Summary of Judgment

1. Introduction

The proceedings were an application in the Labour Court to review and set aside an arbitration award issued in an unfair dismissal dispute. The applicant was the Department of Justice and Constitutional Development (the employer). The first respondent was PSA on behalf of Mukhambi (the employee). The second respondent was the General Public Service Sectoral Bargaining Council, under whose auspices the arbitration was conducted, and the third respondent was Commissioner DP Seopela N.O., who issued the impugned award.

The matter arose after the employee’s dismissal for misconduct and the subsequent referral of an unfair dismissal dispute to arbitration. The arbitration resulted in an award which the department challenged on review. The Labour Court was asked to determine whether the commissioner’s award was reviewable and, if so, what the appropriate substituted outcome should be on the record before it.

The general subject-matter of the dispute concerned alleged misconduct involving the receipt and capture of bail monies, the manner of recording those payments in the employer’s accounting system, a cash shortfall, and the consequences of those facts for the substantive fairness of the employee’s dismissal.

2. Material Facts

The employee was employed by the department as an e-scheduler clerk stationed at the Randburg Magistrate’s Court. Part of her duties included receiving bail monies on behalf of the department. Bail could be paid either by electronic funds transfer (EFT) or in cash. After receipt of bail monies, a bail receipt was to be issued to the payer, and the payment was to be captured in the department’s accounting system as either cash or EFT.

During January 2017, when the employee captured bail monies received, there was a cash shortfall of R170 000 in the department’s possession. The judgment treated as material the employee’s own version that, although she knew that the amount of R170 000 was received by her in cash, she nonetheless recorded the four payments comprising that amount as EFT payments. The judgment noted that this had the effect of concealing the cash shortage, at least temporarily, and that this was the employee’s own explanation for the manner of capture.

The court recorded that the employee did not provide an acceptable explanation for the underlying shortfall itself. On the facts accepted by the court for purposes of the review, the absence of an explanation for the shortage was significant in evaluating what inference should be drawn from the admitted misrecording.

In the employer’s internal disciplinary proceedings, the employee faced a principal allegation of gross dishonesty, based on the deliberate misrecording of the four cash bail payments as EFT payments, and a second principal allegation of theft. The initial disciplinary enquiry found her guilty of gross dishonesty and also guilty of theft in the amount of R20 000, although the judgment observed that the R170 000 was made up of three payments of R50 000 and one of R20 000, and stated that it was not obvious why theft was found only in the amount of R20 000.

On internal appeal, the appeal tribunal held that finding the employee guilty of both theft and gross dishonesty amounted to splitting of “convictions”. It set aside the theft finding but upheld the finding of gross dishonesty.

At arbitration, the commissioner’s award proceeded on the basis of a factual premise that the employee had been found not guilty of gross dishonesty on appeal. On that basis, and because the employee had been exonerated on theft, the commissioner reasoned that the employee had no case to answer.

3. Legal Issues

The central legal questions were whether the arbitration award was reviewable on the basis that the commissioner materially erred in his understanding of the facts and whether, applying the applicable review standard, the outcome reached by the commissioner was one that a reasonable decision-maker could reach on the evidence and issues before him.

The dispute before the Labour Court primarily concerned the application of law to fact within the framework of review, including whether the commissioner’s decision reflected a failure to apply his mind to material facts and whether the decision was unreasonable in the sense articulated in the cited review authority. To the extent that the commissioner’s award rested on an incorrect factual premise about the outcome of the internal appeal on the gross dishonesty charge, the review challenge also turned on a material factual mistake and its consequences for the reasonableness of the award.

A further issue concerned remedy on review, namely whether the matter should be remitted or whether substitution was appropriate, given the court’s view of what the proper outcome was on the facts.

4. Court’s Reasoning

The court approached the review primarily by examining whether the commissioner’s award was grounded in a correct appreciation of the material facts and whether the outcome satisfied the reasonableness threshold applicable to arbitration reviews. It held that the award presented a “clear example” of reviewability because the commissioner based his decision on a “plainly wrong factual premise”: that the employee had been found not guilty of gross dishonesty on internal appeal.

On the court’s analysis, the internal appeal in fact upheld the finding of gross dishonesty while setting aside the theft finding. The commissioner’s contrary assumption was treated as demonstrating a failure to apply his mind to the material facts. The court reasoned that, had the commissioner properly applied his mind to the record and the disciplinary outcomes, he would not have proceeded on that erroneous premise.

The court further evaluated the commissioner’s conclusion that the employee had “no case to answer” against the standard articulated in Sidumo and another v Rustenburg Platinum Mines Ltd and others. It held that no reasonable decision-maker could, on the facts before the commissioner, have concluded that the employee had no case to answer. In particular, the court emphasised the employee’s own version: she admitted that she knowingly recorded cash payments as EFT payments, and she did so to conceal the cash shortage, even if only temporarily.

From those facts, the court drew what it described as the “most natural, probable inference”, namely that, absent an acceptable explanation, on a balance of probabilities the employee took the missing amount and attempted to conceal that by making false entries in the accounting system. The court reasoned that if there were an innocent explanation for the shortage, there would have been no reason for the employee deliberately to misrecord the payments as EFT when she knew they were cash.

The court treated the “splitting” point raised in the internal appeal as not determinative for purposes of substantive fairness on review. It held that whether characterising the misconduct as theft and gross dishonesty involved splitting was “hardly the point”, because either transgression, on the court’s view of the facts and probabilities, clearly warranted dismissal. The court therefore concluded that the department had established grounds to review and set aside the award.

On remedy, the court held that the only proper finding available on the facts was that the employee’s dismissal was substantively fair. It noted that procedural fairness was not in issue, and therefore considered the matter capable of finalisation without remittal. This underpinned the court’s decision to substitute the arbitration outcome with a dismissal of the employee party’s referral.

5. Outcome and Relief

The Labour Court reviewed and set aside the arbitration award issued by the third respondent under the auspices of the second respondent, under case number GPBC 777-18. The court substituted the award with an order that the employee party’s referral is dismissed, which reflected the court’s conclusion that the dismissal was substantively fair and that procedural fairness was not contested.

No order as to costs was made, consistent with the parties’ agreement that costs should not be awarded.

Cases Cited

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

Head of Department of Education v Mofokeng and Others (2015) 36 ILJ 2802 (LAC).

Legislation Cited

No legislation was expressly cited in the judgment text provided.

Rules of Court Cited

No rules of court were expressly cited in the judgment text provided.

Held

The court held that the arbitration award was reviewable because the commissioner proceeded on a materially incorrect factual premise that the employee had been exonerated on the charge of gross dishonesty on internal appeal. The court further held that, applying the reasonableness standard, no reasonable commissioner could have concluded on the facts (including the employee’s own account of deliberately capturing cash payments as EFT payments to conceal a shortage) that the employee had no case to answer.

The court held that the only proper outcome on the record was that the employee’s dismissal was substantively fair, and it substituted the arbitration award with an order dismissing the employee party’s unfair dismissal referral. No costs order was made.

LEGAL PRINCIPLES

The judgment applied the principle that an arbitration award may be reviewed and set aside where the decision-maker fails to apply their mind to material facts, including where the award is founded on a demonstrably incorrect factual premise that is central to the outcome.

The judgment applied the review standard associated with Sidumo and Another v Rustenburg Platinum Mines Ltd and Others, namely that an award is reviewable where the result is one that no reasonable decision-maker could reach on the material before the commissioner.

The judgment further reflects that where the record permits only one proper outcome and procedural fairness is not in dispute, the Labour Court may substitute the arbitration award with the appropriate final determination rather than remit the matter, particularly where the commissioner’s reasoning is undermined by a material misapprehension of the facts.