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[2015] ZALCJHB 185
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State Information Technology v Commission for Conciliation Mediation And Arbitration and Others (JR203/13) [2015] ZALCJHB 185 (25 June 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: JR 203/13
In the matter between
STATE INFORMATION
TECHNOLOGY
Applicant
and
COMMISSION FOR
CONCILIATION MEDIATION
AND ARBITRATION
First Respondent
R BYRNE N.O
Second Respondent
MOSES MTIMUNYE
Third
Respondent
Heard: 07 March 2014
Delivered:
25 June 2015
Summary:
When the commissioner has undertaken the enquiry into the fairness of
a dismissal in the wrong manner
and reached an unreasonable decision,
his or her arbitration award becomes reviewable.
JUDGMENT
LALLIE J
Introduction
[1] This is an
application to review and set aside an arbitration award of the
second respondent (“the commissioner”)
in which he found
the third respondent’s dismissal both substantively and
procedurally unfair and ordered the applicant to
pay him compensation
in the amount of R1 600 005, 62.
[2] The facts of this
matter are mainly common cause. They are that the third respondent
was appointed by the applicant to the position
of Chief: Strategic
Services until his dismissal on 30 June 2009. On dismissal he was the
applicant’s acting Chief Executive
Officer (“acting
CEO”). He was a member of the Recommendations Committee and the
Supply Review Council which deal with
tenders on behalf of the
government and the applicant. He reported to the applicant’s
board of directors (“the board”).
In terms of the
applicant’s procurement policies and procedures, the applicant
had to obtain the board’s approval for
procurement of goods and
services in excess of R30 million. The approval had to take the form
of a board resolution which could
be secured through a properly
constituted meeting of directors by a simple majority alternatively,
through a round robin process.
The round robin process required the
approval of all the directors to pass a proposed resolution.
[3] On 30 June 2009, the
third respondent instructed his subordinate to enter into a contract
(“the contract”) on behalf
of the applicant for the
amount of R202 203 877, 23 with Software AG (Pty) Ltd (“SAG”).
When the third respondent issued
the instruction he was aware that
the board approval had not been secured as not all the board members
had given their approval
to the proposed resolution to have the
contract signed although an attempt was made to obtain it by the
round robin process. He
was charged for contravening the applicant’s
procurement policy and
section 51
of the
Public Finance Management
Act of 1999
. He raised the defence that he acted on the board
chairperson’s instructions that the contract be signed. The
defence was
rejected and he was dismissed. Aggrieved by his
dismissal, he referred a dispute to the first respondent (“the
CCMA”)
where the commissioner issued the arbitration award the
applicant seeks this court to review and set aside.
[4] The applicant’s
main grounds for review are that the commissioner committed a gross
irregularity and/or committed misconduct
and/or exceeded his powers
and rendered an irrational and unreasonable award. It submitted that
there was no justification for
the third respondent’s conduct
of executing the chairperson’s unlawful instruction. The
commissioner’s finding
that compliance with the chairperson’s
instruction was reasonable is unreasonable. The commissioner had no
valid reason for
rejecting the applicant’s evidence regarding
the chairperson’s reaction in the meeting of 2 July 2009 to the
effect
that she was surprised that the contract had been signed. He
failed to consider the respondent’s omission to call the
chairperson
as a witness in light of the evidence of her reaction in
the meeting of 2 July 2009. The applicant further submitted that the
commissioner
exceeded his powers by resuscitating the third
respondent’s claim of procedural unfairness which he had
elected not to pursue.
He unreasonably considered the irretrievable
breakdown of the employment relationship when the third respondent
sought compensation
and not reinstatement.
[5] The commissioner
allowed the third respondent to challenge the procedural fairness of
his dismissal on the grounds that he may
not have understood his
rights at the time he indicated that only the substantive fairness of
the dismissal was challenged. He
found that the applicant delayed in
taking disciplinary action against the third respondent as he was
charged a year after the
commission of the misconduct and it took two
years to finalise the process. The delay impacted on the substantive
fairness of the
dismissal as it was inconsistent with the conclusion
that the employment relationship had broken down. It rendered the
dismissal
procedurally unfair. Based on his finding that the
dismissal was substantively and procedurally unfair, the commissioner
ordered
the applicant to pay the third respondent compensation
equivalent to his annual salary in the amount of R1 600 005 62.
[6] The commissioner
found the third respondent’s dismissal substantively unfair
because he acted on the chairperson’s
instructions. The
applicant’s grounds for review are mainly based on section 145
(2) (a)(ii) of the Labour Relations Act
66 of 1995 (“ the LRA”)
as they are based on irregularities committed by the commissioner in
the conduct of the arbitration
proceedings. There is merit in the
applicant’s ground for review that the commissioner’s
finding that the third respondent
had a good defence because he acted
on the instructions of the chairperson is unreasonable. There was
overwhelming evidence before
the commissioner that the defence raised
by the third respondent did not hold water. The third respondent
conceded that he was
aware that the approval of the board had not
been secured when he complied with the chairperson’s
instructions that the contract
be signed. It was his evidence that
there was no time pressure to have the contract signed on 30 June
2009. He conceded that had
the chairperson issued the instruction in
their telephone conversation preceding the one in which she
instructed him to sign the
contract, the instruction without the
approval of the board would have been unlawful. In the telephone
conversation in which the
chairperson instructed the third respondent
to have the contract signed, she also told him that the approval of
the board had not
been secured. The commissioner overlooked the
reality that the applicant knew that the instruction was unlawful and
elected to
execute it. He conceded that attempting to achieve cost
saving cannot be a license to undermine policies and procedures of an
institution.
[7] Evidence tendered at
the arbitration was that the amount involved in the contract which
was signed without the board’s
approval exceeded the R30
million which the third respondent was authorised to bind the
applicant in excess of R187 million. In
paragraph 22 of the award the
commissioner states as follows:
‘
In my view,
even though the Chairman of the Board is the custodian of such
processes, one cannot realistically and responsibly conceive
of a
situation where a CEO can wilfully ignore processes that are
designed to establish proper authorisation before executive
decisions
are carried out. On the other hand, however, the most senior person
in the Organisation, the Chairman, gave him the instruction
and took
on the responsibility of sorting out the procedural/authorisation
issue. This is exactly why he had the contract signed
– because
he received the instruction to do so. The facts before him were still
the same as earlier that evening, where he
accepted that there was
“no deal”. My view is that this is a good defence, even
though it is not a complete defence.
Any action of a misconduct
nature should therefore be primarily directed at the Chairman, and
one would ordinarily conceive of
a lesser sanction to him’.
[8] The commissioner’s
finding that the third respondent had a good defence indicates that
he conducted the enquiry into the
fairness of the dismissal in the
wrong manner. Item 7 of Schedule 8 to the LRA, the Code of Good
Practice: Dismissal, provides
guidelines for the determination of the
fairness of a dismissal for misconduct. It required the commissioner
to have considered
whether or not the employee contravened a rule or
standard regulating conduct at the workplace. If the rule was
contravened, to
consider the validity or the reasonableness of the
rule, whether the employee was aware of the rule and whether
dismissal was the
appropriate sanction. A reading of the award proves
that the commissioner failed to carry out the enquiry in the correct
manner.
He accepted the existence of a valid rule. He avoided stating
unequivocally whether the third respondent had breached the rule.
When dealing with whether the third respondent breached the rule he
goes as far as to accept that at the time he gave instructions
that
the contract be signed, the facts before him were still the same as
earlier that evening when he accepted that there was no
deal. He,
however, deliberately omitted to state the obvious result of the
third respondent’s conduct, thus failing to complete
the
enquiry he was required to make. His decision on the substantive
fairness of the dismissal reflects his failure to make the
required
enquiry. The gross irregularity of conducting the enquiry in the
incorrect manner therefore had a direct effect on his
decision.
[9] The third
respondent’s argument that the commissioner did not disregard
the evidence that any instruction to conclude
a contract under the
circumstances would be unlawful overlooks the commissioner’s
finding that at the time the third respondent
gave the instruction
that the contract be signed, the facts before him were still the same
as earlier that evening when he accepted
that there was no deal. His
argument that the commissioner considered that just one member of the
board did not support the conclusion
of the agreement does not assist
him because it is common cause that the approval of all the board
members was necessary. The commissioner
only raised questions about
what the third respondent should have done and made no findings. The
commissioner neither found that
the financial saving created
exceptional circumstances which called for exceptional measures nor
that the third respondent did
not want to prejudice the applicant but
rather save money. The conclusion he reached was that the third
respondent acted on the
instructions of the chairperson and should
have therefore been issued with a lesser sanction. The commissioner
identified the facts
which he needed to evaluate in order to reach a
reasonable decision but failed to evaluate them.
[10] I agree with the
third respondent that there is no merit in the applicant’s
ground for review that the commissioner acted
unreasonably by
considering the procedural fairness of his dismissal including the
appropriateness of the sanction of dismissal.
The argument that the
third respondent sought compensation instead of reinstatement is of
no moment. The commissioner’s conduct
is supported by item 7 of
schedule 8 to the LRA. However, the commissioner reached an
unreasonable decision in finding the third
respondent’s
dismissal procedurally unfair because of the applicant’s delay
in taking and concluding disciplinary action
against him. The third
respondent conceded that the delay in the finalisation of his
disciplinary enquiry was occasioned by the
complexity of the charges
which had been preferred against him.
[11]
The applicant and the third respondent sought to rely on
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
[1]
which allows this Court to interfere with an arbitration award of a
commissioner of the first respondent if it is a decision a
reasonable
decision-maker could not reach on the facts before the commissioner.
In
Sidumo
(
supra)
and
Herholdt
v Nedbank Ltd
[2]
it was held that the conduct of a commissioner is relevant in the
enquiry into the reasonableness of the commissioner’s
arbitration award. Both section 138 of the LRA and the decision in
Sidumo
(
supra
)
require commissioners to act fairly when conducting arbitrations. A
consideration of the totality of the evidence before the commissioner
proves that there is no basis for the commissioner’s decision
that the third respondent’s dismissal was substantively
unfair.
The facts before the commissioner are that the third respondent
contravened a valid rule he was aware of. By virtue of
his seniority
as the acting CEO of the applicant, he knew that he was being
instructed to carry out an unlawful instruction and
that he could
refuse. He however, elected to carry out the unlawful instruction and
instructed that the applicant be bound to a
contract which involved
in an amount in excess of R180 million without the necessary board
approval when there was no time pressure
for the contract to be
signed. The importance of good governance cannot be overemphasised.
With all these facts before the commissioner
his conclusion that the
third respondent’s dismissal was substantively unfair is not
based on the evidence before the commissioner
and therefore
unreasonable.
[12] I am not convinced
that the third respondent acted unreasonably in opposing this
application. In the circumstances granting
a costs order against him
would not be appropriate.
[13] In the premises, the
following order is made:
13.1
The arbitration award issued by the second respondent under case
number GATW 15320 – 11 and dated 21
December 2012 is reviewed
and set aside.
13.2
The award is substituted by the following:
13.2.1
The third respondent’s dismissal was substantively and
procedural fair.
13.3
There is no order as to costs.
_______________________________
Lallie J
Judge of the Labour Court
of South Africa
APPEARANCES
For the
Applicant:
T. Motau SC
Instructed
by:
Chuene Gouse Inc
For the
Respondents:
H Bucksteg
Instructed
by:
Carel J Schoeman Inc
[1]
[2007] 12 BLLR
1097 (CC)
[2]
[2013] 11 BLLR
1074
(SCA)