What is the appropriate test to be used to determine fairness in labour disputes?

‘Law has no definition of ‘common sense’ at least that I am aware of. The standard of ‘reasonableness’ is a fuzzy standard that posits an average person and bounces whatever issue is at hand, off of that fiction.’

-        Cliff Gilley

Since the Sidumo judgement[1], the way labour disputes are arbitrated or adjudicated had shifted from the ‘reasonable employer’ standard to the ‘reasonable decision maker’ standard[2]. On the face of it there would not seem to be much difference between these two schools of thought, however, the difference between these two standards have serious practical- and financial implications for employers – especially as arbitrators and our judiciary now in effect, through arbitration awards and judgements, prescribes to employers as to what the employer’s rules should be and to what extend the employer should apply these rules, as I will demonstrate herein – which (it seems) the Sidumo judgment initiated contrary to its specific intentions- and provisions of the Labour Relations Act.  

Not sufficient emphasis is placed on- or consideration given to the fact that workplace rules differs, and that it does so for various reasons, and I will return to this aspect of workplace discipline later herein. Furthermore, different industries have different legislation applicable to it i.e. compliance with the provisions of the Road Traffic Act would be essential for a driver employed in the transport industry whereas this has no work related influence on the Confectioner to whom the provisions of the Health Act will apply more prominently. Workplace rules- and the severity of a transgression will therefore be applicable in accordance with the provisions of legislation pertaining to the employer’s operations as non-compliance will affect the employer directly albeit through contractual- or legislative obligations which could result in civil- and/or criminal proceedings against the employer where the employer fails to comply.

An administrative clerk being intoxicated whilst on duty is a less serious offence compared to that of a driver or blockman being intoxicated whilst on duty for the simple reason that the risk of serious (or even fatal) injury too self and others are much higher with the driver or blockman, and that therefore, preventative measures- and disciplinary sanctions would be applied more severely to the driver or blockman for example in such an instance compared to the action taken against the administrative clerk. This, one would think to be common sense. However, and since the Sidumo judgement, our dispute resolution institutions seem to have a total disregard- or failure to comprehend this concept.

I recently had an interesting matter at the CCMA related to an issue where the conduct of an employee could have caused a serious risk of food contamination in the community in which the retailor operates in, but the Commissioner brushed it off as insignificant. I will return to this matter later herein and demonstrate that the ignorance- or failure by our dispute resolution institutions to consider the operations- and national legislation applicable to the particular industry the parties to the dispute operates in, could result in serious negative consequences, even to the imprisonment of the employer. To have adopted the kind of approach our arbitrators and judiciary have, would in any event be contrary to the contents of Sidumo in which it quoted an extract from the finding in NUMSA v Vetsak Co-operative Ltd and Others 1996 (4) SA 577 (A) and reported at (1996) 17 ILJ 455 (A) in which the Appellate Division clearly stated that:

‘Fairness comprehends that regard must be had not only to the position and interests of the worker, but also those of the employer, in order to make a balanced and equitable assessment. In judging fairness, a court applies a moral or value judgment to establish facts and circumstances (NUM v Free State Cons at 4461). And in doing so it must have due and proper regard to the objectives sought to be achieved by the Act’[3].   

Definitions

It is necessary to look at various definitions before proceeding:

Definition of reasonableness:

Black’s Law Dictionary defines reasonableness as: ‘Fair, proper, or moderate under the circumstances.’

West's Encyclopaedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc.: ‘The term reasonable is a generic and relative one and applies to that which is appropriate for a particular situation. In the law of Negligence, the reasonable person standard is the standard of care that a reasonably prudent person would observe under a given set of circumstances. An individual who subscribes to such standards can avoid liability for negligence. Similarly, a reasonable act is that which might fairly and properly be required of an individual’.

Note that both definitions include the phrase ‘under the circumstances’.

In determining a dispute such as the fairness of a dismissal of an employee, the arbitrator or judge must consider whether the employee’s conduct was fair- and whether dismissal was a fair sanction under the circumstances and on the evidence presented – in the presiding officer’s opinion. As indicated in my previous article, ‘Testing employees for drug abuse in the (South African) workplace’, every individual’s perception of what constitute as reasonable, may differ, and the following explanation will probably be the most appropriate:

‘The so-called reasonable person is a creation of legal fiction. Such a person is really an ideal, focusing on how a typical person, with ordinary prudence, would act in certain circumstances.’

Background

Very briefly, Mr. Sidumo was employed as a security officer responsible for searching staff when reporting off duty. The employer was suffering losses. It was established that Mr. Sidumo did not perform his duties in terms of the employer’s requirements and that Mr. Sidumo in response hereto stated that he did not receive adequate training when transferred to his new post which was at a high security facility. Mr. Sidumo had almost 15 years’ service and a clean disciplinary record. Mr. Sidumo was dismissed from his employment for negligence and failure to follow procedure. Mr. Sidumo appealed internally against his dismissal but was unsuccessful. He then referred an unfair dismissal dispute to the CCMA.

The arbitrating commissioner found that although Mr. Sidumo was guilty of misconduct, dismissal would not be the appropriate sanction as Schedule 8 of the Labour Relations Act and case law prescribes the concept of progressive discipline which the employer failed to apply especially considering Mr. Sidumo’s long service- and clean disciplinary record. The commissioner also found that the employee’s misconduct did not result in a total breakdown of the trust relationship. The commissioner re-instated Mr. Sidumo on a final written warning valid for three months and three months’ compensation payable to Mr. Sidumo.

The employer then applied for review of the arbitration award at the Labour Court. The Labour Court found that the arbitration award did not contain any reviewable irregularity and dismissed the application for review. The employer then approached the Labour Appeal Court which held that although some of the commissioner’s reasons for re-instating the employee were questionable, dismissal was never the less too harsh a sanction and upheld the commissioners’ decision. The employer then approached the Supreme Court of Appeal which held that dismissal was an appropriate sanction. The matter was then referred to the Constitutional Court for determination.

Constitutional Court Judgement

Observations

It is evident throughout this case, from CCMA arbitration proceedings, review at the Labour Court, appeals at the Labour Appeal Court and Supreme Court of Appeal to the conclusion of this matter at the Constitutional Court, that the following issues were not raised- nor was there any consideration given to the following:

·        Disciplinary Code: It must be noted that the employer had a disciplinary code in place which probably had been concluded after negotiations with the representative trade union after consideration of the rules pertaining to the employer’s specific industry, national legislation regulating the industry and the degree of severity of the transgression of each particular rule.

·        Schedule 8 is a guideline: It must furthermore be noted that the LRA promotes collective bargaining in the workplace as it specifically recognises the difference in operational requirements between different industries. There is the perception that trade unions only tend to negotiate wages. This perception would be incorrect. Another point of note is the fact that in several cases it was held that the Code of Good Practice as contained in Schedule 8 of the LRA, is merely a guideline.

·        Purpose- and provisions of the LRA: I am of the opinion that the provisions of an internal disciplinary code, which was established as a result of negotiations between the employer and the employee’s trade union, should at all times get preference over the suggested provisions of Schedule 8 of the LRA in any event, as such a negotiated disciplinary code is the result of the employer and the employees regulating themselves the conditions of their working environment – which is exactly what the legislators had in mind when drafting the LRA and provided inter alia for the concept of bargaining councils, collective bargaining / agreements and workplace forums.

·        Difference in severity of non-compliance: As mentioned above, allthough staff may be employed by the same employer, the applicable disciplinary action could vary, even for the same offence.

 Reasonable person test:

Since the Sidumo judgement, our courts will not easily interfere with an arbitrating commissioner’s decision where the judge is of the opinion any reasonable person could have reached the conclusion the arbitrator had under the circumstances.

To this extend our courts have gone as far as to say that the arbitrating commissioner’s decision does not have to be the correct decision, and that the court will not interfere with that decision.[4] This judgement seems to throw everything that constitute fairness, out of the equation, and this is NOT what the Sidumo judgement had in mind:

‘…Section 145 therefore must be read to ensure that administrative action by the CCMA is lawful, reasonable and procedurally fair…’[5]

It continues at paragraph 106 to reaffirm this requirement in terms of the Constitution.

For a judge to state that the commissioner’s decision does not have to be the correct decision provided any reasonable decision-maker could have reached such a decision, would furthermore also be clearly contrary to the provisions of the Labour Relations Act (LRA) which clearly expects from the employer not to act unfairly towards an employee.[6] In the same manner, an arbitrating commissioner’s decision should also be fair towards all the parties and where a decision is incorrect, it clearly cannot be said to be fair. Where a decision is clearly incorrect (and therefore unfair), such a decision should stand to be reviewed regardless if a person could reasonably have come to the (incorrect and unfair) decision, otherwise it is contrary to the spirit- and intention of the provisions of Sidumo, the LRA, and the Constitution (as per paragraphs 105 and 106 of Sidumo) as it obviously causes a grave injustice to the party to the dispute against whom the award was made as I will demonstrate below.

It is clear from some arbitration awards issued out of the CCMA that commissioners now, and possibly due to the Labour Court’s reluctance to interfere citing Sidumo, issues binding awards without much thought and consideration of specifics as it would be very difficult for a party to a dispute, to place the decision on review. Where a presiding commissioner has little- or no knowledge or experience of the specific industry in which the dispute originated, presenting a case at the CCMA has become challenging, as an arbitrator could rule that a standard which is well established-, general knowledge- and practice in an industry, to be unfair – and our courts may very well refuse to interfere with such a decision.

For example:

It is general knowledge within the retail industry that employees may not consume any items without permission or which had not been paid for – regardless of the value of such an item. The reasons for this rule is very simple (common sense I would think) and not limited to the following:

·        First and foremost, the item consumed by the employee belongs to the employer and by consuming the item without permission or without paying for it, the employee is in effect stealing the employer’s property, and clearly destroying the trust relationship on which any employment relationship is based;

·        The employee may be allergic to the item- or some of its ingredients, which could result in a medical condition and possible severe effects on the employee. In such an instance this may result in the employee needing medical attention and obviously paid sick leave. In some situations, severe allergies could be fatal;

·        Consumption of food or drink is in terms of health regulations strictly forbidden in production departments as food contamination holds a serious risk to the health of the employer’s customers and could have serious consequences not only for the employer, but also the community in which the employer operates;

·        Consumption by employees for items not paid, poses a serious financial loss for the employer i.e. if an employer employs 200 staff and only 10 of those employees consumes for example each a pie (selling at R18-00) per week, the loss for one week would be R180-00. This does not seem much, but the loss would calculate to R774-00 per month, or R9 288-00 per annum, and if you have four stores, your loss, just on this one product would calculate to R37 152-00 per annum – which started at loosing R25-71 a day. This is a serious reality in the retail industry and more common that would generally be believed. In two years we have taken over two stores which were on the brink of bankruptcy, mostly due to theft (both staff and customers). I have dealt with retail stock losses extensively in a previous article.

There is a substantial number of case law in place in which it was clearly established that regardless of the value of the item, where the employee misappropriates the employer’s property wilfully, the trust relationship had broken down and warrants dismissal.[7] Given the above-mentioned reasons for the employer’s rule, there should be absolutely no circumstances which could warrant not terminating the employee’s services. Yet, and since the Sidumo judgement, commissioners seem to ignore common sense and existing case law.

Case in point: In an unreported matter, the employee admitted to consuming the employer’s property (food which the employee dished up- and consumed out of a bread baking pan and milk from the bakery) without authorisation, without paying for it and furthermore risking food contamination. The employee’s excuse was that he was hungry and that the remainder of the milk would have been thrown away as there was no further use for it on that day – which is not true. The employee furthermore had no explanation for the balance of the food he consumed, and made no effort to explain his failure to either obtain permission- or to pay for the food. This was clearly of no concern to the commissioner. The employee obtained a Default award in his favour in which the arbitrating Commissioner ruled that under the circumstances (that the milk would possibly have been thrown away) dismissal was too harsh a sanction. What absolute nonsense!

Does the commissioner buy a two litre milk today, make himself a cup of coffee and then discards the remaining milk as he in all probability would not use it again that day? I don’t think so, as this is the reason fridges had been invented in which remainder perishable items can be stored for future use as all perishable items have expiry dates and can be preserved up to that date. Common sense one would think – but, respectfully, not to the arbitrator in this matter. The Commissioner furthermore had a total disregard for well-established case law related to theft in the workplace. I am adamant in my opinion that an arbitrator familiar with the operations of the retail food industry would have reached a different conclusion – this however, is not grounds to place the ridiculous ruling on review. 

Would any reasonable person had come to this conclusion? That would depend on if the person discards the remainder of an item after the initial use and do not preserve it in a fridge for later use. Is this possible? Yes, it may well be and therefore ‘reasonable’, hence and technically in accordance with the manner in which Sidumo is applied by our dispute resolution institutions, our courts may not see any reason to interfere in this decision on this basis. To me this would be absurd, yet, it is indeed, and since Sidumo, the findings of our Labour Courts as I will demonstrate below.

The conciliation commissioner after rescission of the award was granted, continued to make the following comment: 

‘It is not as if the employee consumed caviar and salty crack snacks.’

The conciliation commissioner clearly failed to gasp the seriousness of the risks of food contamination and the rules pertaining to food preparation in accordance with certain religious believes, let alone the fact that the employee admitted to theft, which clearly had minor (if any) consideration by the commissioner.

The LRA specifically provides for collective bargaining in industries. The reason for this is that industries are different, each with its own specific statutes which may be more prevalent in one industry than in another. Each industry therefore has its own unique problems which requires its own regulatory measures. The office worker consuming the milk (supplied daily to staff for coffee) cannot be compared to staff working in a bakery where items are produced for sale to customers and the staff consumes the ingredients. Neither can any staff member, without permission, claim ownership on the milk supplied to staff during coffee breaks and merely decide to take it home, as he has no authority to do so – even Sidumo recognises this. Yet, our Labour Courts seems to have condoned these types of thefts in the workplace.

If this is the route labour dispute resolution is taking in South Africa, then I am afraid it not only holds serious economic consequences for us, but also serious health risks – especially in the retail food industry as the arbitrator clearly has no idea what the consequences could be for a community (not to mention the employer) effected by food contamination – or are we going to wait for it to happen and then blame the employer for failing to take preventative measures?

Maybe the time has come for arbitrators to have specific experience in the industry which the dispute originated, over which the arbitrator will be presiding?

For a representative to sit at a dispute resolution institution and having to explain at great lengths why a specific industry has a specific rule in place is not only time consuming, but frustrating. At the end of it all, the presiding officer (who may have no experience of the industry) may then also rule that particular rule to be unfair, or the employee’s disregard for the rule to be fair – under the circumstances – as demonstrated herein.

The LRA promotes collective bargaining within each industry, and the resolution of disputes by each industry through Bargaining Councils. This is ideal, as at Bargaining Council level, the dispute resolution officers should be familiar with the rules pertaining to that industry and the reason for the existing of the rule/s. Granted, some Commissioners acting as dispute resolution officers at Bargaining Council level may not be familiar with the industry, but they can easily familiarise themselves with the industry’s rules through the Bargaining Council.

Commissioners employed by the CCMA who do not have this advantage, should be cautious in merely shooting a rule down without considering its implications as mentioned above, but then again, the Commissioner may not have any appreciation for the existence of the rule in the first place.

The manner in which an industry operates, should never be dictated by a dispute resolution officer who has minimal- to no idea as to how an industry operates and why certain rules are in place. Such a presiding officer will never gasp the serious consequences a transgression of certain rules holds for the employer, and it is my opinion that in such an instance, the presiding officer would be unfit to preside over such dispute resolution proceedings.

Not only has the rules pertaining to specific industries now, since the Sidumo judgement been placed in jeopardy, but even existing national legislation are being totally ignored when it comes to dispute resolution processes pertaining to labour issues. This means that in a labour context, the employee can get away with transgressions in terms of national legislation which otherwise could have landed the employee in prison. How can this be and where is the rationale behind this practise?

What would be the only practical solutions for an employer where the transgression of its rules (and sometimes inevitably also national legislation) are where such transgressions are condoned by presiding officers during the dispute resolution process and/or our Labour Court judges?

I for one, having no other alternative, had now made it company policy to criminally prosecute each and every case where an employee was found misappropriating company property, regardless of the value. At the beginning some SAPS officers were reluctant to open cases but I rather testify during criminal proceedings which will inevitably lead to a positive and fair result for the employer – and presiding Commissioners can then continue to condone the employee’s actions as at least our criminal courts don’t. Our new policy will inevitably contribute to an even higher unemployment rate and the prospects of gaining employment will now be substantially lower. It is however a fact that the current manner in which CCMA commissioners arbitrate disputes, I have no other alternative.

Is the CCMA now going to force me to employ a cashier with a criminal record?

Maybe the time has come for judges to consider the specific reasons for the existence of other national legislation (i.e. Health Act, Road Safety Act etc.) and consider the seriousness of transgressions prescribed in terms of those Acts for the relevant transgression and apply it in labour jurisprudence. The employer is expected to comply with these provisions and serious consequences (which could include fines and even imprisonment or both depending on the applicable legislation) where its employees are not in compliance, yet, some arbitrators and judges seem to be of the opinion that the issue of a Final Warning to the employee to be sufficient (i.e. where an employee drove a company vehicle whilst three times over the alcohol limit). Is the same ruling going to be applicable where the employee is caught in terms of national legislation pertaining to the employers operations and given a fine / prison sentence?

It would seem that as long as our arbitrators and judiciary ignores national legislation pertaining to the employer's specific operations, the reasonable person test will remain unreasonable......and therefore unfair, and ought to be placed on review / appeal. This is not what the Sidumo judgement had in mind and our Labour Courts and arbitrators should read this judgment again.

 [1] Sidumo & Another v Rustenburg Platinum Mines Ltd & Others (2007) ZACC 22

[2] At paragraph 68

[3] At paragraph 64

[5] At paragraph 105 my emphasis

[6] Sections 187 and 188 of the LRA