The general rule to be applied is that an employer has a right to
institute disciplinary action against an employee when it
has some
interest in the conduct of the employee, ordinarily to be found in
some nexus between the employee’s conduct and
the employer’s
business. On this basis, the long arm of the employer’s
disciplinary code has been held validly to extend
to assaults against
co-employees committed after hours (
Van Zyl v Duhva Open Cast
Services (Edms) Bpk
(1988) 9
ILJ
905) and on a bus
transporting workers home after the end of shift (
NUM & others
v East Rand Gold and Uranium Co Ltd
1986) 7
ILJ
739 (IC)).
Similarly, In
NEHAWU obo Barnes v Dept of Foreign Affairs
[2001]
6 BALR 539 (P), the arbitrator held that the department was entitled
to discipline a diplomat for harassing two flight
attendants while on
a flight to take up a posting. The relevant threshold is a sufficient
and legitimate interest by the employer
in the employee’s
conduct; not, as the arbitrator appeared to consider, whether the
employment contract covered the conduct
in question. The
undisputed evidence before the arbitrator was that the club was
established and operated in terms of
s 132
of the
Correctional
Services Act, 1998
, read with
regulation 39
of the regulations
promulgated under
s 134
of the Act. The club was established
primarily for the use of employees at the correctional centre. The
employees had been appointed
in terms of that legislation and
contracted the duties in regard to the club’s activities,
subject to the authority and discipline
of the Department. They were
also remunerated for their services in the club by the Department.
The fact that the club had its
own constitution is both unremarkable
and irrelevant to the issue that fell to be determined. Similarly
irrelevant is the fact
that the club, as opposed to the applicant,
suffered financial loss on account of the employees’ conduct.
In these circumstances,
I fail to appreciate how any reasonable
decision-maker could come to the conclusion that the employees
conduct in relation to the
club and its activities were so remote
from their employment so as to fall outside of the course and scope
of employment, and that
the Department as a consequence was not
entitled to take disciplinary action against the employees. There is
an obvious nexus between
the employees conduct and the business of
their employer, if only in respect of the orderly running of the club
primarily established
for the benefit of all employees, and the
application of basic principles of good governance. For this reason
alone, the arbitrator’s
finding in regard to substantive
fairness stands to be reviewed and set aside.
[18]
In so far as the outcome of the arbitration proceedings is dependent
on the reasonableness of the arbitrator’s finding
on procedural
fairness, the arbitrator’s finding is that the chairperson of
the disciplinary hearing erred by regarding a
finding of guilt on the
main charge to necessarily result in a finding of guilt on the
alternative charges. The arbitrator concluded
“it must be borne
in mind 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 finding of
guilt on alternatives which were
not assessed aggravated the
chairperson to dismiss the applicants. This is a procedural defect.”
[19]
First, such a defect would only count as procedural in nature. The
arbitrator’s complaint appears to be that the employees
were
found guilty on charges in respect of which there was no proper
assessment of the evidence in relation to the charge, and
a finding
of dismissal in those circumstances. This, on the face of it, is a
concern that goes to substance rather than process.
Secondly, the
arbitrator appears to have adopted the view that it was his function
in effect to sit as a review tribunal to review
the decision of the
chair of the disciplinary hearing. He appears not to have appreciated
that the arbitration hearing was a proceeding
de novo and that it was
incumbent on him to have assessed all of the evidence to establish
whether the employees were guilty of
the charges brought against
them. Thirdly, common sense dictates that if the arbitrator had found
the employees guilty of the charges
that formed the basis of the
alternative charges against him, this would have had a profound
impact on his thinking and on his
award as the alternative charges,
misguidedly formulated as they were, were serious.
[20]
In short, I am persuaded that the decisions to which the arbitrator
came in respect of substantive and procedural fairness
of decisions
that fall outside of the band of decisions to which reasonable
decision-makers could come on the available material.
The award
stands to be reviewed and set aside. In terms of the applicable
principles, it is incumbent on this court then to enquire
whether
notwithstanding the arbitrator’s reasoning, the outcome of the
proceedings is nonetheless sustainable having regard
to the evidence
on record. I am unable to come to that conclusion. In my view, the
evidence clearly establishes that Maake failed
to comply with an
instruction from the head of the correctional facility to update the
club’s financial statements, that
he failed to comply with an
instruction to ensure that all money from the tuckshop was banked
immediately, that R 500 went missing
from Maake’s office
drawer, that he was responsible for the safekeeping of the missing
money he undertook to refund the club,
but that he failed to comply
with his undertaking and that he failed to report a shortfall of R
300 when banking the club’s
funds. In respect of Matlou, in my
view, the evidence establishes that there was a standing instruction
that banking was required
to be done regularly. Indeed, Matlou
admitted as much in his statement. Matlou was specifically instructed
by the head of the correctional
facility to bank the money that went
missing, he willfully ignored that instruction and in the absence of
any explanation for his
conduct, went on unauthorised leave
immediately after ignoring the instruction. The fact of the matter is
that after Matlou left
on leave, neither the money nor the safe were
seen again.
[21]
Given the weight of the evidence against both employees, at least in
respect of charges of a gross dereliction of duty, I fail
to
appreciate on what basis the result of the award can be rescued from
the arbitrator’s reasoning.
[22]
Ordinarily, an order to the effect that the arbitration award should
be set aside and the matter remitted for rehearing would
have
sufficed. I’m concerned that the events that formed the basis
of the present dispute occurred in mid-2007, nearly seven
years ago.
There is nothing in the papers that indicates any delay in the
conduct of this matter that can be attributable to the
officials of
this court; on the contrary, it appears that the parties have been
content to litigate at in their leisure. The middle
purpose would be
served in a rehearing at this stage. The court has a discretion to
substitute the arbitrator’s award, and
given the frustration of
the statutory purpose of expeditious dispute resolution in this
instance, I intend to exercise that discretion.
The evidence against
the employees have been summarised above, and as I have already
indicated, I have no station in concluding
that they are both guilty
of gross direction of duty in circumstances where the consequences
for the club were particularly serious.
In my view, the arbitrator
ought to have upheld the dismissals.
[23]
There is also before the court an application to have the arbitration
award made an order of court. The parties are agreed
that the fate of
that application would be dependent on the outcome of the review
application. Finally, in relation to costs, although
the applicant
has succeeded in having the award set aside, in my view, an order for
costs should not be made in circumstances where
a successful
applicant in a matter such as the present has failed to pursue the
application with due diligence, and where inordinate
and unexplained
delays have resulted.
For
these reasons, I make the following order:
1. The
arbitration award issued by the second respondent on 23 March 2009
under case number PGSA 274- 08/09 is
reviewed and set aside.
2. The
second respondent’s award is substituted by the following:
“
The dismissal of
the applicants was substantively and procedurally fair.”
3. The
application in terms of
s 158
(1) (c) is dismissed.
ANDRE
VAN NIEKERK
JUDGE
OF THE LABOUR COURT
REPRESENTATION
For
the applicant: Adv. Pio, instructed by the state attorney
For
the third respondent: Adv. Basson, instructed by Grosskopf Attorneys