Employment law update – Retrenchment

May 1st, 2012
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By Talita Laubscher

The applicant in Naidoo v MB Technologies (Pty) Ltd and Others [2012] 2 BLLR 191 (LC) contended that she was unfairly discriminated against on the basis of race and that her dismissal by the respondent was automatically unfair, alternatively substantively and procedurally unfair. She also claimed payment of a bonus of R 18 600.

Naidoo was employed by the respondent on 1 December 2006 as Manager: Special Projects. At the time when she was offered employment by the respondent, Naidoo was employed as a trainee manager at South African Breweries. Baxter, the respondent’s chief executive officer, had met Naidoo and was very impressed with her. The idea was that she would be groomed for a senior role at the respondent. Unfortunately things did not work out well. This was due, in part, to Naidoo’s unrealistic expectation of what she believed had been offered to her and what was expected of her once she was employed. Naidoo was dissatisfied, inter alia, with the requirement that she had to perform an internal audit function and she also complained that Baxter had failed to send her to study at Stanford University as she believed he had promised to do. The respondent, on the other hand, was disappointed with Naidoo’s performance and with the fact that Naidoo had not sought assistance from her fellow board members.

On 25 April 2008, after three meetings, the respondent addressed a letter to Naidoo informing her that she was retrenched with effect from 31 July 2008 on the basis that her position had become redundant. During the trial, it transpired, however, that the real reason for the dismissal was the breakdown in the trust relationship between Naidoo and the respondent. There was no evidence of unfair discrimination.

The Labour Court, per Gush J, accordingly held that Naidoo’s dismissal was both substantively and procedurally unfair, and ordered payment of compensation equal to six months’ remuneration, as well as payment of the bonus amount.

Illegal immigrants

The first respondent in Dunwell Property Services CC v Sibande and Others [2012] 2 BLLR 131 (LAC) was employed as a manager in July 1999 but was dismissed on 23 June 2003. In the letter of dismissal, the appellant stated that the reason for Sibande’s dismissal was that he had been using a fraudulent identity document and that the Department of Home Affairs had obtained a court order to have him deported. Dunwell further informed him that it was illegal for it to continue with his employment. Sibande referred an unfair dismissal claim to the Commission for Conciliation, Mediation ad Arbitration. The commissioner held that Sibande’s dismissal was both substantively and procedurally fair. Importantly, she held that ‘this was one of the cases that did not require a disciplinary hearing to be held because [Sibande] was not dismissed for any misconduct that he might have committed but was declared an illegal immigrant’.

Sibande took the matter on review to the Labour Court. The court, per Molahlehi J, agreed with Sibande that the commissioner had failed to consider relevant evidence and thus the award was reviewable. The evidence that the court held had not been properly considered included the common cause fact that Sibande had been in possession of a South African identity document, which had been confiscated by officials of the Department of Home Affairs; the fact that the appellant had been in possession of Sibande’s birth certificate, which reflected South Africa as his place of birth; and evidence to the effect that Dunwell’s director, Mr Toda, had owed Sibande money and had conspired with officials of the department to have Sibande deported on grounds that he was an illegal immigrant from Zimbabwe. The court also considered the fact that the appellant had relied on a judgment by Stegmann J in the South Gauteng High Court that involved Sibande. Whereas the commissioner in her award held that Sibande was dismissed because he was ‘declared’ an illegal immigrant (with reference to the Stegmann J judgment), in actual fact Stegmann J had held that there may have been ‘a suspicion’ that Sibande could be an illegal immigrant. In the circumstances, the arbitration award was reviewed and set aside and replaced with an order that Sibande’s dismissal was unfair and that he had to be reinstated.

Dunwell appealed. It was argued on Sibande’s behalf that it was incumbent on Dunwell to conduct a proper investigation about the allegation that he was an illegal immigrant and the only way this could have been achieved was by convening a disciplinary inquiry. Dunwell’s failure to hold an inquiry rendered the dismissal procedurally unfair. In addition, he was dismissed for a reason that was never proved and hence the dismissal was substantively unfair.

The Labour Appeal Court (LAC), per Ndlovu JA (Waglay DJP and Sandi AJA concurring), observed that Dunwell had to demonstrate that Sibande’s dismissal was fair. In this case it was evident that no due process was followed prior to Sibande’s dismissal. He was not called before a disciplinary inquiry and he was instead merely informed of the fact that he was dismissed. The reason for the dismissal, namely that he was ‘declared an illegal immigrant’ was furthermore simply incorrect. The LAC accordingly held that Sibande’s dismissal was both procedurally and substantively unfair.

As to whether reinstatement was the appropriate remedy, the LAC held that it was not. Ndlovu JA held in this regard that, in the circumstances of the case, Sibande’s continued employment relationship with Dunwell would be intolerable and that it was no longer practicable for him to be reinstated. This was particularly so because Sibande had levelled some very serious and scandalous allegations against senior employees of Dunwell. The LAC accordingly dismissed the appeal in part and upheld it in part. It held that Sibande’s dismissal was unfair but instead of being reinstated, Sibande was awarded 12 months’ remuneration in compensation.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

This article was first published in De Rebus in 2012 (May) DR 61.