Employment law update – Compensation for unfair retrenchment and unfair labour practice in relation to post-retirement benefits

October 1st, 2021

In Total South Africa (Pty) Ltd v Meyer and Others [2021] 8 BLLR 795 (LAC) an employee was dismissed for operational requirements. The employee had been employed by Total since 1987. He was subsequently seconded to a subsidiary of Total in 1993 and then later Total was sold to Exxaro in 2013. The employee was subsequently retrenched. He was advised at the time that there were no vacancies for him, but he was offered employment on a fixed-term basis with one of the group companies. The employee alleged that he was unfairly dismissed. Furthermore, he alleged that he had been subjected to an unfair labour practice in that he had been denied post-retirement medical benefits.

The dismissal was found to be substantively and procedurally fair at arbitration. The Labour Court (LC) found that the dismissal was unfair and ordered compensation equal to 12 months’ remuneration. This is because there had been no meaningful consultation process followed with the employee and the employee had not been considered for vacancies. Total then challenged the quantum of the award alleging that the compensation was excessive given the fact that the employee had already been paid a substantial severance package. This package included medical aid benefits for two years and severance pay of approximately four weeks’ remuneration per year of service. Furthermore, the employee was engaged as a fixed-term employee with another entity shortly after retrenchment (albeit that there was no recognition of past service).

The Labour Appeal Court (LAC) referred to the case law in which it has been held that compensation is not limited to compensating an employee for actual financial loss incurred but is a payment for the infringement of the employee’s dignity. Therefore, the compensation award in these circumstances was to compensate the employee for a breach of his rights. The LAC, however, found that the employee was not automatically entitled to the maximum compensation. The court took into account the fact that the employee had been paid severance pay in excess of the statutory minimum and had received an income for some time after the retrenchment. It was held that this should have been taken into account and it was, therefore, found that in the circumstances compensation equal to six months’ remuneration was just and equitable.

As regards the unfair labour practice dispute, the LC had found that it was an unfair labour practice dispute to deny the employee post-retirement medical aid benefits. The LAC found that nine employees who had been retrenched prior to the employee had been paid post-retirement medical benefits. Total alleged that the reason for the differentiation between the nine retrenchees and the employee was that the terms and conditions of the 2010 restructuring were only relevant to 2010 and were not applicable to the employee’s retrenchment. The LAC held that there was no rational justification for the treatment of the employee compared to the other employees who had previously been retrenched. It was accordingly held that Total had exercised its discretion not to provide post-retirement medical benefits arbitrarily and capriciously and, therefore, Total was ordered to extend post-retirement medical aid benefits to the employee.

Dismissal for misconduct and inconsistent application of discipline

In Nyathikazi v Public Health and Social Development Sectoral Bargaining Council and Others [2021] 8 BLLR 778 (LAC) a senior manager was dismissed for two allegations of misconduct for contravening supply chain procedures when procuring goods. This had resulted in irregular expenditure being incurred in contravention of the policies.

At arbitration the arbitrator found that the employee was guilty of approving irregular expenditure. However, it was found that the dismissal was substantively unfair because there had been inconsistent application of discipline in that three other heads of department had also authorised irregular expenditure, but no disciplinary action had been taken in respect of them. The arbitrator found that the employer had provided no ‘reliable evidence and reasonable explanation’ as to why those three employees were not disciplined and, therefore, the dismissal of the employee was found to be substantively unfair. In addition, the dismissal was found to be procedurally unfair because the disciplinary hearing had continued in the employee’s absence after the employee had left the hearing because the presiding officer had arrived late.

The arbitrator, however, found that reinstatement would not be appropriate in the circumstances because the misconduct was serious in that irregular expenditure of more than R11 million had been incurred. This rendered continued employment intolerable, but the arbitrator awarded two months’ remuneration as compensation. This was upheld on review by the LC.

On appeal, the LAC considered the issue of consistency in that there were three other employees who had not been dismissed for committing similar misconduct. It was held that the parity principle did not apply if no evidence had been led regarding the inconsistent treatment of other employees. Furthermore, an employee guilty of serious misconduct cannot rely on inconsistency alone to escape the consequence of their misconduct. The dismissal was therefore found to be fair, and the appeal was dismissed with costs.

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

This article was first published in De Rebus in 2021 (Oct) DR 34.


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