IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT DURBAN
CASE NO.
D906/01
In the matter between:
NINIAN & LESTER (PTY) LIMITED
APPLICANT
and
THE COMMISSION FOR CONCILIATION
MEDIATION & ARBITRATION FIRST
RESPONDENT
R J T McCANN SECOND
RESPONDENT
EUNICE BABHEKILE LANGE THIRD RESPONDENT
FLORENCE THOKO NGCONGO FOURTH
RESPONDENT
DUDUZILE WITNESS SHABANE FIFTH
RESPONDENT
LILIAN MADLANGA SIXTH
RESPONDENT
__________________________________________________________________
____________
JUDGMENT
__________________________________________________________________
____________
NDLOVU AJ
Introduction:
[1] This matter is brought up by virtue of section 145 of the Labour
Relations Act 66 of 1995, in terms whereof the Applicant seeks
an order reviewing and setting aside an arbitration award, which
was issued on 21 May 2001.
[2] The Applicant is a clothing manufacturing company whose
business comprises several departments, including
manufacturing sections where garments are assembled by
operators, who are also referred to as machinists. The Third to
Sixth Respondents (“the four Respondents”) were employed by
the Applicant as machinists. They were, however, dismissed by
the Applicant on 3 March 1998 after a disciplinary hearing. They
claimed that their dismissals were unfair and, as a result,
referred the dispute to the First Respondent for conciliation.
[3] After the dispute remained unresolved it was, originally,
arbitrated by Commissioner Setiloane, appointed by the First
Respondent. On 12 August 1998 Commissioner Setiloane issued
an arbitration award whereby the dismissal was declared to be
fair. The four Respondents were not satisfied and referred the
matter to this Court for review.
[4] On 19 August 1999 the Court reviewed and set aside
Commissioner Setiloane’s award and directed that the matter be
remitted to the First Respondent for a fresh arbitration by a
commissioner other than Commissioner Setiloane. The fresh
arbitration was conducted by the Second Respondent who issued
his award on 21 May 2001. In terms of that award (which is the
subject of this review), the Second Respondent found that the
sanction of dismissal of the the four Respondents was too harsh,
implying it was unfair. He ordered their reinstatement by the
Applicant, with effect from 1 June 2001. It is against this award
that the Applicant seeks an order by this Court, reviewing and
setting it aside.
The Facts:
[5] On 3 March 1998 disciplinary hearings were held against the four
Respondents and one other employee. They were arraigned on
a charge of:
“The fraudulent use of bonus coupons, i.e. using coupons which
do not pertain to your operation to enhance your
performance/bonus earnings”.
[6] The Applicant kept track of the number of garments produced by
each machinist by a system of coupons, in terms of which once a
garment was complete, the relevant coupon was stuck onto a
self-gummed score sheet in respect of that particular machinist.
The number of coupons, therefore, represented the number of
jobs completed by that machinist on a particular day and this
formed an intrinsic part of the Applicant’s work performance
management and bonus scheme in respect of individual
machinists.
[7] All four Respondents pleaded not guilty to the misconduct
charge, save the Fifth Respondent who pleaded guilty.
[8] Both at the disciplinary enquiry and the arbitration hearing it was
contended on behalf of the Applicant that the four Respondents
were guilty of the misconduct charge, in that:
8.1 False or blank coupons that had been obtained from unknown
sources were wrongfully attached on the four Respondents’
individual daily
score sheets.
8.2 As a result of the above, each of the four Respondents acquired
undue credit in that her daily productivity was wrongfully
increased, which, in turn, unduly increased her bonus earnings,
thereby defrauding the Applicant.
8.3 The efficiencies recorded by the Work Study Department/Costing
Department were inflated, which could lead to incorrect costings
and thereby incorrect selling prices of the Applicant’s product,
which could probably result in a loss of revenue to the Applicant.
[9] It was not disputed by the four Respondents that they attached
false or blank coupons to their daily score sheets and that as a
consequence thereof their individual productivity was inflated,
which gained them undue bonus earnings. In her evidence
before the Second Respondent, the Fourth Respondent admitted
that she was aware that what she did was wrong. The Sixth
Respondent, however, denied awareness of any wrongfulness of
her actions.
[10] Both Respondents (Fourth and Sixth Respondents) contended
that they did what they did upon instructions by their supervisor,
Ms Cookie Moodley. In other words, they were complying with
their supervisor’s instructions. According to them, the idea
behind the whole scam was ensuring the enhancement of Ms
Moodley’s good work performance image to the management.
They admitted that they generally failed to satisfy the daily
target production. They submitted that their low daily
productivity had attracted a lot of criticism of Ms Moodley by the
management, as their supervisor in the production line. Thus, Ms
Moodley issued the instruction to avoid this criticism, which was
attracting her fall out with the management, a possible prelude
to her own dismissal.
[11] The Applicant’s Human Resources Manager, Mr Bernard Gama,
gave evidence which was rather of a formal nature, not directly
implicating anyone of the four Respondents. This evidence
focused mainly on the procedural and operational system
employed by the Applicant in the production department where
the four Respondents were employed as machinists, under the
supervision of Ms Moodley. The system involved, inter alia, the
completion and submission of coupons and score sheets, from
which an individual machinist’s productivity was determined.
[12] Since the Fourth and Sixth Respondents admitted to having
attached false coupons on their daily score sheets and falsely
inflating their daily productivity, as alleged, most of Mr Gama’s
evidence became mere confirmation.
[13] In terms of the Applicant’s operational coupon system aforesaid,
there was an incentive in the form of bonus money which was
payable to an operator only upon the operator having achieved
more than 68% efficiency, which was determined from the daily
score sheets. The higher the operator achieved beyond this
percentage target then the greater the bonus money she would
receive. Therefore, through the scam, the four Respondents
attained regular undue bonuses.
[14] Mr Gama was only employed by the Applicant on 4 May 1998.
The four Respondents committed the alleged misconduct during
February 1998, some three months before Mr Gama joined the
Applicant. For this reason, his evidence could not be held to
incriminate anyone of the four Respondents in any direct way.
[15] Ms Moodley testified that she was the production supervisor at
the Applicant’s factory where she was in total control of Line 17,
which was the line on which the four Respondents worked as
machinists. She was responsible for the quality of garments
produced as well as the production thereof. Therefore, she had
to check step-by-step that the garment was correctly assembled.
In all, there were about 24 machinists working under her
supervision.
[16] The operators were required to cut out the coupon that came up
with the garment. The coupon contained certain information
including the size of the garment, the quantity, and the “standard
minute value” (smv), etc. The last-mentioned aspect related to
the average or standard time allocated to the sewing of a
particular garment by the machinist. At the end of each day the
machinist would attach all coupons she had finished on her daily
score sheet and submit it to the supervisor, who was, of course,
Ms Moodley in the case of the four Respondents.
[17] Ms Moodley further testified that at the end of each day she
would collect the score sheets from each machinist on Line 17
(including the four Respondents) and then would work out the
efficiency percentages thereon in respect of each one of them.
She put the percentages on the score sheets for the various
machinists, which then represented their percentage
performance towards the target for a particular day. In
calculating the percentage she relied on the quantities as
reflected on the score sheets. On the following morning she
would hand the score sheets over to the Work Study Department.
It was important that each score sheet reflected an smv measure
on it, without which it would not be possible to calculate the
efficiency percentage aforesaid. Therefore, a coupon without an
smv measure reflected on it would not be attached on the score
sheet of the machinist concerned, implying that it would be
disregarded.
[18] She denied, under cross-examination, that she had ever
instructed anyone of the four Respondents to stick false or blank
coupons on their score sheets. She further denied that she had
ever instructed any operator to remove coupons from regular
work they had not done and put them on their score sheets. She
also denied that she authorised anyone else to do this. It was
put to her that she used to walk around with a pocket full of
blank coupons which she would hand out to machinists. This,
she also denied. She argued that she would not gain anything
out of what the four Respondents did.
[19] Ms Moodley explained that the garment with a sewing fault would
be returned to the responsible machinist for repairs, which would
then affect that particular machinist’s production time and, thus,
her daily productivity. When a machinist was called upon to
perform repair work not of her own making, such factor would be
taken into account in ensuring that her efficiency percentage was
not adversely affected thereby. The period during which she
performed repair work not of her own making was called “down
time” and was endorsed on the machinist’s score sheet by the
supervisor, in this case, Ms Moodley.
[20] It was put to Ms Moodley that the four Respondents had done
numerous repairs not of their own making and that she, as the
supervisor, had been too busy to acknowledge this on their score
sheets, that is, recording their “down time”. That, as a result,
she had instructed them to attach blank coupons on the score
sheets. She vehemently denied this allegation.
[21] Ms Moodley admitted, however, that Line 17 was always a
problematic line. She attributed this problem to the fact that it
was a new line with new and inexperienced operators. But she
regarded the problem as a teething one. She also admitted that
she was answerable when the Line was under-performing.
[22] She further stated that on the following morning before taking
the score sheets to the Work Study Department she would have
first discussed each score sheet with her manager. The
manager would then sign the score sheet before it was handed
over to the Work Study Department. As a matter of fact, it was
the Work Study Department which eventually detected the scam
when it was realised that operators were reaching 80% efficiency
but the units productivity remained low and did not correspond to
that high efficiency percentage.
[23] Another witness who testified at the arbitration hearing on behalf
of the Applicant was Ms Prem Naidoo. She had started working
for the Applicant in 1985 when she had been engaged as a work
study clerk, involved with the calculation of bonuses for each
machinist. As from 1988 she had been promoted to a training
instructor. Part of her instruction programme pertained to the
bonus system of the Applicant. A machinist was entitled to a
bonus payment when she scored a daily productivity of 68% or
higher. This was one of the aspects that she taught to the
trainees. She had further taught the trainees about the coupon
card system, including the smv system. She stated, however,
that of the four Respondents only the Fourth Respondent
attended her training programme. She could not, therefore,
comment about the other three Respondents in this regard.
The Law:
[24] It is now settled law that an arbitration award is an administrative
act issued by an arbitrator in his or her capacity as a public
functionary in the performance and exercise of his or her public
function and public power, respectively. (Carephone (Pty) Ltd
v Marcus NO and Others [1998] 19 ILJ 1425 (LAC) at 1431
H-I).
[25] In Carephone the Labour Appeal Court (LAC) formulated the
guideline which a review court must follow in determining
whether or not the arbitration award is reviewable, which the LAC
framed as follows:
“Is there a rational objective basis justifying the connection made by the
administrative decision maker between the material properly
available to him and the conclusion he or she eventually arrived
at?” (at 1435, para 37).
[26] In Pharmaceutical Manufacturers Association of SA and
Others: in re: Ex Parte Application of the President of the
RSA and Others 2000(3) BCLR 241 (CC), the Constitutional
Court held that:
“As long as the purpose sought to be achieved by the exercise of
public power is within the authority of the functionary, and as
long as the public functionary’s decision, viewed objectively, is
rational, a court cannot interfere with the decision simply
because it disagrees with it, or considers that the power was
exercised inappropriately. A decision that is objectively irrational
is likely to be made only rarely but if this does occur, a court has
the power to intervene and set aside the irrational decision”. (at
273/4, para 90).
Analysis and Assessment of the Application:
[27] After considering all the evidence adduced before him, the
Second Respondent concluded, among other things, as follows:
“Taking all of the above into consideration in regard to the issue
at hand it therefore presents as a distinct probability that the
Applicants (referring to the four Respondents herein) were
instructed by their supervisor Ms Moodley to affix blank coupons
to their score sheets. It seems that this was done to ensure that
not too much down time was recorded on the score sheets. The
motive behind this presents as being a need by the supervisor to
be able to show to her manager that the performance levels
were kept as high as possible and that not too much time and
effort was spent on down time - so that the supervisor would
then not be criticised for this. Such criticism we heard from Mr
Gama could ultimately have resulted in the supervisor being
punished for such repetitive poor performance. Hence on a
balance of probabilities I find that it is probable that Ms Moodley
as the supervisor did instruct the Applicants (the four
Respondents) to affix blank coupons to their score sheets from
time to time.
Secondly in regard to whether the Applicants knew what they
were doing was wrong in affixing blank coupons to their score
were doing was wrong in affixing blank coupons to their score
sheets, clearly in the case of Ms Ngcongo this was so, as she
admitted so under cross-examination. However she said she had
only done this because she had been instructed to do so by her
supervisor. In regard to the evidence of Ms Madlanga, she
testified that she did not know at the time that it was wrong to
do so. However this evidence is seriously questioned particularly
in the light that she claimed she did not know the percentage at
which a bonus was achieved was 68% and was further very
vague in stating whether she had received bonuses or not. Thus
although she had not been to the training school and therefore
had not received direct training about the bonus scheme, it
seems to me very doubtful that with something as important as
this to an employee she would not have made enquiries from
other employees on the line with her and found out that the use
of blank coupons was contrary to company policy regarding this
system. Therefore on a balance of probabilities I find that Ms
Madlanga was also probably aware that she was doing wrong in
affixing blank coupons to the score sheets.
As the other two Applicants (the Third and Fifth Respondents) did
not give evidence before this arbitration hearing it was not
possible to directly establish whether or not they were able to
confirm that they knew that they were doing wrong in affixing
blank score sheets (coupons??). However it seems reasonable to
assume that similar to the other two Applicants (the Fourth and
Sixth Respondents) in terms of the probability test used above,
that they were also aware that they were doing wrong in affixing
blank coupons to the score sheets.
However what does present as being of crucial importance in this
regard is that it does present on a balance of probabilities that
they were instructed to do so by their immediate supervisor Ms
Moodley.
In regard to the third issue of whether dismissal was an
appropriate sanction for wrongly affixing blank coupons to their
score sheets, what presents as of particular importance here is
that from the evidence before me it presents that they did this
on the instruction of their supervisor Ms Cookie Moodley. In this
regard Mr Gama in his evidence had vindicated that a supervisor
would be trusted more than an operator would be trusted due to
would be trusted more than an operator would be trusted due to
the level of seniority. Thus being given an instruction to do
something by their supervisor, it would be reasonable to expect a
subordinate to follow such an instruction. However the critical
factor here is the lawfulness of this instruction and in reference
to what was mentioned above, it was found that on a balance of
probabilities the Applicants (the four Respondents) were
probably aware that they were doing wrong in affixing blank
coupons to the score sheets. Hence while most of the blame
would fall on the supervisor, nevertheless as Ms Prem Naidoo
testified, both the supervisor and the operator concerned would
be jointly responsible to see that the information sent through to
work study was correct. Hence some responsibility, albeit a
lesser responsibility, would also apply to the operators
concerned.
Taking all the above into account I am of the view that the
sanction of dismissal was too harsh a sanction for the four
Applicants concerned (the four Respondents) as what they did
was probably under the instruction of their supervisor, even
though on a balance of probabilities it seems likely that they
were aware that what they were doing was wrong. What would
therefore present as a more appropriate sanction would be a
final written warning to be given and that furthermore their
reinstatement would not be retrospective”.
[28] In my view, the evidence presented at the arbitration hearing
does not tend to support any justifiability link between it and the
decision made by the Second Respondent and, in relation to the
reasons he gave for the decision (as expressed in his award).
This view is based on the Second Respondent’s own findings, as
well as the inherent probabilities of the case.
[29] The Second Respondent concluded that it was proven, on a
balance of probabilities, that the four Respondents were, indeed,
instructed by their supervisor, Ms Moodley, to attach false or
blank coupons to their daily scoresheets. Nevertheless, he found
that what the four Respondents did was wrongful and, further,
that they knew, as at the time they did it, that it was wrongful.
[30] In our law there is no justification on the part of a subordinate to
obey an unlawful instruction given by his/her superior and
particularly so, as in the present case, where such subordinate is
aware that the instruction is unlawful. Even in a war scenario,
the order given to a soldier by his/her commander must have
been a lawful one, before the soldier may justifiably act upon it.
As for the test applicable in determining the lawfulness or
otherwise of the order or instruction, the learned authors
Burchell and Mitchell had this to say:
“The test is whether objectively viewed the order is lawful or
unlawful. If it would appear to a reasonable person (rather than a
reasonable soldier) that the order is unlawful, the soldier ought
not to obey it and if he does, his act is unlawful and he is liable to
punishment”.
(Principles of Criminal Law”, 2nd Edition, 1999, at 181-2).
See also: S v Banda 1990(3) SA 466 (B), at 485 E-H.
[31] In Banda Friedman J stressed that, for the purpose of this test, a
reasonable soldier should not be regarded as different from a
reasonable civilian. In other words, an objective test is applied.
That being the case, there is no way that Ms Moodley’s professed
instruction (assuming she gave one), objectively viewed, could be
lawful, as, it would have required the four Respondents to
commit a criminal misconduct. Therefore, I do not accept it as a
lawful defence that the four Respondents did what they did
because they were complying with Ms Moodley’s instructions.
[32] The four Respondents’ motive for the transgression was
irrelevant, for the purpose of determining their guilt or otherwise
of the transgression. In other words, whether the four
Respondents’ motive was for the protection of Ms Moodley’s
position to the management or for their own personal pecuniary
gain, in the form of bonus earnings, was irrelevant on the
question of whether or not they were guilty of the misconduct
charged. This would only be relevant on the question of
sanction. My understanding of the Second Respondent’s finding
on this point was that he also saw it the same way.
[33] The misconduct in question involved the element of dishonesty of
a very high and serious degree, as between employer and
employee, and which, in my view, rendered the continued normal
working relationship and trust between the Applicant and the four
Respondents intolerable, if not utterly impossible.
[34] Apart from the evidence of the Fourth and Sixth Respondents,
the Second Respondent seemed to put reliance on the testimony
of Mr Gama in concluding that Ms Moodley instructed the four
Respondents to perpetrate these wrongful and dishonest acts.
Mr Gama had testified, among other things, that Ms Moodley, as
supervisor, could probably ultimately be punished (including
being dismissed) for the poor performance of the four
Respondents. However, I fail to appreciate how Mr Gama’s
testimony could possibly directly implicate either Ms Moodley or
the four Respondents in the perpetration of this transgression.
Mr Gama was not yet there when the misconduct was committed.
His evidence could, therefore, be accepted only to the extent that
it was admitted by the four Respondents. In any event, as I
pointed out earlier, his evidence remained one of a formal
nature, whose importance was, it seems to me, over-emphasized
in the mind of the Second Respondent.
[35] The Second Respondent made a negative credibility finding
against the Sixth Respondent. He essentially found that the
Sixth Respondent was not telling the truth when she said she was
not aware that what she did was wrong. The Third and Fifth
Respondents did not testify at the arbitration hearing. However,
the Second Respondent made what he regarded as a “reasonable
assumption” and found that they also committed the
transgression, well knowing it to be so. He also held that they
did this on instruction by Ms Moodley.
[36] I am unable to understand how the Second Respondent arrived at
this conclusion. Whilst there was evidence implicating the Third
and Fifth Respondents in the perpetration of the transgression,
there was no admissible evidence presented to the Second
Respondent exculpating them, or even suggesting that they were
also instructed by anyone to commit the misdeed. The Fourth
and Sixth Respondents did not, as witnesses, give any evidence
which tended to exonerate the Third and Fifth Respondents,
except only trying to save their (the Fourth and Sixth
Respondents’) own skins.
[37] Significantly, under cross-examination, the Fourth Respondent
conceded that she did not hear Ms Moodley giving the same
instruction to her co-Respondents, namely, Dudu (presumably
the Fifth Respondent) and Eunice (presumably the Third
Respondent). (Arbitration record, at page 127 of the
Bundle).
[38] The Sixth Respondent testified on her own behalf only. Among
other things, she stated:
“I was doing the repairs (tape unclear) Cookie used to issue blank
coupons during the repair process (tape unclear) proceed with
(tape unclear) for placing blank coupons (tape unclear) I had to
come back on the day of the hearing in the meeting I (tape
unclear) and I told them that I was acting on instructions from
my supervisor and I gave my explanation why I used those blank
coupons but I was dismissed....” (Arbitration record, at page
159).
[39] Under cross-examination, the Sixth Respondent said she could
not recall whether anyone else witnessed Ms Moodley giving her
the blank coupons. (Arbitration record, at page 162). She
further said that she did not challenge Ms Moodley’s instruction
but simply carried it out. (Ibid, at page 166).
[40] I am, therefore, mystified, really, on what basis the Second
Respondent deemed it proper and competent for him to make
the so-called “reasonable assumption” and treat the Third and
Fifth Respondents on the same basis as the Fourth and Sixth
Respondents, who adduced evidence. In my view, the Second
Respondent misdirected himself in this regard. Indeed, his
“reasonable assumption” benefitted the Third and Fifth
Respondents when he apparently conclusively assumed that they
were similarly instructed by Ms Moodley to use false or blank
coupons in the manner that they did.
[41] Indeed, as I have said earlier, the Second Respondent appeared
to accept that the four Respondents were guilty of the
misconduct charged, but only that the sanction of dismissal was
rather too harsh. That is why he felt that a final written warning
would have been more appropriate. However, in my view, the
transgression was serious enough to have justified and entitled
the Applicant to impose a summary dismissal on the four
Respondents. The fact that the Second Respondent found the
four Respondents to have “probably” been instructed by Ms
Moodley did not, to my mind, render their misconduct less
serious and to justify a more lenient sanction. The Code of Good
Practice provides, inter alia, as follows:
“(4) Generally, it is not appropriate to dismiss an employee for a first
offence, except if the misconduct is serious and of such gravity
that it makes a continued employment relationship intolerable.
Examples of serious misconduct, ....., are gross dishonesty, .....”
(Item 4, Schedule 8 to the Act).
[42] In my view, the four Respondents’ transgression did involve gross
dishonesty. They fraudulently acquired undue financial gains at
the expense and to the detriment of the Applicant. To my mind,
this was an illegal operation so serious that it had the potential of
crippling the viability and survival of the Applicant. Indeed, the
four Respondents bit the hand that was feeding them. If
employers should be disabled to rid their workplaces of grossly
dishonest employees, such as in the present case, then they
would better simply close down their business operations until
the workplace is relieved of such heinous elements by some
other means.
[43] The Second Respondent appeared to have based his conclusion
that the sanction of dismissal was too harsh on his finding that
the four Respondents committed the misconduct, “probably” on
the instructions of Ms Moodley, who was herself not even
charged with the misconduct. This perception on the part of the
Second Respondent suggested that the Applicant was, therefore,
not consistent in the treatment of its employees. It seems to me
the Second Respondent was missing the point here. In the first
place, the Applicant never believed that Ms Moodley committed
any wrong, even if the evidence before the Second Respondent
might have aroused some suspicion that Ms Moodley was
possibly or probably aware of what was going on. Whatever Ms
Moodley’s real status was in this regard, the fact of the matter
was that the Applicant could not reasonably have been expected
to retain such dishonest employees (the four Respondents) in its
employ. By the way, it was revealed that Ms Moodley also left
the Applicant (albeit of her own accord) shortly after the four
Respondents’ dismissal.
[44] I am, accordingly, satisfied that the Second Respondent’s
decision (as expressed in his award) was not rationally
objectively justifiable in relation to the material properly available
and presented to him at the arbitration hearing, taking into
account the reasons he gave for the decision.
[45] My finding, therefore, is that the dismissal of the four
Respondents by the Applicant on 3 March 1998 was both
substantively and procedurally fair.
Order:
[46] In consequence whereof, I make the following order:
46.1 The award issued on 21 May 2001 by Commissioner, Dr R
McCann, under case No. KN16712 is hereby reviewed and set
aside and is substituted therefor with the following.
“The dismissal of the Applicants was both substantively and
procedurally fair”
46.2 There is no order as to costs.
______________
NDLOVU AJ
Date of Judgment : 8 May 2003
Appearances:
For the Applicant : Adv P Schumann
Instructed by : Millar and Reardon
For the Respondents : Adv D S Rorick
Instructed by : Seltzer Inc.