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[2016] ZALCJHB 14
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Armaments Corporation of South Africa (SOC) Ltd v CCMA and Others (JR1961/13; JR1510/13) [2016] ZALCJHB 14; [2016] 5 BLLR 461 (LC); (2016) 37 ILJ 1127 (LC) (20 January 2016)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case
no: JR1961/13; JR 1510/13
ARMAMENTS
CORPORATION OF SOUTH AFRICA (SOC) LTD
Applicant
and
CCMA
First Respondent
WILLEM
KOEKEMOER,
N.O.
Second Respondent
SOLIDARITY
Third Respondent
J
M
JOUBERT
Fourth Respondent
Heard:
27 August 2015
Delivered:
20 January 2016
JUDGMENT
WHITCHER
J
Introduction
[1]
The applicant (‘Armscor’) launched two review
applications which were due to be heard together, but gave notice
in
its heads of argument that it abandons the application instituted
under case number JR1510-13.
[2]
The remaining application concerns the arbitration award of Koekemoer
Cm (‘the Commissioner’) in which he rejected
Armscor’s
point
in
limine
that
Mr Joubert was not dismissed, but rather that his contract terminated
by operation of law after he failed to obtain security
clearance in
terms of section 37 of the Defence Act.
[1]
The Commissioner found that that Armscor dismissed Mr Joubert and
accordingly the CCMA had jurisdiction to arbitrate, and then,
on the
merits, found that Mr Joubert’s dismissal was substantively and
procedurally unfair, and thus ordered his retrospective
reinstatement.
[3]
Armscor essentially abandoned its jurisdictional review of the award
at the hearing and also accepted the Commissioner’s
findings
that Mr Joubert’s dismissal was procedurally unfair.
[4]
This review application is specifically directed against the findings
made by the Commissioner on the substantive fairness of
Mr Joubert’s
dismissal, and the relief awarded by him. It also concerns the
appropriate relief where it is found that a dismissal
was only
procedurally unfair.
The
arbitration
[5]
In essence, the following material was placed before the Commissioner
in relation to the issues under review.
[6]
In terms of section 37(2) of the Defence Act, which section is
applicable to employees of Armscor:
‘
A
member or employees contemplated in subsection 1(a)
[2]
may
not
be
enrolled, appointed or promoted, receive a commission or
be
retained
as
a member or employee,
unless
such member or employee has been
issued
with the appropriate or provisional grade of security clearance
by
the Intelligence Division.’(Emphasis added).
[7]
Armscor has a number of policies which have their source in section
37(2) of the Defence Act.
[8]
Paragraph 6.6.1 of the Armscor Conditions of Employment Practice
provides that the appointment and employment of an employee
are
subject to obtaining and maintaining an applicable security
clearance.
[9]
Paragraph 5.5.1 of the Armscor Security Clearance Practice provides
that an appointment in Armscor is subject to obtaining and
retaining
a security clearance in relation to the security classification of
the information to be accessed.
[10]
Paragraph 5.15.2.4 of the Security Clearance Practice further
provides that persons who fail to qualify for any grade of security
clearance as a result of a negative vetting content will be dismissed
or their contract of employment terminated.
[11]
Mr Joubert was employed by Armscor from July 1981. At the time of his
dismissal in December 2012, he was employed as a Senior
Manager and
earned a gross salary of R81 920.00. Over the course of his
employment with Armscor, Mr Joubert had been granted
security
clearance certificates (at different grades) by the Intelligence
Division of the SANDF.
[12]
On 26 November 2012, for reasons never explained to Mr Joubert and
Armscor, the Intelligence Division of SANDF refused to renew
Mr
Joubert’s security clearance or to grant him any grade of
security clearance, despite Armscor’s Personnel Evaluation
Division (“APED”) recommending the grant of security
clearance. Armscor informed him of the decision on 7 December
2012.
[13]
On 18 December 2012, Armscor addressed a letter of termination to Mr
Joubert. After citing the provisions of section 37(2)
of the Defence
Act and Armscor’s related policies, Armscor went on to inform
Mr Joubert as follows:
“
You
are hereby informed that you have been
refused
all grades
of
security clearance. Consequently your contract of employment is
terminated with immediate effect. You are further advised of
your
right to appeal within 30 days from the date of this letter, the
decision to refuse you all grades of security clearance should
you so
wish, by personally requesting
a
review
of the clearance by lodging a written request via APED to the
Personnel Security Review Board (PSRB)” (Emphasis added).
[14]
On 7 January 2013, Mr Joubert lodged a request with the Defence Force
for the urgent review of his security clearance and on
9 April 2013
sought reasons from the Secretary of Defence for the Defence Force’s
refusal to grant him any security clearance.
To date of the
arbitration and this review hearing, he has received no response from
the Defence Force.
[15]
At the arbitration, Armscor pointed out that it is not involved in,
and has no control over, the decision-making process of
granting
security clearance certificates by the Intelligence Division of the
SANDF.
[16]
The same holds for decisions by the PSRB, which is established in
terms of section 40 of the Defence Act and is tasked (in
terms of
section 41) with reviewing objections over the refusal of security
clearance.
Grounds
of review
Findings
of substantive unfairness
[17]
The parties agreed in the arbitration pre-trial minute that in the
event that the Commissioner rejected Armscor’s point
in
limine,
and finds that Mr Joubert was dismissed by Armscor, the
Commissioner was to determine the real legal basis for the dismissal
and
whether it was substantively and procedurally unfair.
[18]
In this regard, Armscor contended at the arbitration that, insofar as
Mr Joubert was dismissed for the purpose of the LRA,
such dismissal
was a dismissal for incapacity and that it was substantively fair in
that it was dictated by section 37(2) of the
Defence Act and
Armscor’s corresponding policies.
[19]
Armscor referred the Commissioner to various legal authorities,
including case law to the effect that incapacity can arise
from any
condition that prevents an employee from performing his work and that
an employer may legitimately dismiss an employee
incapable of
performing his obligations arising from the employment contract.
[3]
[20]
Armscor also cited an award in which a Commissioner found
justifiable, on the basis of incapacity, the dismissal of a security
guard who no longer complied with certain security regulations.
[4]
[21]
In essence, Armscor contended to the Commissioner that since Mr
Joubert had been
refused all grades
of security clearance by
the Intelligence Division of the SANDF, he was incapable of
performing his job in any manner and that his
dismissal for
incapacity was substantively fair in that it resulted from a legal
prohibition on employment brought about by section
37(2) of the
Defence Act. His continued employment would have been unlawful as a
consequence of him not having obtained the necessary
security
clearance in terms of the Defence Act.
[22]
In addition, and in line with this, Mr Joubert’s dismissal was
sanctioned by Armscor’s internal policies, which
policies were
based on section 37(2) of the Defence Act.
[23]
In light of these submissions, I find that the issue of incapacity as
the reason for dismissal and the fairness thereof was
squarely placed
before the Commissioner to determine.
[24]
That this was a highly relevant alternative defence
[5]
is apparent from the facts that were common cause before the
Commissioner, read with the case law cited by Armscor to the
Commissioner.
[25]
However, it is apparent from the award that the Commissioner left out
of account the whole of this alternative defence submitted
on behalf
of Armscor. The Commissioner’s only finding that goes directly
to substantive fairness is this:
‘
The
respondent did not prove a fair reason to dismiss the applicant. I
could not accept ‘operation of law’ as a fair
reason to
dismiss the applicant or by this means isolate the applicant from his
basic rights pertaining to fairness’.
[26]
The Commissioner thus failed to consider material facts and
submissions placed before him and accordingly committed a material
irregularity.
[27]
The question is whether this material error caused a substantively
unreasonable outcome, which the SCA in
Herholdt,
[6]
found is reviewable as a species of gross irregularity.
[28]
In summary, an award will be reviewable if the Commissioner ignores
materially relevant facts and submissions (with this being
prima
facie unreasonable), if the distorting effect of this misdirection is
to render the result of the award unreasonable.
[7]
[29]
I agree with Mr Myburgh that incapacity is the correct categorisation
of the basis for Mr Joubert’s dismissal and that
this is
apparent from this commentary by Prof Brassey SC, which was quoted
with approval by the LAC in
Samancor
:
[8]
“
Incapacity
may be permanent or temporary and may have either a partial or a
complete impact on the employee’s ability to perform
the job.
The Code of Good Practice: Dismissal conceives of incapacity as
ill-health or injury but it can take other forms. Imprisonment
and
military call-up, for instance, incapacitates the employee from
performing his obligations under the contract. The dismissal
of an
employee in pursuance of a closed shop is for incapacity;
so
is one that results from a legal prohibition on employment.
”
[9]
(Emphasis added.)
[30]
I also agree that, in line with this authority, Mr Joubert’s
dismissal was fair in that it resulted from a ‘legal
prohibition on employment’ brought about by section 37 (2) of
the Defence Act.
[31]
In addition, Mr Joubert’s dismissal was sanctioned by Armscor’s
unambiguous internal policy provision to the effect
that ‘persons
who fail to qualify for any grade of security clearance as a result
of a negative vetting content will be dismissed
or their contract
terminated’. Given its statutory underpinning (its source being
in section 37(2) of the Defence Act), the
nature of Armscor’s
business and the high levels of security clearance held by Mr Joubert
as a senior manager, namely ‘secret’
and ‘confidential’,
this rule or standard is patently fair and reasonable, as was Mr
Joubert’s dismissal ensuing
from it.
[32]
A consideration of the above facts and submissions – which were
ignored in their entirety by the Commissioner –
demonstrates
that the Commissioner’s finding of substantive unfairness was
unreasonable. Put differently, a failure to consider
these factors
caused an unreasonable result.
[33]
The submissions made on behalf of Mr Jourbert failed to convince me
otherwise.
[34]
A large measure of the submissions concerned the rationality of the
Defence Force’s decision (it being contended that
the decision
was irrational and reviewable), which is of no moment to the fairness
of the decision taken by Armscor, it being a
separate and distinct
process. Armscor has no influence or control over the decision-making
process of the Defence Force and the
review board, and Armscor did
recommend security clearance for Mr Joubert.
[35]
It was further submitted that Armscor ought to have allowed the
review process to run its course before taking a decision to
dismiss
Mr Joubert. By not waiting for the outcome of the review application,
Armscor dismissed Mr Joubert in the absence of proof
that it had
become permanently and objectively impossible for Mr Joubert to be
retained in his position. His incapacity had not
been determined to
be of a permanent nature that warranted dismissal.
[36]
It was submitted that Armscor could have, for example, suspended or
redeployed Mr Joubert, as alternatives to dismissal.
[37]
I agree with Armscor’s counter submissions. Mr Joubert could
not have been deployed elsewhere in Armscor because his
security
clearance was removed in its
entirety
and it would be
unreasonable to expect Armscor to keep a high earning employee on the
books with no work in return, pending a review
process, the duration
of which they had no way of ascertaining. Even at the point of the
review hearing, Mr Joubert’s security
issue had not been
resolved. Armscor was entitled to dismiss him in the interim.
Relief
of retrospective reinstatement
[38]
Even if I am wrong in reviewing and setting aside the Commissioner’s
findings on the substantive merits of Mr Joubert’s
dismissal,
the Commissioner’s order of retrospective reinstatement is
reviewable, as submitted by Armscor.
[39]
Armscor made detailed submissions on the issue of relief at the
arbitration. But, again, the award does not reflect the slightest
application of the mind by the Commissioner to such.
[40]
A fundamental issue not considered by the Commissioner is that, as a
matter of law, a party cannot enforce a contract that
is in
contravention of statutory provisions.
[10]
Yet, this is precisely what the Commissioner did in ordering Armscor
to continue its employment relationship with Mr Joubert, in
circumstances where this is in contravention of section 37(2) of the
Defence Act.
[41]
I was referred to the case of
KZN
Provincial Treasury
[11]
in which an analogous situation arose. The employee had been
dismissed by the treasury, and reinstated in an award by a
commissioner.
The order of reinstatement was in contravention of
section 47 of the Constitution, which provides that public servants
are prohibited
from being members of parliament – the employee
having become one after his dismissal. In setting aside the
Commissioner’s
order of reinstatement, Van Niekerk AJ (as he
then was) held:
‘
I
am, therefore, in agreement with Mr Pillemer, who represented the
applicant, that Dr Abonta’s membership of the National
Assembly
precludes him from employment by the State and that it was not,
therefore, competent for the arbitrator to reinstate Dr
Abonta.’
[12]
[42]
Prof Brassey SC in a commentary on section 193 of the LRA wrote that
‘[r]einstatement or re-employment can be ordered
only if the
employment is lawful’.
[13]
[43]
In short, as Mr Myburgh put it, in circumstances where Mr Joubert’s
employment is not lawful, reinstatement was thus
incompetent
[44]
In conclusion, the Commissioner’s failure to consider these
fundamental issues caused him to produce an unreasonable
decision on
relief.
Procedural
unfairness
[45]
Armscor accepted the Commissioner’s finding that Mr Joubert’s
dismissal was procedurally unfair, but submitted
that six (6) months’
salary would have been an appropriate and fair compensation because
Mr Joubert had gained employment
in mid-May 2013 at a salary of
R81 000.00 per month. I disagree. I consider compensation
equivalent to at least eight months’
salary to be more
equitable considering that his new employment is on a contract basis
(his first being a year’s contract)
and the fact that Armscor
dismissed an employee who had provided 31 years of service in the
absence of any pre-dismissal procedures.
Order
[46]
In the premises, the following order is made:
1.
The
award of the second respondent on the substantive fairness of Mr
Joubert’s dismissal is reviewed and set aside and substituted
with an award that Mr Joubert’s dismissal was substantively
fair.
2.
The
award of the second respondent on the issue of relief (reinstatement
and backpay) is reviewed and set aside and substituted
with an award
that the applicant is directed to pay Mr Joubert compensation in an
amount equivalent to eight (8) months’
pay.
3.
There
is no order as to costs in respect of the review application filed
under case number JR1961/13.
4.
The
applicant is ordered to pay the third and fourth respondents’
costs associated with the review application instituted
under case
number JR 1510/13.
________________________________
Benita Whitcher
Judge
of the Labour Court of South Africa
APPEARANCES:
On
behalf of the applicant: Adv A Myburgh SC (instructed by Bowman
Gilfillan Inc)
On
behalf of the third and fourth respondents: Adv MJ Engelbrecht
(instructed by Serfontein, Viljoen and Swart)
[1]
42 of 2002.
[2]
Section 37(1)(a) provides that the Minister may
prescribe ‘different categories of security clearance to be
issued by the
intelligence Division for various categories of
members and employees, and the employees of the Armaments
Development and Production
Corporation of South Africa Limited.
[3]
NUM & another v Samancor Ltd (Tubatse
Ferrochrome) & others
(2011) 32
ILJ 1618 (SCA); Samancor Tubatse Ferrochrome v MEIBC & others
[2010] 8 BLLR 824
(LAC); Basson et al, Essential Labour Law (2009)
5
th
edition at page 135.
[4]
Mhlungu & another v Gremick Integrated
Specialists
(2001) 22 ILJ 1030 CCMA.
[5]
Alternative to the defence that Mr Joubert’s
contract terminated by operation of law.
[6]
Herholdt v Nedbank Ltd
[2013] 11 BLLLR 1074 (SCA) at para 25.
[7]
Head of the Department of
Education v Mofokeng & others
[2015]
1 BLLR 50 (LAC).
[8]
Samancor Tubatse Ferrochrome v MEIBC & others
[2010] 8 BLLR 824 (LAC).
[9]
Brassey
Commentary
on the Labour Relations Act
[RS 2,
2006] at A8-76, quoted with approval in
Samancor
at para 10.
[10]
City of Tshwane Metropolitan Municipality v
RPM Bricks (Pty) Ltd
2008 (3) SA 1
SCA
at para 13;
Eastern Cape Provincial
Government & others v Contractprops 25 (Pty) Ltd
2001 (4) SA 142
(SCA) at paras 11-12.
[11]
KZN Provincial Treasury v General Public
Service Sectoral Bargaining Council & others
[2006] 6 BLLR 573 (LC).
[12]
At para 10.
[13]
Brassey
Commentary
on the Labour Relations Act
[RS 2,
2006] at A8-146.