Brief Summary

Labour Law — Unfair dismissal — Review of arbitration award — Employee dismissed for bribery and dishonesty — Arbitrator found dismissal both substantively and procedurally unfair — Applicant sought to review award on grounds of misdirection and misconduct by arbitrator — Arbitrator unduly rejected evidence of witnesses supporting employee's misconduct and failed to properly evaluate hearsay evidence — Court found that the arbitrator misdirected himself in assessing the credibility of evidence and failed to apply the appropriate legal standards, leading to an irrational conclusion regarding the fairness of the dismissal.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings were an application in the Labour Court to review and set aside an arbitration award issued under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA). The applicant was Rustenburg Platinum Mines Limited (Rustenburg Section), the first respondent was the CCMA, the second respondent was Commissioner M Phetla N.O. (the arbitrator who issued the award), and the third respondent was Mr Mtshongo, PM (the employee).

The dispute arose from the employee’s dismissal for alleged bribery and dishonesty. After his dismissal on 27 March 2007, the matter proceeded to arbitration, where the commissioner found the dismissal substantively and procedurally unfair and awarded the employee 12 months’ compensation (R92 005-80) in an award dated 17 March 2009 (case number NW3967-07). The employer then launched review proceedings in the Labour Court under case number JR 995-09. The review was heard on 9 January 2014 and judgment was delivered on 8 July 2014.

The general subject-matter of the dispute concerned whether the arbitrator’s findings on substantive fairness, procedural fairness, and the consequent maximum compensation award were decisions that a reasonable decision-maker could reach, given the evidence and applicable principles, including the treatment of direct evidence, hearsay evidence, and professional opinion evidence in arbitration.

Material Facts

The employee commenced employment with the applicant on 6 January 2006 and, at the time of dismissal, worked as a training instructor at the Klipfontein Development Centre. His responsibilities included screening prospective employees, developing and training recruits, and presenting refresher training.

The employee was dismissed on 27 March 2007 following allegations that he accepted money from prospective employees in exchange for providing them with certifications required to obtain employment or placement with the applicant. The employer’s case at arbitration included the evidence of five witnesses. The employee testified on his own behalf and called one witness.

It was common cause that certain prospective employees (including Sinkinkile and Mshipeni) underwent written assessments, and that the employee was responsible for assessing their written responses to determine whether they progressed to the next stage. It was also common cause that the employee issued certificates and/or “pass outs” permitting progression in the process.

A central disputed factual issue concerned whether Zamkile Sinkinkile, a prospective employee at the time, paid the employee R350 to pass evaluations and assessments. Sinkinkile testified to payment; the arbitrator rejected his evidence on the basis that his statement was made under alleged pressure or duress. The Labour Court focused on the exchange in the record and treated it as significant that Sinkinkile did not, on his own version, concede fabrication, and that the representative’s questioning framed the suggestion of lying, which Sinkinkile ultimately denied.

Another factual component related to Z Mshipeni, who did not testify at the arbitration. Instead, an affidavit/statement under oath was read into the record, in which Mshipeni alleged paying R150 for a “pass out ticket”. The arbitrator rejected this statement as hearsay, primarily because the employer allegedly did not make adequate efforts to secure Mshipeni’s attendance.

Further evidence relied upon by the employer included testimony from senior training personnel, including Brian Kidson (HRD co-ordinator and senior training officer) and Riaan Harding (senior training officer), who testified that if they had evaluated the written assessment answers of Sinkinkile and Mshipeni, they would have failed them. This was relevant to whether the employee improperly passed them. The arbitrator treated this evidence as mere “opinions” and did not engage with it as materially probative professional evidence.

On procedural fairness, the contested issue at arbitration was whether the employee had been afforded an opportunity to be heard at the disciplinary enquiry. The employer’s evidence was that the hearing proceeded in the employee’s absence because he left with his representative after being told it would continue. The employee’s evidence was that he was not present at the moment the chairperson informed the representative that the hearing would continue and that he therefore had no opportunity to be heard once proceedings commenced.

The Labour Court, however, treated as undisputed that the employee received subsequent written notices from the chairperson inviting written submissions on guilt and sanction and notifying him of continuation dates, and that the employee did not take up these opportunities and did not attend.

Legal Issues

The central legal questions concerned whether the arbitrator committed reviewable irregularities and whether the resulting award was one that a reasonable decision-maker could reach on the evidence.

The review implicated mixed questions of fact, law, and the application of law to fact, including the following principal issues. The first was whether the arbitrator’s rejection of Sinkinkile’s direct evidence, and the approach taken to corroborative or supporting evidence, reflected a misdirection that rendered the substantive fairness finding unreasonable. The second was whether the arbitrator applied the appropriate enquiry when deciding whether to admit and rely on hearsay evidence (Mshipeni’s statement), having regard to section 3(1)(c) of the Law of Evidence Amendment Act. The third was whether the arbitrator’s characterisation of senior training officers’ testimony as mere opinion, without proper evaluation, constituted a failure to consider relevant evidence.

A further legal issue was whether, on the procedural fairness question, the arbitrator’s reasoning about a “contradiction” between employer witnesses and the resulting acceptance of the employee’s version was sustainable, given the uncontested documentary and oral evidence of the notices affording the employee further opportunities to be heard.

Court’s Reasoning

The Labour Court approached the review by considering whether identified irregularities in the arbitrator’s treatment of the evidence led to an outcome that fell outside the band of reasonableness contemplated by review jurisprudence. The court accepted that not every irregularity justifies interference, and that the enquiry ultimately requires assessing the reasonableness of the outcome on a conspectus of the evidence, including what the position would be if the irregularities were “cured”.

On Sinkinkile’s evidence, the court analysed the relevant portion of the record and concluded that the arbitrator’s premise—that Sinkinkile admitted making the allegation under duress and said “something” to save his job—was not supported by the transcript when read in context. The court treated the representative’s questioning as leading the witness toward a proposition of fabrication, and it emphasised that Sinkinkile ultimately denied that he lied to secure employment. The court further considered Sinkinkile’s testimony, as a whole, to be direct and convincing, and found no adequate basis for the arbitrator’s conclusion that the statement was made under duress. The court held that being advised to tell the truth or face losing a job did not necessarily equate to duress and could provide an incentive to be truthful. On this basis, the court found a misdirection in the arbitrator’s evaluation of Sinkinkile’s evidence.

On Mshipeni’s statement, the court focused on the legal standard governing hearsay in civil proceedings as set out in section 3 of the Law of Evidence Amendment Act 45 of 1988. While recognising that arbitration is not bound by the strictest formalism of evidentiary rules, the court held that arbitrators should not disregard the section 3(1)(c) enquiry, which requires consideration of multiple factors (including the nature of the proceedings, the purpose of the evidence, probative value, the reason for the witness’s absence, prejudice, and overall interests of justice). Relying on the principle articulated in POPCRU obo G Maseko v The Department of Correctional Services and Others [2011] 2 BLLR 188 (LC), the court treated the “nature of the proceedings” as an integral part of the section 3(1)(c) evaluation.

The court found that the arbitrator effectively reduced the hearsay enquiry to a single factor, namely whether sufficient effort had been made to secure Mshipeni’s attendance, without properly considering the remaining statutory factors. The court also rejected the arbitrator’s credibility-based concern arising from translation issues when the statement was taken: it reasoned that, given Breedt did not understand the language, he could not be expected to confirm translation accuracy, and the appropriate focus should have been on Breedt’s testimony that the statement was read back (through translation) and then signed by Mshipeni, indicating acceptance of its content.

Regarding the evidence of Kidson and Harding, the court held that although the testimony involved opinion, it was professional opinion from senior training officers with relevant expertise and responsibilities. The court considered that such evidence was material to whether the employee’s assessment and issuing of pass outs were consistent with required standards. The arbitrator’s dismissive approach, without adequate reasons, was treated as a failure to properly evaluate relevant evidence.

On substantive fairness, the court reasoned that if Sinkinkile’s evidence were properly accepted, the arbitrator would have had direct evidence implicating the employee. If the hearsay enquiry were properly conducted, a reasonable arbitrator would have been able to admit Mshipeni’s statement in the interests of justice, particularly in light of corroboration by Sinkinkile’s direct evidence and the context that Mshipeni was never employed by the applicant (affecting the employer’s ability to secure his attendance). When combined with the professional opinions of senior training personnel, the court held that the employer would at least have established a prima facie case of dishonesty, shifting an evidentiary burden to the employee to answer the case against him, in line with the approach referenced in Woolworths (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2011) 32 ILJ 2455 (LAC). The court noted that the employee did not ultimately call witnesses he suggested would corroborate him. In the court’s assessment, the arbitrator’s conclusion that the dismissal was substantively unfair was therefore not one a reasonable decision-maker could reach.

On procedural fairness, the court identified the issue as whether the employee was given an opportunity to be heard. It held that the arbitrator’s finding of a “material contradiction” between Harding and Geyer was not sustainable because Geyer’s inability to remember did not contradict Harding’s account. More importantly, the court treated as decisive the uncontested evidence that, after the initial hearing date, the chairperson issued written notices inviting the employee to make written submissions on guilt and sanction, and informing him of continuation dates, which the employee neither responded to nor attended. The court applied the principle from Semenya and Others v Commission for Conciliation, Mediation and Arbitration and Others (2006) 27 ILJ 1627 (LAC), namely that where a reasonable opportunity to be heard is afforded and an employee refuses to take it up, procedural unfairness does not follow. The court also invoked Old Mutual Life Assurance Co SA Ltd v Gumbi 2007 (5) SA 552 (SCA); (2007) 28 ILJ 1499 (SCA) for the proposition that an employer’s procedural obligation is to afford an opportunity to be heard before sanction. On the court’s evaluation, the opportunity was afforded, and the arbitrator’s procedural unfairness conclusion was unreasonable.

Given these conclusions, the court held it was unnecessary to deal with the remaining review grounds, including the complaint relating to maximum compensation, because the award could not stand.

Outcome and Relief

The Labour Court reviewed and set aside the arbitration award issued under case number NW3967-07.

The matter was remitted to the CCMA to be heard de novo by a commissioner other than the second respondent.

No order as to costs was made, with the court determining that fairness favoured each party bearing its own costs.

Cases Cited

POPCRU obo G Maseko v The Department of Correctional Services and Others [2011] 2 BLLR 188 (LC).

Gold Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation, Mediation and Arbitration and Others [2007] ZALC 66; 2014 1 BLLR 20 (LAC).

Woolworths (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2011) 32 ILJ 2455 (LAC).

Semenya and Others v Commission for Conciliation, Mediation and Arbitration and Others (2006) 27 ILJ 1627 (LAC).

Old Mutual Life Assurance Co SA Ltd v Gumbi 2007 (5) SA 552 (SCA); (2007) 28 ILJ 1499 (SCA).

Legislation Cited

Law of Evidence Amendment Act 45 of 1988, section 3.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the arbitrator materially misdirected himself in evaluating key evidence relevant to substantive fairness, including the rejection of a witness’s direct testimony on an unsustainable basis, the improper approach to admitting and assessing hearsay evidence without conducting the full statutory enquiry, and the unjustified dismissal of relevant professional opinion evidence.

The court further held that procedural unfairness was not established because the employee was afforded a reasonable opportunity to be heard through subsequent notices inviting written submissions and attendance, which he did not utilise. The arbitrator’s contrary conclusion was not reasonable on the uncontested facts.

Accordingly, the award of substantive and procedural unfairness and the compensation award were set aside, and the dispute was remitted for a new arbitration before a different commissioner, with no costs order.

LEGAL PRINCIPLES

The judgment applied the principle that, on review, identified irregularities in arbitration proceedings must be assessed in relation to whether they render the outcome unreasonable, and that the reviewing court considers the evidentiary picture that would have existed had the irregularities not occurred, consistent with the approach referenced in Gold Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation, Mediation and Arbitration and Others [2007] ZALC 66; 2014 1 BLLR 20 (LAC).

The judgment applied section 3(1)(c) of the Law of Evidence Amendment Act 45 of 1988 to the admission of hearsay in arbitration, holding that although arbitration is less formal than court proceedings, a commissioner must still engage with the multi-factor “interests of justice” enquiry, including (among other considerations) the nature of arbitration proceedings, the probative value of the hearsay, corroboration, the reasons for the witness’s absence, and potential prejudice. The judgment relied on POPCRU obo G Maseko v The Department of Correctional Services and Others [2011] 2 BLLR 188 (LC) to emphasise that the nature of arbitration is a factor within the statutory enquiry rather than a reason to ignore it.

The judgment applied the principle that, where an employer establishes at least a prima facie case of misconduct such as dishonesty on the evidence, an evidentiary burden may shift to the employee to provide an adequate answer, as reflected in the court’s reliance on Woolworths (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2011) 32 ILJ 2455 (LAC) in its assessment of the evidentiary consequences of the employer’s case.

On procedural fairness, the judgment applied the principle that a dismissal is not procedurally unfair where the employee has been given a reasonable opportunity to be heard but declines or fails to use that opportunity, consistent with Semenya and Others v Commission for Conciliation, Mediation and Arbitration and Others (2006) 27 ILJ 1627 (LAC). It also applied the principle that the employer’s procedural obligation is satisfied by affording the employee an opportunity to be heard before sanction, as referenced in Old Mutual Life Assurance Co SA Ltd v Gumbi 2007 (5) SA 552 (SCA); (2007) 28 ILJ 1499 (SCA).

Rustenburg Platinum Mines Limited v Commission For Conciliation, Mediation and Arbitration and Others (JR 995-09) [2014] ZALCJHB 238 (8 July 2014)