Employment law update – Dismissal for insubordination and compensation for fixed term employees

May 1st, 2018

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowmans in Johannesburg.

In Jorgensen v I Kat Computing (Pty) Ltd and Others [2018] 3 BLLR 254 (LAC), the appellant was a manager of a branch in Durban which, was running at a loss. The appellant was instructed to send monthly reports to the managing director, which he failed to do. The managing director then informed the staff that they would not be paid until they started to make a profit. He later relented and paid them half their salaries. A letter was sent to the appellant explaining why the salaries had been halved and recording that the appellant had not met any of his performance targets. The appellant was requested to attend an inquiry, which the appellant failed to attend. It was stated in the letter to the appellant that should he fail to attend the inquiry this would be an act of gross insubordination.

Two inquiries were subsequently held in Durban and chaired by an independent chairperson. The first inquiry related to a charge of misconduct for gross insubordination in that he failed to attend the inquiry in Johannesburg. The second inquiry was in relation to complaints about the appellant’s work performance. Both parties made written submissions to the chairperson who found the appellant guilty of gross insubordination and recommended dismissal. The chairperson did not recommend dismissal for poor work performance as the chairperson had not been in a position to properly evaluate the concerns about performance. The employer dismissed the appellant for gross insubordination, causing financial loss to the company as a result of inactivity, actions and mismanagement of the branch and failing to follow company policies and procedures.

The appellant referred an unfair dismissal claim to the Commission for Conciliation, Mediation and Arbitration (CCMA). The commissioner considered the fact that the chairperson had not made a finding on poor performance and found that it was not competent for him to arbitrate that aspect of the dispute. He therefore considered whether the appellant committed gross insubordination and, if so, whether it was a dismissable offence. The appellant argued that he did not attend the inquiry as he had only been paid half his salary and thus the employer had breached his employment contract. The commissioner agreed that the appellant was not obliged to attend the inquiry as the employer had not fulfilled its contractual obligations. The commissioner found further that it is an employee’s choice whether to attend a disciplinary inquiry or not. Thus, the commissioner found that the dismissal was substantively unfair and awarded compensation equal to nine months’ remuneration.

The employer approached the Labour Court (LC) to review the arbitration award. The LC held that the commissioner erred in finding that he was not required to arbitrate the dispute insofar as it related to poor work performance. This was because the LC was of the view that the appellant was dismissed for gross insubordination and poor work performance. The LC found that the appellant was not guilty of gross insubordination because he could elect to attend or not attend the inquiry. The LC accordingly reviewed and set aside the award and remitted the matter to the CCMA to determine whether the dismissal for poor performance was procedurally and substantively unfair.

On appeal, Landman AJA for the minority in the Labour Appeal Court (LAC) agreed with the LC’s finding that the commissioner failed to appreciate the grounds on which the appellant was dismissed. He was of the view that poor performance was one of the reasons for the dismissal in the notice of termination and, therefore, the commissioner was required to consider this notwithstanding that this was not the finding reached by the chairperson. Tlaletsi DJP for the majority of the LAC did not agree with this as he stated that the dismissal notice did not expressly refer to poor work performance but rather gross insubordination and causing a financial loss as a result of inactivity, actions and mismanagement of the branch. He was of the understanding that the financial loss referred to was not as a result of poor performance, but was related to the wasted costs as a result of the appellant’s failure to attend the inquiry in Johannesburg. Thus, he found that the commissioner was correct not to consider poor performance and there was accordingly no reason to remit the matter back to the CCMA for another arbitrator to make a determination regarding the issue of poor performance. Furthermore, the appellant’s dismissal was already found to be unfair and compensation had been ordered so the referral back to the CCMA would be purely academic. Phatshoane AJA concurred with Tlaletsi DJP in this regard.

All three judges of the LAC agreed that the dismissal for gross insubordination was substantively unfair as it was not fair to expect the appellant to attend a disciplinary inquiry when the employer had breached the obligations to pay him his full salary. Landman AJA also remarked that the appellant’s concerns that he would not be treated impartially were validated by the fact that the employer dismissed the appellant for poor work performance despite the fact that the chairperson did not make a finding on performance. Landman AJA further upheld the commissioner’s finding that there is jurisdiction that an employee has a choice whether or not to attend a disciplinary inquiry.

As regards compensation, all three judges of the LAC found that the commissioner did not consider the fact that the appellant was engaged on a fixed term contract, the balance of which was five months at the time of his dismissal. It was found that there was no cause to award compensation more than his actual loss of income and thus the award of compensation was not one that a reasonable commissioner would have made and the amount should be reduced. The order of the LC was accordingly set aside and replaced with an order that the dismissal was substantively unfair and the respondent was to pay the appellant the difference between what he had earned and what he would have earned had he worked the balance of the contract term of five months.

This article was first published in De Rebus in 2018 (May) DR 41.