IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN
Case no: C 407/98
In the matter between:
SOUTH AFRICAN BREWERIES LIMITED Applicant
BEER DIVISION
AND
DAVID WOOLFREY First Respondent
FOOD AND ALLIED WORKERS UNION Second Respondent
THE INDIVIDUAL EMPLOYEES LISTED ON
ANNEXURE “A” TO THE NOTICE OF MOTION Third and Further
Respondents
JUDGMEN
T
MLAMBO J.
1. This is an application to review a decision of the first respondent under section 33(1)(b) of the Arbitration
Act 42 of 1965 on the grounds that he exceeded his powers.
2. The first respondent’s powers are set out in the arbitration agreement entered into between the applicant and
the second respondent representing the third and further respondents (the employees). Those powers, to the
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extent that they are relevant to this review, are to decide ‘what sanction is fair’ and to then ‘make an
award which s/he deems appropriate and may prescribe a sanction or remedy including
reinstatement’.
3. The first respondent (Woolfrey) conducted the arbitration and, in respect of the employees decided that
dismissal was not a fair sanction. He reinstated them retrospectively but imposed a three and four months’
suspension without pay effected by way of a deduction of wages for the respective periods from the back
pay to which the employees were entitled as a result of their retrospective reinstatement.
4. The contentions advanced on behalf of the applicant by Mr Wallis SC, were:
4.1 the first respondent exceeded the powers conferred on him by the arbitration agreement because he had no
power to impose the sanction of disciplinary suspension without pay;
4.2 he had no power to impose that sanction because an arbitrator cannot ‘impose a sanction which is not
available to the employer’ ;
4.3 the sanction was not available to the employer because there is nothing in the contracts of employment or
any collective agreement permitting the sanction and its imposition would offend the provisions of section
19(1)(e) of the Basic Conditions of Employment Act, no. 3 of 1983.(BCEA)
5. The whole of the applicant’s case is based on the proposition that the arbitrator’s powers to make an award
are limited to the range of decisions available only to the employer.
6. It is trite that arbitrators derive their powers solely from the provisions of the arbitration agreement between
the parties. In this instance clause 2.2 of the arbitration agreement provides:
“The arbitrator shall have the power to make an award which s/he deems appropriate and which may
prescribe a sanction or a remedy including reinstatement.”
The question is therefore whether Woolfrey could, as a sanction, impose a three or four months suspension
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without pay as part of the reinstatement award.
7. It is correct that the effect of a retrospective reinstatement is, inter alia, to restore the employment
relationship retrospectively. It is equally correct that it is impermissible in terms of section 19 of the BCEA
to require employees to work and not pay them their wages. In this context the employer or arbitrator has no
power to order the deduction of wages for work performed. It is also a contravention of this section to set
off from wages due, an amount for shortages or money stolen by the employee.
8. Mr Wallis relied extensively on two english cases in support of his submissions. In Sealand Petroleum
Co. Ltd v Barrat (1986) 2 all ER 360 the employee and the employer had signed a contract which
provided that the employer would be entitled to deduct losses incurred by the employee from his wages. In
Bristow V City Petroleum Ltd (1987) 2 all ER 45 the parties had also signed a contract essentially to the
same effect. In those cases the deduction of shortages or losses from wages, even though agreed to by the
parties, was struck down as unlawful and impermissible. Section 19 also renders such conduct unlawful.
9. The facts in the two English cases are, however, distinguishable from the matter before me. In casu no
work was performed by the employees. Woolfrey found their dismissal to be unfair. He found that instead
of dismissing the employees the applicant should have issued them with final written warnings and suspend
them without pay for three and four months respectively in line with the charges they faced. Was it
permissible and lawful for Woolfrey to award suspension without pay as a form of disciplinary penalty?
10. The recognition agreement between the parties provides for suspension without pay as a form of
disciplinary penalty. During the period of suspension the employment relationship is maintained but the
obligations to tender services and to pay wages are suspended. This form of disciplinary punishment has
been in practice for some time and has also been upheld by the courts in the past. This Court has also held
that suspension without pay as a form of disciplinary penalty is impermissible. See County Fair v CCMA
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& others (1998) 6 BLLR 577 (LC).
11. In casu I see no reason to hold otherwise. It can never be correct that suspension without pay as a form of
disciplinary penalty is impermissible and that it contravenes section 19 of the BCEA. Section 19 is
premised on remuneration or wages becoming due after a tender of services or actual performance by the
employee. In terms of this section it is unlawful to refuse to pay the remuneration due for any reason. The
reason it is unlawful is because the employee has tendered his services or has performed his duties, which is
his obligation and the employer must also fulfil its obligation to pay the remuneration due.
12. I do not agree with Mr Wallis for another reason. The imposition of suspension without pay as a
disciplinary penalty is because the employee has committed some form of a disciplinary breach. An
employer is entitled to take action against employees who misconduct themselves. Once the employer has
decided that instead of terminating the contract of employment it will simply suspend it for a period it is not
acting unlawfully. In fact section 19 is irrelevant to this scenario as no tender of services or performance by
the worker takes place or is required.
13. The fact that Woolfrey awarded the employees reinstatement does not automatically mean that they were
also entitled to their wages. See Durban Confectionery Works (Pty) Ltd t/a Beacon Sweets v
Majangaza (1993) 14 ILJ 663 (LAC) where the Labour Appeal Court upheld an industrial court
determination where an employee was reinstated but made to forfeit seven and a half months remuneration
(or compensation). In view of the fact that Woolfrey found their dismissal to be unfair he had to decide
whether to award them compensation as part of the reinstatement award. The Labour appeal Court in
Johnson & Johnson v Chemical Workers Industrial Union & Others case no PA 15/98 has ruled that
the compensation awarded in dismissal cases is not for the loss of remuneration but is in the form of a
solatium for a wrong perpetrated. The wrong is the infringement of the right not to be unfairly dismissed.
It is therefore correct, as argued by Mr Cheadle, for the second and further respondents, that what Woolfrey
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awarded was compensation based on the employees’ rate of remuneration. What Woolfrey did, therefore,
was to award the workers compensation for the duration of the period of their dismissal but deducted three
and four months compensation. In my view he was entitled to do this.
14. The decision in Consolidated Frame Cotton Corporation v President of the Industrial Court 1986 (3)
SA 786 AD does not alter the position. In that case the Appellate Division (as it was known then) held that
a reinstatement order in terms of section 43 (4)(b) was aimed at a restoration of the “status quo ante the
termination, the change in the terms or conditions of the contract of employment, of the introduction
of the alleged unfair labour practice.” (798 FG). This decision should be understood in the context of
the purpose and objective of section 43(4)(b) of the Labour Relations Act no 28 of 1956 (now repealed).
The objective of that section was to restore the status quo ante pending the final determination of the matter
under section 46(9) of the same Act. Hence an order under section 43(4)(b) meant that dismissed
employees were to be paid their normal wages and they had to tender their services which could either be
accepted or rejected by the employer. A section 43(4)(b) order lapsed if it was not extended. Once the
order lapsed the obligation to pay wages also ceased even if a final determination was not yet made. At the
final determination stage if a court reinstated employees it was not automatically so that wages were also
awarded. Durban Confectionery Works (Pty) Ltd t/a Beacon Sweets v Manjangaza (supra) . The court
had to specifically order payment of compensation which was, invariably, based on the rate of
remuneration.
15. Is it correct that the arbitrator’s powers are limited to what the parties themselves can do? This cannot be
correct for the simple reason that once the matter goes to arbitration (or to court) the arbitrator has power to
confirm what has taken place or undo it. The employer who has dismissed the workers has no power to
reverse the dismissal unilaterally. It therefore makes sense that the arbitrator has that power simply because
he is seized with the matter once one party, usually the employer, has taken a decision. It would be very
impractical for arbitrators to be constrained to what the parties themselves can do. This ignores the fact that
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the decision taken to arbitration has consequences which only the subsequent process of arbitration (or
litigation) must deal with. The Appellate Division in Amalgamated Clothing & Textile Workers Union
of South Africa v Veldspun Pty Ltd 1994 (4) SA 162 at 169FH stated, in relation to the arbitration
process in labour matters, that
“When parties agree to refer a matter to arbitration, unless the submission provides otherwise, they
implicitly if not explicitly (and, subject to the limited power of the Supreme Court under section 3(2) of the
Arbitration Act) abandon the right to litigate in courts of law and accept that they will be finally bound by
the decision of the arbitrator. There are many reasons for commending such a course and especially so in
the labour field where it is frequently advantageous to all the parties in the interests of good labour relations
to have a binding decision speedily and finally made. In my opinion the courts should in no way discourage
parties from resorting to arbitration and should deprecate conduct by a party to an arbitration who does not
do all in his power to implement the decision of the arbitrator promptly and in good faith.”
16. In the Veldspun case the appellate division upheld certain closed shop provisions which authorised
deductions from wages even where same were not authorised by employees. The appellate division rejected
argument that the closed shop provisions contravened section 19 (as argued in casu) of the BCEA. At page
176 E G the court said:
“It is arguable that on a proper interpretation of these provisions the implementation by the
employer of the closed shop arrangement would not inevitably be a contravention of any of their
terms. The complicated and difficult process of interpreting these ambiguous and unclear statutory
provisions is, however, unnecessary in this case. In the first place, it is by no means inevitable that the
nonunion employees would have refused voluntarily to authorise the deduction from their wages. If
they did so authorise the deduction then it is highly unlikely that the employer would be committing
any offence under the Employment Act. I do not agree with counsel’s submission that the threat of
dismissal implicit in the closed shop arrangement would effectively preclude such written authority
being given voluntarily. Thus, even if voluntariness must be implied in s 19(1)(e)(i), it is not inevitable
that the provision would have been contravened.
But even if the implementation of the closed shop arrangement would have necessitated the employer
contravening one or more of the provisions of the Employment Act, the employer would have been
entitled to approach the Minister of Manpower under s 34(1) of the Act for an exemption.”
It is therefore, in my view, not open to Mr Wallis to argue that this decision is clearly wrong. The Veldspun
decision upheld a long standing practice by arbitrators (and courts) when requested to intervene. Mr Wallis
also requested that it would have beeen impractical for the applicant to suspend without pay 52 of the
employees as this would have disrupted production. This argument also lacks merit. The number of
employees involved is a fraction of the total workforce i.e 52 out of 530. In fact the applicant did suspend
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18 of the 52 employees pending the finalisation of the disciplinary process. The decision in Rikhotso &
others v Transvaal Alloys (1984) 5 ILJ 228 (IC) does not help the applicant. In that case the whole
workforce was involved and perhaps in that sense it would be impractical to suspend the whole workforce.
17. It follows that in my view suspension without pay as a form of disciplinary penalty is permissible. I have
further found nothing reproachable in Woolfrey’s award. I therefore dismiss the application with costs
which shall include the costs of two attorneys of attending court.
MLAMBO J.
For the applicant: Mr Wallis SC with Mr Brasso, instructed by Findlay & Tait Inc.
For the 2nd to further respondents: Mr Cheadle of Cheadle Thompson & Haysom.
Date of judgment: 11 January 1999.
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