Employment law update – An arbitrator’s duty when awarding a remedy

February 1st, 2017

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

South Africa Revenue Service v Commission for Conciliation, Mediation and Arbitration and Others [2017] 1 BLLR 8 )CC).

Is reinstatement an appropriate remedy for an employee who uses the infamous ‘k’ word when referring to his immediate superior and says: ‘I cannot understand how [‘k’] think’and ‘a [‘k’] must not tell me what to do’.

Unsurprisingly a unanimous bench of 11 judges of the Constitutional Court (CC) upheld an appeal launched by the applicant to have set aside the relevant portion of the Labour Court (LC) and Labour Appeal Court’s (LAC) respective orders and substitute the LC’s order with a finding that the arbitrator’s decision to reinstated the third respondent employee be set aside and replaced with a finding that he be compensated for his unfair dismissal.


Having been charged for his aforementioned utterances the employee pleaded guilty at his disciplinary hearing. Taking into account the employee’s mitigating factors the chairperson found that a ten day unpaid suspension together with a final written warning was an appropriate sanction for the employee’s conduct.

The then Commissioner of the South African Revenue Service (Sars) took a contrary view and without first affording the employee an opportunity to be heard, substituted the chairperson’s sanction with that of dismissal.

The employee referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) where arbitration came before the second respondent arbitrator. The issue before the arbitrator was whether Sars could overturn the decision of a chairperson who, in terms of a collective agreement, was solely vested with the authority to deliver a sanction as opposed to merely recommending same.

In her considered view the arbitrator found that the commissioner did not have the authority to replace the chairperson’s sanction, especially under circumstances where the employee was not afforded an opportunity to be heard before the decision to dismiss him was taken. For this reason the arbitrator awarded the employee reinstatement.

Sars review application to the LC and subsequent appeal to the LAC proved unsuccessful as both courts took the view that the chairperson’s authority in terms of the collective agreement to deliver a sanction could not be revisited or usurped by the Sars Commissioner.

In its petition to the CC, Sars persisted with its argument presented at the lower courts, however, at the hearing only pursued with the argument that reinstatement was not an appropriate remedy.

Before addressing the merits of the matter, the CC in its judgment penned by Mogoeng CJ, set out in detail why the derogative term is the ‘worst kind of verbal abuse ever’ that could be visited on another person and is used with the intention of being ‘disparaging, hurtful and intentionally hateful’ to Africans. The Chief Justice went further to say that as a democratic and non-racial society the responsibility is on all races to find a way to end racial hatred.

Turning to the first legal issue raised, the court considered whether Sars perempted its right to appeal against the LAC judgment as argued by the employee. It was common cause that soon after judgment was delivered by the LAC, Sars formally advised the employee in writing that it would not be appealing the LAC’s decision and that he should contact the relevant officials to facilitate his return to work.

A few days later Sars did a roundabout turn and informed the employee of its latest decision to approach the CC and advised him not to return to work.

Dealing firstly with the issue of onus, the court held that when establishing peremption it must be shown that ‘the conduct or communication relied on does “point indubitably and necessarily to the conclusion” that there has been an abandonment of the right to appeal and a resignation to the unfavourable judgment or order.’

Judged on this standard the court found that peremption had taken place. However, in keeping with past authorities the court held that ‘where the enforcement of that choice would not advance the interests of justice, then that overriding constitutional standard for appealability would have to be accorded its force by purposefully departing from the abundantly clear decision not to appeal.’

Mogoeng CJ found that the nature of the dispute together with the court’s constitutional duty to entrench the values of equality, non-racialism and human dignity, demanded that the application be heard in the interest of society.

On the merits of the application the court began by examining the remedies open to an employee whose dismissal is found to be unfair. In terms of s 193(1) of the Labour Relations Act 66 of 1995 (LRA) an employee whose dismissal is substantively unfair must be reinstated unless, as per s 193(2) the employee –

  • does not wish to be reinstated;
  • the circumstances surrounding the dismissal are such that continued employment would be intolerable;
  • reinstatement is not reasonably practical; or
  • the dismissal is procedurally unfair only.

Sars argued that the employee committed an extremely serious offence, which in turn rendered his continued employment intolerable, more so in light of the fact that as an organ of state it was legally obliged to uphold the values enshrined in the Constitution.

The employee argued that Sars failed to demonstrate, that as a result of his conduct, the trust relationship between the parties had broken down and furthermore failed to lead any evidence to prove continued employment would be intolerable.

The court observed that Sars did place evidence before the arbitrator on why continued employment relationship would be intolerable, yet the arbitrator failed to deal with this in her award.

The court held:

‘After concluding that Mr Kruger’s dismissal was unfair, the Arbitrator immediately ordered his reinstatement without taking into account the provisions of section 193(2). She was supposed to consider specifically the provisions of section 193(2) to determine whether this was perhaps a case where reinstatement is precluded. She was also obliged to give reasons for ordering Sars to reinstate Mr Kruger despite its contention and evidence that his continued employment would be intolerable. She was required to say whether she considered Mr Kruger’s continued employment to be tolerable and if so, on what basis. This was not done. She does not even seem to have considered whether the seriousness of the misconduct and its potential impact in the workplace, were not such as to render reinstatement inappropriate. And those are the key factors she ought to have considered before she ordered Sars to reinstate Mr Kruger.’

Moreover the arbitrator failed to take into account the fact that the employee did not apologise for his actions nor did she (the arbitrator) consider the potential unrest Sars could have faced by other employees in response to an active racist, who considers African people incapable of leading him and are his intellectual inferior based on their race alone, being permitted to return to work.

For these reasons the court found the arbitrator’s decision to reinstate the employee was a decision that no reasonable decision maker could have arrived at.

The next issue was whether the employee was deserving of compensation and if so what quantum should Sars be ordered to pay him. Taking into account the employee’s gross misconduct conduct weighed against the fact that Sars did breach a workplace regulation when overturning the chairperson’s initial sanction, together with the fact that Sars was amenable to compensating the employee; the court found that six months compensation was just and equitable.

The court set aside the portion of the award directing the employee to return to work and replaced it with a finding that Sars pay him six months compensation for his unfair dismissal. No order as to costs was made.

This article was first published in De Rebus in 2017 (Jan/Feb) DR 52.