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[2015] ZALCD 37
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Sibiya v Commission for Conciliation, Mediation And Arbitration and Others (D737/13) [2015] ZALCD 37; [2015] 10 BLLR 1060 (LC) (12 June 2015)
SAFLII
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Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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Policy
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Reportable
CASE
NO: D737/13
In
the matter between:
SITHEMBISO
REGINALD
SIBIYA
Applicant
and
COMMISSION
FOR CONCILIATION, MEDIATION
AND
ARBITRATION
First
Respondent
FIRST
NATIONAL BANK (FNB)
Second
Respondent
JABULANI
NGWANE
(COMMISSIONER)
Third
Respondent
Heard:
14 October 2014
Delivered:
12 June 2015
Summary:
R
eview
application to correct a portion of the arbitration award to
substitute the relief of compensation with an order of re-instatement
-
reinstatement
is the default remedy to an unfairly dismissed employee - made
subject to conditions such as whether continued employment
relationship would be intolerable or it was not reasonably
practicable to reinstate or re-employ – reinstatement not
reasonable
as continued employment not reasonably practicable.
JUDGMENT
CELE J
Introduction
[1]
This is an
application in terms of section 145 of the Labour Relations Act
[1]
to review and correct a portion of the arbitration award dated 11
June 2013, issued by the third respondent as a Commissioner of
the
Bank under case number KNDB11008. The applicant seeks an order
substituting the relief of compensation with an order directing
the
first respondent to re-instate him to his employment on terms and
conditions that are not less favorable to him than those
which
governed his employment before the date of his dismissal. The
applicant, in addition seeks an order condoning the late filing
of
his replying affidavit to the main application and the late filing of
the answering affidavit to the “counter review application”.
The second respondent, (the Bank) opposed the review application and
it also seeks condonation for the late filing of its “counter-
review” application.
Factual
Background
[2]
The applicant was employed by the Bank since 18 July 1994 and based
in Umgeni Business Park Regional office of Self Service
Channel. The
applicant was appointed in October 2006 into the position of Area
Manager, also called the Regional Manager for Kwa-Zulu
Natal. He was
a Senior Manager tasked with looking after the overall performance of
ATMs in respect of balancing and reconciliations
in KZN. He held the
level of senior executives and managerial positions in the Bank,
reporting to the Executive Management of the
Bank. At the arbitration
hearing the applicant chose not to testify, thus leaving the evidence
of the Bank unchallenged, to the
extent that its version is probable.
[3]
30 June of every year marks the end of the financial year of the
Bank. A project clean-up for the period February to June 2010
was
decided by the Bank for all Regional Managers to disclose all
balancing differences in their reconciliations as at 30 June
2010.
The exercise was to ensure that losses were identified and placed
where they had to be in accordance with proper and acceptable
accounting principles so as to start the new financial year 1 July
2010 on a clean slate with no unexplained differences. Reconciliation
in the ATM balancing process was regarded by the Bank as extremely
important, necessitating its approval to be done by senior
management. Such senior management included the following staff at
the Bank’s National Office
in
the Cash of Self Service Channel:
1.
Mr
Luchaan Zeelie, the Head of the Section;
2.
Mr
Pieter du Plessis, the National Balancing Manager;
3.
Mr
Vikesh Herrie, the Chief Financial Officer;
4.
Ms
Suret Greyling, the Head of Finance;
5.
Mr
Marque van der Bergh, also the Chief Finance Officer and
6.
Mr
Pat Anderson, applicant’s line Manager.
[4]
One 16 July 2010 the applicant submitted his reconciliation by an
email to the Executive Management of the Bank. He stated that
it was
the finalized reconciliation for the cost centre 6967. The
reconciliation had four versions with unexplained differences.
According to the Bank there were significant amounts passed by the
applicant into the untraced accounts. On 21-22 July 2010 three
staff,
Ms
Suret Greyling, Mr Pieter du Plessis
and
Mr van Wyk were sent to Kwa-Zulu Natal, (KZN) by Mr Zeelie to
investigate the difficulty experienced by the applicant in its
balancing and reconciliation processes. An internal audit report was
compiled. It reflected the inspection to have disclosed that:
Ø
There
were differences that had been rolling for months with no notes,
explanations or breakdown, which was an unacceptable practice.
A
difference rolled when it was not dealt with in the particular month
in which it should have been dealt with, which was against
accounting
practice. The financial and accounting entries had to be done to
resolve the differences.
Ø
The
spreadsheet was of a complicated nature resulting in the clerks
having difficulty in understanding it. That created a segregation
of
duties problematic, resulting in the applicant as the Regional
Manager doing all the balancing.
Ø
The
journals signed off by the applicant had debits and credits in the
wrong way around, demonstrating that there was no attention
to detail
and accuracy.
[5]
In July 2010 all untraced accounts from the reconciliation submitted
by the applicant were cleared. Yet it was soon discovered
that
significant amounts were again passed into the untraced account,
being R2 506 790.00 and R1 866 330.00 in the general ledger
account
number [……]. Because of the clean-up cost centre
6967 had been standing at zero some three weeks before
the amounts
were passed into the untraced account. Ms Suret Greyling queried this
with the applicant and the applicant emailed
a schedule to her on 6
August 2010 to explain the incident. Mr Zeelie was given the schedule
and he found that there were differences
of amounts in respect of
March, April and May 2010. That discovery was of serious concern to
him as he believed that it had been
agreed that the balancing of
accounts for those months had been finalized.
[6]
According
to Mr Zeelie the detailed analysis of the applicant’s schedule
showed that the differences listed were alarming.
To him, the content
of the document indicated gross mismanagement relating to months
prior to the end of June 2010, a clean-up
period. Mr Zeelie concluded
that documentation and reconciliations that had been received from
the applicant were inaccurate, false,
and a misrepresentation. The
problem was also that G4S, the Banks contracted agent company
servicing the automated teller machines,
the ATMS, might not accept
liability for claims that went so far back in time. According to the
Bank there was no other region
that would have hidden these numbers
and these differences should have been disclosed in the June period
as part of the clean-
up exercise. Mr Zeelie referred to the
difference in numbers as “hidden” because the figures
were not disclosed in
reconciliations. He said that he had lost trust
in applicant’s KZN clean-up exercise because it was incomplete.
[7]
Eight days after the report concerning 21-22 July 2010 KZN
inspection, Mr Zeelie received an e-mail from Ms Greyling dated
18
August 2010, referring to the fact that the
untraced ATM differences account was not a dumping ground to clean up
the balancing.
Ms Greyling was also of concern that the older
the claim got, the least likely the Bank would be able to recover the
lost incurred.
The e-mail mentions that the Chief Financial Officer,
Mr Marque van der Bergh, had requested that the Chief Operating
Officer be
informed of the problem, meaning that the
Financial Manager was requesting that the matter be escalated
further. Mr
Pat Anderson sent an email to the applicant seeking
action and timeframes for resolving what had become an untraced debit
balance
of R4, 7 million. Further correspondence was addressed to the
applicant on the discovered discrepancy.
[8]
Mr Zeelie considered the differences in the account as a risk to
branch banking and as a potential risk to the business unit
itself,
resulting in the breakdown of the trust relationship with the
applicant. The applicant’s gross mismanagement
was
considered to be a very serious operational risk to the Bank’s
business.
[9]
On 9 September 2010, the applicant was suspended by the Bank, pending
the outcome of an investigation into ATM balancing anomalies
and ATM
differences. The applicant challenged the fairness of the suspension.
The first respondent found that the Bank had acted
fairly in
suspending the applicant pending the conclusion of the
investigation. The applicant was subsequently served with
a
copy of the charge sheet. It had three charges of misconduct. The
second charge was broken down into six charges but the applicant
was
found guilty and dismissed by the Bank on the basis of counts 1, 2
and 2.1 which were described in the terms:
Count 1
:
“
Fraud, dishonesty
in terms of paragraph 4.2.1 of the Banks Disciplinary Code and
Procedure in that it is alleged that the balanced
position of cost
centre 6967 was misrepresented by you when submitting your “ATM
balancing to GL reconciliation spreadsheet”
dated 30 June 2010
as per your email dated 15 July 2010 to Mr. V Harrie. The
reconciliation reflected a “Total Balancing
Log” figure
of R 22, 602, 230 whereas the actual balancing log for this cost
centre reflected a figure of R 22, 019, 880
thus resulting in a
variance amounting to R582, 350 spread across various ATM’s.
CHARGE 2
Gross mismanagement in
terms of paragraph 4.3.8 of the Banks Disciplinary Code and Procedure
in that it is alleged that as Area
Manager, FNB Self Service Channel
– KZN:
Charge 2.1
You did not ensure that
there were adequate controls in place and this caused ATM cash
difference losses to the Bank amounting to
R11, 082, 281 during the
financial year ended June 2010.”
[10]
The
charges were formulated in terms of the Bank’s disciplinary
code. Section 4.2.1 of the code describes the offence as theft,
fraud, dishonesty or the unauthorised removal of any material from
the Bank or from any person or premises where such material
is kept.
The disciplinary sanction for a first offence of this nature is
summary dismissal. Charge 1 of the notice simply
utilised the
very wording of the section of the code and alleged “fraud,
dishonesty…” Charge 2 was stated
to be in terms of
section 4.3.8 of the Code. Section 4.3 is however a list of the
types of disciplinary action. The nature
of the offence alleged and
the factual allegations are stipulated in this charge and the charge
fully advises the employee of the
allegations against him. The
particulars of the alleged gross mismanagement were stipulated in 2.1
of the charge. The applicant
filed an internal appeal with no success
as his dismissal was confirmed.
[11]
Aggrieved by his dismissal the applicant referred an unfair dismissal
dispute for conciliation and later for arbitration. At
the
commencement of the arbitration hearing the Bank
indicated
that it did not intend to proceed with the fraud allegation in Charge
1. It was submitted that the wording “fraud,
dishonesty
…” in the context of section 4.2.1 must be understood to
mean fraud or dishonesty. The Bank did,
however, persist in its
contention that there had been dishonesty in that the balanced
position of Cost Centre 6967 had been misrepresented.
It then called
four witnesses to prove that the dismissal of the applicant was
substantively fair. The witnesses were all working
in the Cash of
Self Service Channel and were:
7.
Mr
Luchaan Zeelie;
8.
Mr
Pieter du Plessis;
9.
Mr
Vikesh Herrie and
10.
Ms
Suret Greyling.
[12]
The applicant elected not to testify but called Mr David Jesse, his
neighbour and a friend. He assisted the applicant in drafting
the
papers for the internal appeal. Although
he
drafted the appeal documents, the applicant perused and considered
the appeal prior to submitting it.
The
appeal documents made wild allegations which included accusing senior
management, including Mr Zeelie, of serious criminal offences
and it
alleged that the Bank produced a “
doctored”
and “
false”
document. The Bank was accused of producing such a document for
the purposes of the disciplinary hearing.
Mr
Jesse communicated those appeal documents to the Reserve Bank and he
said that he did it on his own volition, seeking to exonerate
the
applicant of any blame in respect thereof. In his evidence he sought
to negate any suggestion that the employment relationship
of the
applicant and the Bank had irretrievably broken down.
[13]
The third respondent issued an award with the finding that the Bank
failed to prove the link between the mismanagement of the
applicant
by using the automated balancing system and any single activity as
the contributing factor to the loss of R8, 9 m. Further,
he found
that the evidence led on the mismanagement of the G4S account
amounted to gross mismanagement. He consequently found that
the
dismissal of the applicant was substantively unfair. He found though
that the applicant was not entitled to reinstatement and
he ordered
the Bank to compensate the applicant in an amount of money equivalent
to his nine months’ salary.
[14]
The review application of the applicant is premised on the failure of
the third respondent to order the Bank to re-instate
him. The Bank
subsequently filed a “counter-review” application to
challenge the findings on substantive fairness of
the dismissal. An
ex
tempore
judgment was delivered soon after the hearing of this matter. The
Bank has since filed an application for leave to appeal.
Chief
findings by the third respondent on re-instatement
[15]
The third respondent found in his award that:
·
the
applicant was an Area Manager of the region that had been shown to
have produced a significant loss of R8,9 million;
·
he was at
the helm of that region when the unexplained loss was incurred;
·
he still
wanted to be reinstated to that position;
·
he did not
assist in sharing light on how that loss occurred;
·
re-instatement
defied any logic by any known standard;
·
Re-instatement
would not be a good order in the circumstances.
·
The need to
analyze the evidence tendered by Mr Jesse on behalf of the applicant
was irrelevant and insignificant as it was to show
that the
relationship between the parties had not irretrievable broken down.
·
The old standard
of the trust between the parties was not to be used; instead a
consideration was to be made whether it would be
fair to the Bank to
order it to re-instate the applicant.
Grounds
for review: re-instatement
[16]
The applicant contended that the failure of the third respondent to
order reinstatement was unjust when seen against the reasons
given
for it.
[2]
He said that the
award suffered from a logical fallacy and that the third respondent
exceeded his powers in the sense contemplated
in section145 (2) (iii)
of the Act. He said that the third respondent had two contradictory
opinions in his award. On one hand
it was wrong to dismiss the
applicant for the misconduct, but on the other it was in appropriate
to re-instate him because of the
same misconduct. He contended that
when the allegation of fraud was removed at the commencement of the
arbitration hearing, the
reason for dismissal remained unclear. He
stated that there were no circumstances to justify a failure to
re-instate him. He averred
that it was illogical to expect him to
testify to explain how the loss of R8.9 million might have been
occasioned whereas the Bank
had already written off the amount
totaling R33 million which included R8.9 million as part of the
clean.
Ground
opposing the review: re-instatement
[17]
It
was submitted that the applicant’s failure to give evidence in
respect of the alleged misrepresentation and the charge
of gross
mismanagement established that there was a serious operational risk
to the second respondent’s business. While the
third
respondent’s decision on reinstatement relied on this failure
on the part of the applicant, the Bank submitted that
there was also
ample evidence it led in respect of the breakdown of trust and also
evidence of post dismissal misconduct which
made a continued
employment relationship intolerable within the meaning of section
193(2)(b) of the LRA. The submission was that
although this evidence
led by the Bank was erroneously not considered by the third
respondent, it was not rejected.
[18]
The applicant occupied a key position in relation to ATM banking and
financial reporting in respect of ATMs. He was appointed
Regional
Manager at FNB ATM, KZN on 16
October, 2006. He
was a Senior Manager and was responsible for the overall performance
of ATMs in the KZN province.
He had been in various managerial
roles for about 10 years prior to his appointment as Regional
Manager. It was submitted that
the operational requirements of the
Bank in respect of the applicant’s position as Regional Manager
required the applicant
to explain the losses and address the question
of adequate controls. His failure to do so as Regional Manager, it
was contended,
had destroyed the confidence and trust which the
employer required of a Regional Manager.
[19]
The further submission was that the post dismissal misconduct of the
applicant was characterised by ill-conceived and strident
attacks on
the integrity and honesty of senior managers and by serious
allegations against the bank. This conduct thus confirmed
the
irretrievable breakdown of the relationship between employer and
employee.
Evaluation
[20]
The applicant seeks to review the award only on the basis of the
third respondent having failed to re-instate him. Nowhere
in his
submissions did the applicant refer to the exceptions to the general
rule in section 193 (2). The applicable provisions
of the section
read:
(2)
The Labour Court or the arbitrator
must
require
the employer to reinstate or re-employ the employee unless:
(a)
…
(b)
the circumstances surrounding the dismissal are such that a continued
employment
relationship would be intolerable,
(c)
it is not reasonably practicable for the employer to reinstate or
re-employ the employee.
[21]
Therefore while reinstatement is the default remedy to an unfairly
dismissed employee, it is made subject to whether the circumstances
surrounding the dismissal are such that a continued employment
relationship would be intolerable or it is not reasonably practicable
for the employer to reinstate or re-employ the employee.
Reinstatement is therefore a discretionary remedy.
In
Dunwell
Property Services CC v Sibande and Others
[3]
the
Labour Appeal Court held that:
“
[31]
… In order to determine whether or not an unfairly dismissed
employee
should be reinstated, as contemplated in s 193(2) of the
LRA, the overriding consideration in the enquiry should be the
underlying
notion of fairness between the parties, rather than the
legal onus, and that “fairness ought to be assessed objectively
on
the facts of each case bearing in mind that the core value of the
LRA is security of employment”
[4]
[22]
The
Court found that the employment relationship would be intolerable
particularly because the employee had levelled very serious
and
scandalous allegations against certain people in the top and lower
management level of the employer. In
Mediterranean
Textile Mills v SACTWU
[5]
the Court referred to a need to provide evidence in respect of the
alleged intolerable relationship but indicated that the finding
should be based on fairness to the parties. The overriding
consideration is fairness rather than an emphasis on legal onus. The
behaviour of the dismissed employee after such dismissal is one of
the factors to be considered in determining the fairness of
dismissal.
[23]
If the applicant had been reinstated, the probabilities are that he
would continue running the office as he did before his
dismissal. How
he ran the office as a Regional Manager was found by his employer not
to conform to the standards set by Bank. He
excluded his two staff
members in the reconciliation of the accounts. If they did not
measure up to the set standards, he had to
arrange for their
intensive training. If they still proved incapable, he had to
consider counselling them with the possibility
of incapacity hearing.
He held a very high and a responsible position and the Bank was
entitled to rely on him in the running of
its business.
The
applicant was aware of the stipulated balancing procedure which the
Bank prescribed. Control measures provided for in the process
guide
were not followed. The guide requires ATM logs to be “screen
dumped” and signed daily by the team member who
was the
supervisor.
[24]
While he deviated from the prescribed procedures of the Bank, it was
not proved on a balance of probabilities for count 1 that
he
knowingly and deceitfully did so. Inferences were drawn with much
speculation that he knew that his reconciliation was wrongly
done. In
the same vein, he could have run out of his depth, as the July 2010
inspection appears to have revealed. Evidence of the
subjective
knowledge of his wrong doing was lacking, hence the acquittal on this
count. In respect of count 2 the gross mismanagement
was allegedly
constituted by a failure to ensure that adequate controls were put in
place
which caused
(my emphasis) ATM cash difference
losses.
[25]
The problem here was that the Bank having proved the mismanagement
and having proved the losses incurred, thought it was entitled
to a
conviction. It was not. It failed dismally to prove the nexus between
the two aspects it proved. Put differently, there are
other regions
where losses were incurred while correct banking practices were
followed, hence the observation that KZN had a problem
not found in
any other regions. Evidence of the Bank did not prove that the
applicant caused the Bank to suffer any financial loss.
It proved
that its financial losses were incurred at its ATMs. That is not
where the applicant was working. His duty was ex
post facto
accounts reconciliation, meaning after the losses were incurred. Yet
he was charged for causing such losses. He was charged with
consequential as opposed to formally defined misconducts. The Bank
assumed that by proving some parts of the misconduct, it was
entitled
to a conviction. It was not. It had to prove the alleged consequence
flowing from the allegations made earlier in the
charge. Therefore
the Bank charged him for the consequential acts he did not commit and
it proved the commission of the consequential
acts he was not charged
for. It does not help the Bank to seek to hide behind the say that it
did not have to be meticulous as
in the criminal court in framing the
charge. The charges were very clear but the evidence failed to
support the allegations therein
contained.
[26]
The remarks on the acquittal of the applicant have been necessitated
by his attitude which appears to be that of an entitlement,
anything
notwithstanding, to reinstatement. As already indicated, his escape
was not with clean hands, thus necessitating a probe
whether
reinstatement would be fair to both parties.
[27]
The final probe turns on the participatory role of Mr Jesse. He
helped the applicant by drafting papers for the internal appeal.
He
was therefore acting as an agent, furthering the aims and objectives
of his friend. He stood to gain nothing personally in the
appeal. The
applicant signed the appeal papers, having gone through them. The
applicant cannot therefore escape the responsibility
flowing from the
conduct or misconduct of his agent. The applicant is therefore
accountable for wild allegations made in the appeal,
which include
accusing senior management, such as Mr Zeelie, of serious criminal
offences and allegations that the Bank produced
a “
doctored”
and “
false”
document.
[28]
Similarly, the applicant cannot successfully distance himself from
the email of 25 October 2011 containing serious allegations
which was
sent to the press. A conclusion is inescapable that as the
arbitration hearing was due to commence on the following day,
the
motive for the dispatch of this email was to attempt to publicly
embarrass the Bank immediately prior to the arbitration
.
Again the applicant cannot escape the responsibility of an agent he
had briefed on the matter.
The
serious
attacks on the employer and its senior managers by the employee using
his agent are circumstances surrounding the dismissal
which makes a
continued employment relationship intolerable.
[29]
In my view, the second respondent succeeded at arbitration in
demonstrating that
the
circumstances surrounding the dismissal were such that a continued
employment relationship would be intolerable and it was not
reasonably practicable for the employer to reinstate or re-employ the
applicant. The third respondent reached a decision that was
both fair
and reasonable, albeit traversing on a different route.
[30]
In the circumstances, and having reflected on the law and fairness in
regard to the costs order, the following order shall
issue:
1.
The
applicant’s review application on reinstatement is dismissed.
2.
The
applicant is to pay the costs thereof.
________
Cele J
Judge
of the Labour Court of South Africa.
APPEARANCES:
1.
For the
Applicant: In person
2.
For the
Respondent :Adv.P.Flynn instructed by Cowan-Harper Attorneys
[1]
Act Number 66 of 1995, henceforth
referred to as the Act.
[2]
See paragraph 15 above.
[3]
(2011) 32 ILJ 2652 (LAC); See also
First National Bank, a Division of
First
Rand Bank Ltd v Language
,
(2013) 34 ILJ 3103, paragraphs [28] to [30] ;
Zilwa
Cleaning and Gardening services CC v CCMA and Others
(2010) 31 ILJ 780 (LC).
[4]
Equity
Aviation Services v CCMA
(2009) (1) BCLR 111
(CC) paragraph 39
[5]
(2012) 2 BLLR 142
(LAC) paragraph 28.
See also
Billiton Aluminum
SA Ltd t/a Hillside Aluminum v Khanyile and others
(2010) 31 ILJ 273 (CC) at paragraph 43