Employment law update – Employee resigning prior to being unfairly dismissed

May 1st, 2020

In Bester v Small Enterprise Finance Agency (SOC) Ltd and Other [2020] 3 BLLR 244 (LAC), the employee, a qualified advocate, was employed in an organisation that was later taken over by Small Enterprise Finance Agency (the company). Her services were transferred in terms of s 197 of the Labour Relations Act 66 of 1995 (LRA) along with the organisation as a going concern. Under the new regime, the employee was appointed to a line manager, one Maboa. Almost immediately, the employee and Maboa clashed. As a result, the employee contemplated resigning and posed questions to the company’s Human Resources Department about the logistics of a resignation. On the same day, the employee was suspended pending a disciplinary hearing into allegations relating to absenteeism and ‘insolence’.

Initially, the employee was suspended by the company on full pay. Shortly thereafter, her remuneration ceased without further notice and she resigned with immediate effect. The company, however, refused to accept her resignation on those terms and insisted that she serve her one month notice period. The disciplinary hearing proceeded in the employee’s absence while she was ill and she was dismissed. The dismissal took effect before the end of her notice period.

The employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). Only one of the alleged unexplained absences was not rebutted by the employee. The arbitrator found that the charge of insolence was bald of detail and consequently held that the employee’s dismissal was both substantively and procedurally unfair. As the restoration of the employment relationship was inappropriate in the circumstances, the arbitrator awarded the employee compensation equal to eight months’ remuneration. The company sought to review the award.

On review, the Labour Court (LC) upheld the unfair dismissal. However, the court found that eight months’ compensation was too much on the grounds that the employee had resigned and was, for that reason, entitled to no more than the equivalent of the balance of her notice period. The employee appealed the judgment.

On appeal, the sole issue before the Labour Appeal Court (LAC) was the appropriateness of the quantum of compensation awarded. The LAC asked why, if the arbitration award was based on a finding that the employee had been unfairly dismissed, was there any room to factor the employee’s resignation into the amount of compensation awarded? The LAC noted that the premise of a compensation award is to give recognition to an unfair act on the part of the employer. Compensation in terms of s 194 of the LRA serves a purpose wider than recovering patrimonial damages.

On the facts, it was apparent that the employee’s deteriorating relationship with Maboa was the reason for her contemplating resigning from the company, which resignation could not be construed as ‘voluntary’ in the circumstances. The employee’s actual resignation was then prompted by the stoppage of her remuneration. Moreover, her resignation, which was intended to be with immediate effect, was rejected by the company. Accordingly, she remained in service at the time she was dismissed. In this context, the LAC found that the employee’s resignation was irrelevant to the computation of the compensation. Once she was dismissed, her resignation played no further role.

Leaving aside the resignation issue, the LAC held that the arbitrator’s reasons for granting the employee eight months’ compensation were entirely reasonable. Apart from ignoring the evidence that the employee’s resignation was not voluntary, the LC had treated the matter as a contractual claim and took the view that, given her resignation, the employee could have no material interest in her job beyond her notice period. This overlooked the purpose of compensation, which was not to yield a quantum based on the concept of positive interest, but rather is premised on a broader consideration of fairness.

Turning to costs, the LAC held that although the employee had represented herself in both the LC and LAC proceedings, fairness dictated that she be granted costs, including those equal to the worth of her own legal expertise.

The appeal was upheld with costs.

Must disputes arising from the Basic Conditions of Employment Act first be dealt with by labour inspectors?

In Amalungelo Workers’ Union and Others v Philip Morris South Africa (Pty) Ltd and Another [2020] 3 BLLR 225 (CC), Amalungelo Workers’ Union and 75 of its members (the applicants) alleged that Philip Morris South Africa and Leonard Dingler (the employers) had breached the Basic Conditions of Employment Act 75 of 1997 (the BCEA) by deducting tax from their salaries for their company vehicles, without taking into account the depreciation of the vehicles. The applicants instituted proceedings in the Labour Court (LC) for an order compelling the employers to repay the amounts, which had been deducted and interdicting them from making the deductions going forward.

The LC, on its own accord, ruled that it lacked jurisdiction to directly enforce the provisions of the BCEA in the absence of an assertion that those provisions formed part of a contract of employment as envisaged in s 77(3) of the BCEA. Relying on two of its previous judgments, the LC held that disputes concerning the enforcement of the provisions of the BCEA must first be referred to a labour inspector and that they can reach the LC only in the form of an appeal.

Unhappy with this outcome, the applicants sought leave to appeal. Both the LC and the Labour Appeal Court refused to grant leave to appeal. The Constitutional Court (CC), however, granted the employees leave to appeal only in respect of whether the LC lacked jurisdiction. In this regard, the question before the CC was whether, barring claims based on employment contracts, the LC’s jurisdiction under the BCEA is deferred until the matter has been resolved by a labour inspector appointed in terms of the BCEA.

The CC noted that the provision that addresses the LC’s jurisdiction is s 77 of the BCEA, which section must be construed in a manner that complies with the Constitution. Section 77 says in unambiguous terms that the LC has exclusive jurisdiction over matters arising from the BCEA, except where the Act provides otherwise. One exception is where the matter concerns contracts of employment where the LCs and civil courts have concurrent jurisdiction.

On a proper interpretation of the section, the CC held that s 77 of the BCEA was designed to promote rather than limit access to the LC in respect of claims under that BCEA. Section 77, when read as a whole, provides that the LC, subject to a few exceptions, enjoys exclusive jurisdiction over all disputes and claims arising from the provisions of the BCEA. This means that on a proper reading of the section, as soon as a dispute is ripe for litigation, the claimant is entitled to refer it directly to the LC.

In the present matter, the LC found that it lacked jurisdiction because disputes under the BCEA must first be referred to labour inspectors and that thereafter they could reach the LC only by way of appeal. When the present dispute arose, the appeal provision had been revoked. This notwithstanding, the CC noted that there is simply no provision in the BCEA which expressly requires that disputes first be referred to labour inspectors before the LC could entertain them.

Having regard to the enforcement provisions of the BCEA, the CC noted that none of the functions assigned by the BCEA to labour inspectors envisages dispute resolution. The fact that labour inspectors are empowered to issue compliance orders does not deprive the LC of jurisdiction to determine disputes concerning compliance with the BCEA. Unlike the Labour Relations Act 66 of 1995, the BCEA does not require that disputes first be referred to the Commission for Conciliation, Mediation and Arbitration before the LC can be approached.

In conclusion, the CC held that determining disputes arising from the BCEA is the function of the LC and if the LC lacked jurisdiction, no forum could entertain such matters because s 77 confers exclusive jurisdiction on the LC in respect of all matters arising from the BCEA. This interpretation is consistent with the applicants’ right to have their dispute resolved by application of law in a fair manner, which right cannot be exercised before a labour inspector.

The LC’s order declaring that it lacked jurisdiction in respect of the particular claim was set aside and the matter was remitted to that court.

Nadine Mather BA LLB (cum laude) (Rhodes) is a legal practitioner at Bowmans in Johannesburg.

This article was first published in De Rebus in 2020 (May) DR 32.