Brief Summary

Labour Law — Unfair Dismissal — Dismissal of employees for dishonesty — Appellant dismissed twelve employees for allegedly sleeping on duty and being absent from their workstations during night shifts — Employees contended that their dismissals constituted an unfair labour practice — Labour Appeal Court found dismissals to be unfair, ordering reinstatement — Supreme Court of Appeal considered whether the dismissals were unfair despite being lawful — Held, dismissal was unfair as employees initially believed they were entitled to sleep after meeting production targets, and their actions did not demonstrate dishonesty in the context of their established work practices.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an appeal to the Supreme Court of Appeal arising from an unfair labour practice dispute under the Labour Relations Act 28 of 1956. The appellant was Boardman Brothers (Natal) (Pty) Ltd, a manufacturing employer operating a candle-making section at its Ladysmith factory. The respondent was the Chemical Industrial Workers’ Union, acting on behalf of twelve dismissed employees who were union members.

The twelve employees were dismissed on 30 June 1991 following disciplinary proceedings in which they were found guilty of being absent from their work stations, sleeping on duty, and breaching their contracts through conduct characterised by the employer as dishonesty in relation to payment for time not worked. The union sought a statutory determination that the dismissals constituted an unfair labour practice and requested reinstatement.

The Industrial Court found that the dismissals were not unfair. On appeal, the Labour Appeal Court, by majority, overturned that decision, declared the dismissals an unfair labour practice, and ordered reinstatement. The Labour Appeal Court thereafter granted leave to appeal to the Supreme Court of Appeal, where the employer sought to have the Labour Appeal Court’s decision set aside.

The general subject matter was the fairness of dismissal as a sanction, in circumstances where employees on a night shift had adopted a practice of stopping work during scheduled working hours and sleeping, while being paid for the shift, and where the shift hours themselves exceeded statutory limits under the Basic Conditions of Employment Act 3 of 1983.

2. Material Facts

It was common cause that the employees worked in the candle-making section where production operated on a 24-hour basis using two alternating teams, one on day shift and one on night shift. During the relevant period (13 to 17 May 1991), the employees were on the night shift, working four nights per week, Monday to Thursday, from 16:45 to just before 07:00. The shift incorporated two one-hour “lunch breaks” and two short “tea breaks”, resulting in a total working time of eleven and a half hours per night within the shift span.

The extended four-night arrangement had been negotiated in 1986 at the request of workers, primarily due to transport difficulties and an unwillingness to work Friday nights. Neither party appreciated at the time that the extended hours contravened the Basic Conditions of Employment Act 3 of 1983, in that they required work beyond what the statute permitted.

Due to concerns about declining production and chronic failure to meet targets (with retrenchments being contemplated), management installed video monitoring equipment without the employees’ knowledge. The recordings revealed that on the night of 13–14 May 1991 the employees worked approximately 8 to 8½ hours, and on the night of 15–16 May 1991 they worked approximately 7½ to 8 hours. On both nights, all employees stopped working between 02:00 and 02:30, went to sleep in the change rooms, awoke at approximately 06:10, showered, changed, and clocked out. The court treated it as common cause that this was not isolated, but reflected a usual practice on that night shift.

The evidence accepted by the court described a scheme developed by the night shift: workers would forego most breaks, work through until they achieved their target, and then sleep for the remainder of the night. Initially this allowed targets to be met. After a compulsory drying-process time was introduced, they could no longer meet the target within those shortened working hours, yet the practice continued notwithstanding a consistent shortfall in production.

The night shift operated without supervision. A supervisor had been appointed at the employees’ request but was removed after being found sleeping on duty, and was not replaced. Evidence indicated that the other team was monitored when on night shift and was not found sleeping; however, its production levels were generally lower than those of the dismissed employees on comparable shifts.

In January 1991 management proposed reverting to five nine-hour night shifts; the workers declined and counter-proposed reduced hours (18:00 to 06:00 with fewer and shorter breaks). These negotiations were ongoing and management had not yet responded when the events of May 1991 occurred.

Following the video footage, the employees were suspended and charged at disciplinary enquiries with being absent from their work stations without permission, sleeping on duty, and breaching their contracts through conduct described as dishonest in claiming payment for time not worked. An independent labour consultant chaired the enquiry, found them guilty, and recommended dismissal; the employer dismissed them and their internal appeal failed.

It was also clear on the record, and accepted by the court, that dismissal followed because of the finding of dishonesty. Under the employer’s disciplinary code, being away from a workstation and sleeping on duty were not ordinarily dismissible offences on a first occasion, and it was conceded for the employer that, absent dishonesty, dismissal would not have been appropriate.

As to disputed matters, the Labour Appeal Court majority stated that the workers did not dishonestly set out to claim money for time not worked, believing instead that if they achieved their target they were entitled to sleep. The Supreme Court of Appeal noted that, in terms of the Labour Relations Act, it was bound by the Labour Appeal Court’s factual findings; however, for purposes of the appeal, it proceeded on the assumption most favourable to the employer’s argument, namely that the employees became dishonest once they knew they were not meeting targets but continued the practice and accepted payment without disclosing the true position.

3. Legal Issues

The central legal question was whether, on the established facts, the dismissal of the twelve employees constituted an unfair labour practice, notwithstanding that dismissal might have been lawful and even permissible on the assumed premise of dishonesty.

The dispute primarily concerned the application of legal standards of fairness to the facts, requiring an evaluative assessment rather than merely a determination of historical facts. The Supreme Court of Appeal expressly treated the fairness inquiry as involving a moral or value judgment applied to the proven circumstances.

A further subsidiary issue concerned the effect of statutory constraints on appeal, namely that the Supreme Court of Appeal was bound by factual findings of the Labour Appeal Court in terms of section 17C(1)(a) of the Labour Relations Act 28 of 1956, and how that constraint interacted with the ultimate fairness evaluation.

4. Court’s Reasoning

The Supreme Court of Appeal approached the matter from the premise that even if the employees’ conduct could be characterised as dishonest from the point when they were no longer meeting targets, and even if dismissal could be justified as a permissible sanction, the decisive inquiry remained whether the dismissals were fair in all the circumstances. The court emphasised that lawfulness does not equate to fairness and that the fairness determination requires a value judgment on the totality of the circumstances, with reference to established authority on this approach.

Although the Labour Appeal Court’s statement about lack of dishonest intent was described as ambiguous, the Supreme Court of Appeal declined to resolve the ambiguity in a way that would be decisive, and instead assumed in the employer’s favour that the employees were dishonest in the manner contended for. This assumption narrowed the appeal to whether dismissal was nonetheless unfair.

In assessing unfairness, the court endorsed and applied the Labour Appeal Court majority’s contextual factors. It accepted that when the scheme was initially adopted, the workers were able to meet targets and did not intend prejudice; the managing director had conceded that he would not have objected to sleeping after targets were met. This mattered to the fairness evaluation because it showed that the conduct began within a perceived target-based working pattern rather than as a deliberate plan to defraud.

The court then considered the effect of the subsequent change in production conditions (the drying-process time). While this change meant targets could not be achieved within the reduced working time, the court treated the continued practice as partly explained by routine and limited sophistication. It acknowledged that the employees were wrong not to adjust their conduct or disclose their inability to meet the target, but it held that their failure to respond should not be judged without regard to the workforce’s level of understanding and the entrenched nature of the routine.

A substantial mitigating consideration in the court’s reasoning was the illegality of the extended night-shift hours under the Basic Conditions of Employment Act 3 of 1983, coupled with evidence (accepted by the Labour Appeal Court majority) that the hours were physically too demanding. The court accepted that the illegality might not be directly causally linked to the precise sleeping pattern (because the employees did not work even the lawful maximum), but held that it remained relevant to fairness that workers were expected to endure a shift pattern with which they could not cope physically. The court further reasoned that, as a reasonable employer, management should have foreseen the risk that employees would not manage the extended hours and might sleep, particularly given the absence of supervision.

The court also considered comparative and contextual performance factors. It noted that the dismissed employees consistently outperformed the other team, including on night shift, and might therefore have believed—albeit incorrectly—that they could not realistically be expected to do more despite management’s complaints about targets. It regarded the unresolved negotiations about shift hours as part of the context in which the employees continued under an arrangement that was under reconsideration.

In addition, the court placed weight on the employees’ length of service and the absence of prior serious misconduct on the record, as well as the absence of warnings or other corrective discipline before resorting to dismissal. These features supported the Labour Appeal Court majority’s conclusion that corrective discipline, rather than dismissal, ought to have been applied.

Against these mitigating considerations, the court did not minimise the employees’ fault. It expressly recorded that the employees were at fault for failing to inform management of their inability to work the long hours, concealing the sleeping and the extent of non-working, accepting payment for hours not worked over a long period, and disregarding management’s legitimate concerns regarding falling production. However, the court concluded that the dishonesty, even on the employer-favourable assumptions, was not of a kind that inevitably required dismissal, and that the employment relationship had not been shown to be irreparably harmed by the misconduct.

On that conspectus, the Supreme Court of Appeal agreed with the Labour Appeal Court majority that dismissal was a disproportionate response and thus unfair, notwithstanding the employer’s efforts to act properly through disciplinary procedures.

5. Outcome and Relief

The Supreme Court of Appeal dismissed the employer’s appeal and thereby left undisturbed the Labour Appeal Court’s order that the dismissals constituted an unfair labour practice and that the employees were to be reinstated.

The appeal was dismissed with costs.

Cases Cited

National Union of Mineworkers and Others v Free State Consolidated Gold Mines (Operations) Ltd – President Steyn Mine; President Brand Mine; Freddies Mine [1995] ZASCA 109; 1996 (1) SA 422 (A).

Legislation Cited

Labour Relations Act 28 of 1956, including section 17C(1)(a).

Basic Conditions of Employment Act 3 of 1983.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The Supreme Court of Appeal held that, even assuming the employees’ conduct could properly be characterised as dishonest once they continued sleeping and accepted pay while failing to meet targets, the decisive question was fairness. On a value judgment considering all relevant circumstances—including the unlawfully extended working hours, physical demands on workers, lack of supervision, ongoing negotiations about shift arrangements, absence of prior warnings, and the nature of the misconduct—the court held that dismissal was not an appropriate sanction and amounted to an unfair labour practice. The employer’s appeal against the Labour Appeal Court’s reinstatement order was dismissed with costs.

LEGAL PRINCIPLES

The court applied the principle that a lawful dismissal is not necessarily fair, and that the determination of fairness or unfairness in an unfair labour practice dispute requires a moral or value judgment based on the totality of proven facts and circumstances.

The judgment further reflects that the appropriateness of dismissal as a sanction depends on a contextual evaluation that may include mitigating factors, such as the employees’ understanding and intentions at the inception of the conduct, whether working conditions contributed materially to the misconduct, the existence of ongoing workplace negotiations relevant to the conduct, the employees’ disciplinary record and length of service, and whether corrective discipline could reasonably have been pursued instead of dismissal.

The court also proceeded on the basis that, on appeal within the statutory scheme, the Supreme Court of Appeal is bound by the factual findings of the Labour Appeal Court in terms of section 17C(1)(a) of the Labour Relations Act 28 of 1956, while recognising that the ultimate fairness determination remains an evaluative judgment applied to those facts.

Boardman Brothers (Natal) (Pty) Ltd v Chemical Industrial Workers' Union (696/94) [1998] ZASCA 24; 1998 (3) SA 53 (SCA); [1998] 3 All SA 67 (A) [1998] 7 BLLR 655 (A) (26 March 1998)