Bester (Scott) v Small Enterprise Financial Agency SOC Ltd and Others (LAC) (unreported case no JA41/2018, 11-12-2019) (Sutherland JA with Kathree-Setiloane AJA and Murphy AJA concurring).

The appellant employee had several clashes with her superior, which prompted her to enter discussions with her employer on terms of her resignation. Ironically on the very same day, namely 21 May 2014, she was placed on paid suspension pending disciplinary action being instituted against her. On 4 September 2014 and while still on suspension, the employer ceased remunerating the employee, which resulted in the employee tendering her resignation with immediate effect.

The employer rejected her resignation on short notice and insisted she serve her full months’ notice. During her notice period the employee was charged and dismissed for absenteeism and insolence.

At the Commission for Conciliation, Mediation and Arbitration (CCMA) the employee’s dismissal was found to be substantively and procedurally unfair following which the arbitrator awarded her eight months compensation.

Aggrieved with the award the employer sought to set aside the arbitrator’s findings on review. Although the Labour Court (LC) upheld the arbitrator’s findings, it found that under circumstances where the employee had voluntarily resigned, the arbitrator erred in awarding her eight months’ salary. Accordingly, the LC found that the employee was only entitled to one-month compensation, that being the amount she would have received while serving her notice period.

On appeal the sole issue before the Labour Appeal Court (LAC) was a challenge on the arbitrator’s discretion to award the employee eight months compensation. Referring and quoting from a relevant authority, the LAC restated the test concomitant to the issue before it was ‘to evaluate whether the decision-maker acted capriciously, or upon the wrong principle, or with bias, or whether or not the discretion exercised was based on substantial reasons or whether the decision-maker adopted [an] incorrect approach’.

What weight, if any, should the arbitrator have placed on the fact that the employee resigned, when assessing how much to compensate the employee? The LAC held that once the employment relationship terminated on grounds of dismissal, the employee’s resignation was irrelevant when quantifying the compensation to award her. Compensation in terms of s 194 of the Labour Relations Act 66 of 1995, according to the LAC, serves a broader purpose than mere patrimonial damages and is determined within the consideration of being just and fair.

As to the approach adopted by the court a quo, the LAC held:

‘The Labour Court, curiously, subordinated its perspective wholly to the fact of a tendered resignation which approach was inappropriately narrow and, in any event, misdirected. The argument advanced in support of the Labour Court’s view before us, as I understand the contention, is that the appellant could have no material interest in her job beyond her notice period, given the tendered resignation. Thus, on that premise, there ought to be a cap on any compensation order commensurate with that material interest. In our view, this is not the way to construe the purpose or effect of a compensation order in terms of section 193. The contention seems to assume that her “positive interest”, (ie, the value to the aggrieved party, had the contract not been breached) in the job is the defining consideration, as if this were a straightforward contractual dispute. That premise is inappropriate in the paradigm regulated by sections 193 and 194 of the LRA. Apart from the questions of fact about the character of the tendered resignation not being freely made and the break in logic between awarding a sum in compensation for a dismissal which ipso facto rendered the tendered resignation irrelevant, the function of sections 193 and 194 is not to yield a quantum based on the concept of positive interest, but rather is premised on the broader consideration of fairness, having weighed the circumstances holistically.’

Having considered the fact that the arbitrator, in awarding the employee eight months compensation, took into account the employee’s length of service, how long she had been unemployed at the time of the arbitration, the employer’s failure to consider progressive disciplinary measures as an alternative to dismissal and the unfair manner in which the employee was dismissed; the LAC was satisfied that his decision was rational and free from criticism.

The appeal was upheld, and the arbitration award confirmed with costs of both the review and appeal applications.

Moksha Naidoo BA (Wits) LLB (UKZN) is a legal practitioner holding chambers at the Johannesburg Bar (Sandton), as well as the KwaZulu-Natal Bar (Durban).

This article was first published in De Rebus in 2020 (March) DR 35.