Employment law update – Dismissal for incompatibility

August 1st, 2020
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In Zeda Car Leasing (Pty) Ltd t/a Avis Fleet v Van Dyk [2020] 6 BLLR 549 (LAC), the Labour Appeal Court (LAC) considered whether the employee’s dismissal for operational requirements was procedurally unfair.

In this case, the employer dismissed an employee for operational requirements in circumstances where the real reason for the dismissal was incompatibility. In this regard, the general manager had a falling-out with another senior manager. Initially the employer tried to remedy the issue by embarking on a mediation process and requesting each employee to answer a list of questions regarding the dispute. The employee who was dismissed responded to the questions, but the responses lacked specificity and she indicated that the falling-out had no detrimental effect on the business. The other employee provided comprehensive responses and provided specific examples of the lack of trust, accountability and mutual respect. She was of the view that the conflict had an effect on the operational requirements of the business and proposed a change in structure.

After considering the responses, the employer then decided to consolidate the posts of the two incompatible managers and invited each of the managers to apply for the new post without first consulting with them on selection criteria. The employee’s legal representative challenged the decision to merge the posts and requested that the employer engage in a fair consultation process with the employee. In response to this the employer issued the employee with a s 189(3) letter. The employer explained that the employee had not applied for the new combined position and offered the employee a generous severance package. While the employee was still considering this option the employer issued a notice of termination for operational reasons.

The employee then referred a dispute to the Labour Court (LC). The employee alleged that she was unfairly discriminated against but the LC rejected this. The employee also alleged that the dismissal was both substantively and procedurally unfair. The LC held that there was an operational requirement to justify the dismissal but the procedure was unfair because the employee had been presented with a fait accompli and because the employer had not properly consulted with her. The LC awarded ten months’ remuneration as compensation.

On appeal, the LAC found that the real reason for the dismissal was incompatibility as the employee was unable to work with others and adapt to the employer’s corporate culture but the employer had instead categorised the issue as operational. The LAC remarked that incompatibility is a category of incapacity because it impacts on work performance. Therefore, the appropriate process to follow is to inform the employee about the conduct that has caused disharmony, identify how the relationship has been affected and propose remedial action. The employee should then be given a reasonable opportunity to improve the situation. In this case, the employer had started off trying to mediate the matter but then decided to pursue a redundancy process instead. The operational requirements dismissal did not stem from economic issues or technological changes at the employer. Rather, the employer decided to make a structural change to deal primarily with the conflict, which had arisen between two senior employees. The employer was required to engage in a meaningful joint consensus seeking process, which it did not do. Instead, when the employee did not apply for the position it took the opportunity to dismiss the employee. There was no consultation over selection criteria. The LAC accordingly held that the dismissal was procedurally unfair.

The LAC found that when making an award for compensation the court must consider all relevant factors and be fair to both parties. The LC had correctly considered the extent of the procedural unfairness, the employee’s length of service and the emotional and financial stress suffered. However, the LC should have also considered the ex gratia payment that had been made to the employee, as well as a further two months’ salary that had been paid to the employee after her dismissal. The LAC held that if these amounts were considered, then the employee effectively received more than the maximum compensation of 12 months’ remuneration permitted under the LRA. The amount of compensation was accordingly decreased to seven months’ remuneration.

Fixed-term contracts

In National Union of Public Service and Allied Workers v Mfingwana and Others [2020] 6 BLLR 600 (LC) an employee was engaged on a six-month fixed-term contract. The employee was deemed permanent by virtue of s 198B of the Labour Relations Act 66 of 1995. At the end of the fixed-term contract, the contract was extended for another five months. There was an addendum to the extended contract, which specified a termination date after the extension period. The contract was not renewed after this extended period and the employee referred an unfair dismissal dispute.

The commissioner found that the work was not of limited duration and there was no justifiable reason for fixing the term. The employee was, therefore, permanently employed and the termination of the contract constituted a substantively and procedurally unfair dismissal. The employee was reinstated on an indefinite basis. The matter was taken on review to the Labour Court (LC). The LC per Rabkin-Naicker J held that the employer could not rely on the termination date in the addendum to argue that there was no reasonable expectation of renewal as this did not change the fact that the employee had already been deemed permanent when the initial contract expired. The application for review was accordingly dismissed.

Monique Jefferson BA (Wits) LLB (Rhodes) is a legal practitioner at DLA Piper in Johannesburg.

This article was first published in De Rebus in 2020 (Aug) DR 41.