Employment law update – The potential financial implications on an employer in pre-dismissal arbitration

July 1st, 2017
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Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

Sampson v South African Post Office SOC Limited (unreported case no J2106-15, 10-5-2017) (Whitcher J)

Section 188A of the Labour Relations Act 66 of 1995 allows for what is referred to as a pre-dismissal arbitration where an employee and employer, under certain circumstances, approach a duly authorised body – such as the Commission for Conciliation Mediation and Arbitration (CCMA) – and request an arbitrator to preside over an internal disciplinary hearing. The arbitrator, having heard all the evidence from both parties, will decide whether the employee is guilty of the charges preferred against him or her and if so, will deliver an appropriate sanction, which may include dismissal. The arbitrator’s ruling has the same status as a statutory arbitration award, and hence an employee aggrieved by the outcome may approach the Labour Court (LC) to review and set aside the arbitrator’s findings in the same manner one reviews any statutory arbitration award. Thus, s 188A was designed to eliminate a duplication of processes where an employer has an internal hearing and thereafter the same process unfolds before the CCMA in arbitration.

The novel question that arose in this case was whether the employment relationship is automatically restored if the LC on review, sets aside the arbitrator’s decision to dismiss the employee and if so, whether the employee is entitled to backpay from the date of dismissal to the date of the order setting aside the arbitrator’s ruling.

Background

The applicant employee was suspended with full pay in November 2011, charged for certain acts of misconduct in January 2012 and later partook in a pre-dismissal arbitration in terms of s 188A in June 2012.

On 4 June 2012 the arbitrator delivered a ruling wherein he found the employee guilty of misconduct and handed down the sanction of dismissal. The employee took the arbitrator’s ruling on review and absent the employer opposing the application, the LC, on 3 September 2015, set aside the arbitrator’s ruling and ordered the matter be heard de novo before another arbitrator.

Days after the order was delivered the employee’s attorney wrote to the employer advising it that the court order in effect retrospectively reinstated the employee and as such, demanded the employer pay the employee his remuneration he would have earned from date of dismissal to the date the dismissal was set aside. The attorney further sought the employer begin paying the employee his normal salary as from September 2015.

In a written response the employer rejected the legal consequences of the order as interpreted by the employee and took the view that the dismissal stood until heard by another arbitrator.

This prompted the employee, on 26 October 2015, to approach the LC, firstly, seeking his back pay and secondly, his normal salary from date of the court order to the date he initiated these legal proceedings.

The issue before the court centred firstly on the legal consequences of setting aside a dismissal ruling in terms of s 188A, more specifically whether the employment relationship between the parties had retrospectively revived and secondly what the parties’ respective obligations were flowing from the legal consequence of setting aside the dismissal.

In rejecting the employer’s argument the court held that setting aside a dismissal pursuant to a pre-dismissal arbitration, the status quo ante is restored – meaning parties return to their respective positions as if the dismissal had never occurred. The court held:

‘In this matter, the court order set aside the original decision to dismiss the Applicant and the original decision to dismiss him effectively “vanishes” and he is treated as if he had never been dismissed. The order revived retrospectively the contract of employment between the Applicant and the Respondent. In my view, this must be implicit in an order that sets aside, without qualification, a decision to dismiss the Applicant. He thus reverts to his status as an employee on precautionary suspension.’

In view of the fact the employee had taken up new employment months after his dismissal and currently held the same position; the remuneration the employee received for this period from his current employer would be offset against the remuneration he would have been entitled to receive from the respondent employer had he not been dismissed.

In respect of earnings for the period after the dismissal was set aside, the court noted the employee only claimed payment from the date of his dismissal being set aside (ie, 3 September 2015) to the date he launched legal proceedings in casu (ie, 26 October 2015).

The employer argued that the employee was not entitled to any remuneration over this period as he never tendered his services to the employer after 3 September 2015 and, hence, could not have been said to be in the employ of the employer. This was compounded by the fact that the employee continued to remain in the employ of a different entity.

Without downplaying the general principle that an employee is generally entitled to remuneration post reinstatement only if the employee tenders his or her services – the court noted that the employer took the view that the dismissal still stood after the arbitrator’s ruling was set aside and, therefore, had the employee resigned from his current employment and attempted to take up his erstwhile position with the employer; the employer would have on the probabilities, denied him such an opportunity. The court therefore saw it fit to order the employer to pay the employee his salary from 3 September 2015 to 26 October 2015 subtract that what the employee had earned for the same period with his current employment. The employer furthermore was ordered to pay the employee his leave pay owing for the period June 2012 to October 2015.

Since there was some dispute between the parties as to what the employee earned at his current place of employment, the court allowed the parties to resolve this issue on their own, failing which they could approach the court for assistance.

As to the financial risk an employer may have to endure if a dismissal under s 188A is set aside on review, the court held:

‘This may all seem a very steep price for the Respondent to pay for an action it took, invoking section 188A, which was designed precisely to avoid long delays in the resolution of disputes and the attendant risk of backpay accumulating in the event of an adverse finding.

Noting that the Respondent’s risk is to some extent on-going, I can only say that, in my view, my hands are tied. I cannot suspend the legal consequences of the reviewing courts “setting aside” of the section 188A dismissal because the effects seems rather onerous on one party. This case seems to have wandered into something of a legal no-mans’ land which might benefit from legislative scrutiny in future and the careful crafting of relief sought when reviewing section 188A decisions or when opposing such reviews.’

This article was first published in De Rebus in 2017 (July) DR 47.

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