Brief Summary

Labour Law — Review of arbitration award — Third respondent dismissed for alleged dishonesty after a disciplinary enquiry — Santam Limited sought to overturn finding of substantive unfairness — Third respondent cross-reviewed finding of guilt — Court found that the evidence did not support the finding of guilt against the third respondent, rendering the award reviewable — Dismissal deemed procedurally fair but substantively unfair, leading to an order for reinstatement without loss of benefits — Each party to bear its own costs.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned two review applications heard together in the Labour Court, Cape Town, arising from an arbitration award issued under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA). The applicant in one review was Santam Limited (the employer), and the opposing party was Mr Kooganasen Theo Pillay (the employee), cited as the third respondent. The CCMA and the commissioner, Commissioner L.O. Martin, were cited as the first and second respondents respectively.

The litigation flowed from two disputes that had been consolidated at arbitration: an unfair dismissal dispute (following the employee’s dismissal for alleged misconduct connected to an internal email) and an unfair labour practice dispute concerning promotion (the employee’s non-appointment to a managerial position in a merged/restructured unit). The arbitration ran for an extended period (18 days), culminating in an award dated 7 September 2015.

In the award, the commissioner found that the employee’s dismissal was procedurally fair but substantively unfair, and awarded compensation equivalent to six months’ salary, while dismissing the employee’s promotion-related unfair labour practice claim. Both parties were dissatisfied: Santam sought to review and set aside the finding of substantive unfairness and the sanction-related outcome, while the employee brought a cross-review challenging the finding of misconduct (guilt), aspects of procedural fairness, and the dismissal of his promotion claim. The Labour Court determined both review applications in a single judgment.

2. Material Facts

The third respondent commenced employment with Santam on 1 July 2008 and was dismissed on 16 September 2014 following a disciplinary enquiry. Prior to dismissal, he was appointed (in June or July 2013) as caretaker of the Project Management Office (PMO). A strategy discussion emerged regarding aligning or merging the PMO with the Project Portfolio Office (PPO), with the employee contending that he was mandated to pursue a merger that would create a new combined capability (referred to as the “EPO”) and that the head of the PMO would lead the merged unit. Santam’s position was that any such alignment was subject to leadership buy-in within the relevant business unit.

An Optimization Forum was established to discuss the merger, involving business change representatives and the employee (among others). In December 2013, the employee signed a contract to become the permanent head of the PMO. During February 2014, he was advised to place the alignment process on hold due to restructuring steps being implemented.

On 13 May 2014, the employee was advised of a decision to amalgamate the PMO and PPO, and that the position of head of the amalgamated unit would be advertised internally, with the employee free to apply. The employee was dissatisfied because he expected appointment to the position without a recruitment process. He applied “under protest” but was informed on 19 July 2014 that he was unsuccessful. Ms Marelize Visser was appointed to the relevant leadership post, announced internally with effect from 1 July 2014.

Following this outcome, the employee lodged a grievance asserting that the position had been promised to him. He also sent an email on 2 July 2014 responding to the announcement of Visser’s appointment, objecting to the announcement while his grievance remained unresolved. Santam regarded aspects of that email as dishonest and charged the employee with misconduct, contending that he had falsely asserted that employees’ employment contracts had been unilaterally terminated with immediate effect, allegedly with reference to section 189 of the Labour Relations Act 66 of 1995. The employee was found guilty and dismissed.

The employee referred an unfair dismissal dispute and, separately, on 31 July 2014, referred an unfair labour practice dispute alleging unfairness in Santam’s failure to promote him to the PMC managerial post. These disputes were consolidated for arbitration.

In assessing the facts relevant to promotion, the Labour Court treated as decisive the commissioner’s finding that there was no evidential basis for an express promise by Mr Jan de Klerk to appoint the employee to the role, and that the employee had been afforded an opportunity to compete for the position.

In assessing the dismissal, the Labour Court focused on the wording of the 2 July 2014 email, the context of discussions in the grievance meeting, and particularly what Mr Kevin Wright had said and how the employee understood those statements when he wrote the email. The court regarded it as common cause that the email was distributed to multiple recipients and that the dismissal ultimately rested on the first complaint, namely distributing false and misleading information (the employee having been cleared of the second complaint and its alternative).

3. Legal Issues

The central questions before the Labour Court were whether the commissioner’s determinations were reviewable under the established reasonableness standard, and in particular whether the arbitration award was one that a reasonable decision-maker could reach on the evidence.

On the unfair labour practice (promotion) dispute, the key issue was whether the commissioner’s finding—namely that there was no proof of an express promise of promotion and that the recruitment process was fair—was unreasonable on the record.

On the unfair dismissal dispute, the key issues were whether the commissioner’s finding of procedural fairness was sustainable, whether the commissioner’s finding that the employee was guilty of distributing false and misleading information was supported by the evidence, and whether the commissioner’s remedial conclusion (compensation rather than reinstatement) was consistent with section 193(2) of the Labour Relations Act 66 of 1995.

These issues involved a mixture of fact (what was communicated and understood), the application of legal standards to fact (whether the employer had proved misconduct and whether the award was reasonable), and an assessment of the statutory framework governing remedies for unfair dismissal.

4. Court’s Reasoning

The Labour Court approached both reviews through the established review standard, namely whether the relevant findings fell within the bounds of reasonableness. The court specifically invoked the review enquiry associated with the Constitutional Court’s guidance in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others, emphasising that review is not an appeal and that the question is whether the outcome is one a reasonable commissioner could reach on the evidentiary material.

On the promotion-related unfair labour practice, the court held that the commissioner’s conclusion was reasonable. The employee’s case depended on an alleged promise by De Klerk, but the court accepted the commissioner’s assessment that there was no evidence to substantiate an express promise. The court attached significance to the chronology: the employee’s grievance asserting a promise arose only after he was unsuccessful in the recruitment process. The evidence recorded in the judgment included that Wright had telephoned De Klerk and that De Klerk refuted the allegation. In these circumstances, the court found no basis to interfere on review and dismissed the employee’s review challenge to the unfair labour practice outcome.

On the procedural fairness of the dismissal, the court upheld the commissioner’s finding. It reasoned that the employee had received timeous notice of the disciplinary process, was given the opportunity to be heard, and could call and cross-examine witnesses. Those features were treated as satisfying process fairness.

The court’s principal interference arose in relation to substantive fairness, specifically whether Santam had proved the misconduct underpinning the dismissal. The dismissal ultimately depended on the first charge, the allegation that the employee had distributed false and misleading information in the 2 July 2014 email. The court analysed the allegedly false portion of the email and concluded that, on its face, the employee was not merely asserting an objective fact but was relaying what he said he had been advised by Wright and another manager, in a context where he believed a legal and ethical duty arose to inform affected employees.

The court held that the commissioner’s finding that the employee knowingly disseminated false information was not consistent with the evidence, particularly Wright’s evidence and the transcript of the grievance hearing. The court noted that the commissioner accepted that Wright referred to section 189 in the grievance meeting (albeit, in the commissioner’s view, hypothetically), and that Wright’s arbitration commentary on the email was essentially that the statement was “bizarre and crazy”, rather than a clear evidential refutation that he had not said what the employee understood him to have said. The court treated the employee’s understanding at the time as central: if the employee understood Wright’s remarks to entail that termination under section 189 would follow, the court reasoned that conveying that understanding could not be characterised as the distribution of information that was false and misleading in the manner alleged.

A further component of the court’s reasoning concerned onus. It held that the onus remained on the employer to prove that the information distributed was false and misleading, and that the commissioner’s conclusion that the employee disseminated false information was not justified on the record. On this basis, the court found the guilt finding reviewable because an award inconsistent with the evidence could not be one a reasonable decision-maker would reach.

The court also addressed the commissioner’s refusal to grant reinstatement, treating this as inconsistent with the statutory scheme. It referred to section 193(2), which makes reinstatement or re-employment the required remedy unless one of the statutory exceptions is present. The commissioner had refused reinstatement on the basis that it was “better that the parties part ways” due to the employee’s resentment towards management built up over time, with reference to a meeting on 13 May 2014. The court held that this was not a proper basis to invoke the exception of intolerability in section 193(2)(b). It reasoned that intolerability must be demonstrated on evidence from the employer, and that such intolerability must be connected to the misconduct that led to dismissal; reliance on resentment expressed before the misconduct was committed was treated as an irrelevant consideration and indicative of a failure to apply the statutory test.

In relation to Santam’s review (the “first review”), the court ultimately found that the challenge to the commissioner’s sanction-related conclusion did not warrant interference under review. It reiterated that a commissioner must determine fairness without deferring to the employer, and that the task is not to reconsider sanction afresh but to assess whether dismissal was fair. The court considered that the commissioner had engaged with Santam’s evidence on sanction (including Wright’s rationale) and reached a conclusion within the range of reasonableness. However, because the court found the guilt finding unsupported by evidence, it treated Santam’s review as effectively academic in consequence, while still dismissing it.

Having found the relevant portion of the award unreasonable on substantive fairness and remedy, the court held it was in a position to substitute the outcome because all the material evidence was before it.

5. Outcome and Relief

The Labour Court dismissed Santam’s review application challenging the award.

The court dismissed the employee’s review application insofar as it challenged the commissioner’s dismissal of the unfair labour practice (promotion) claim, and upheld the finding that the dismissal was procedurally fair.

The court reviewed and set aside the arbitration award and replaced it with an order that the employee’s dismissal was procedurally fair but substantively unfair, and ordered Santam Limited to reinstate the employee without loss of benefits.

The court made no costs order in favour of either party, directing that each party pay its own costs.

Cases Cited

Sidumo and Another v Rustenburg Platinum Mines Ltd and Others [2007] 12 BLLR 1097 (CC); 2008 (2) SA 24 (CC); (2007) 28 ILJ 2405 (CC); [2007] ZACC 22; 2008 (2) BCLR 158 (CC).

Legislation Cited

Labour Relations Act 66 of 1995 (as amended), including section 189 and section 193(2).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The Labour Court held that the commissioner’s dismissal of the employee’s unfair labour practice claim relating to promotion was within the bounds of reasonableness and therefore not reviewable.

The Labour Court held that the commissioner’s finding that the dismissal was procedurally fair was supported by the record and not reviewable.

The Labour Court held that the commissioner’s finding that the employee was guilty of distributing false and misleading information (the misconduct forming the basis of dismissal) was not supported by the evidence, rendering the award unreasonable and reviewable.

The Labour Court held that the commissioner’s refusal to order reinstatement was inconsistent with the requirements of section 193(2) of the Labour Relations Act 66 of 1995, particularly in the absence of evidence establishing statutory grounds to depart from reinstatement.

LEGAL PRINCIPLES

The review test applied was whether the award was one that a reasonable decision-maker could reach on the evidence, consistent with the standard articulated in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others.

In misconduct dismissals, the employer bears the onus of proving the employee’s misconduct. A finding of guilt that is not consistent with the evidence is reviewable because it falls outside the range of reasonable outcomes.

Section 193(2) of the Labour Relations Act 66 of 1995 establishes reinstatement or re-employment as the primary remedy for substantively unfair dismissal unless one of the enumerated exceptions applies. A decision-maker must apply the statutory exceptions on the evidence, and a refusal to reinstate must be justified within the framework of section 193(2).

The statutory exception of intolerability in section 193(2)(b) requires evidential support, and the intolerability relied upon must be connected to the circumstances surrounding the dismissal and the misconduct that led to dismissal, rather than unrelated historical workplace sentiments.

Santam Limited v Commission for Conciliation, Mediation and Arbitration and Others (C912/15; C871/15) [2017] ZALCCT 29 (6 June 2017)