Employment law update – Must discipline be consistently applied?

March 1st, 2015

By Talita Laubscher and Monique Jefferson

While there is a general rule that discipline must be consistently applied, the Labour Appeal Court (per Waglay JP, Ndlovu JA and Coppin AJA) held in ABSA Bank Ltd v Naidu [2015] 1 BLLR 1 (LAC) that the mere fact that another employee was previously not dismissed for similar misconduct did not mean that the employer condoned such behaviour and that it would be unfair to dismiss another employee for similar misconduct.

In this case, Naidu was an investment banker at ABSA and was dismissed after switching funds from one portfolio to another without the client’s knowledge or consent. She had tried to obtain consent from the client to move his funds to another fund but allegedly could not get hold of him because he was out of the country. She nevertheless switched his investment from the Money Market to the Property Market as she thought it would be in his best interest to do so. In order to do this, she relied on the client’s signature from a previous switch form. This was done in violation of ABSA’s Rules and Codes of Conduct and was in breach of Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS) legislation. Naidu later informed her employer that she had done this and was dismissed following a disciplinary inquiry into her misconduct.

After an internal appeal was dismissed, Naidu referred an unfair dismissal claim to the Commission for Conciliation, Mediation and Arbitration (CCMA) alleging that her dismissal was substantively unfair as another employee had previously committed similar misconduct but received a final warning. The outcome at the CCMA was that the dismissal was substantively unfair and reinstatement was ordered. According to the CCMA commissioner, the sanction of dismissal was too harsh in the circumstances, especially when regard was had to the following factors –

• ABSA had previously not dismissed an employee for similar misconduct and thus had demonstrated that not all transgressions of this nature are dismissable;

• Naidu had 20 years’ service with ABSA;

• Naidu had thought that she was acting in the best interest of the client and ABSA;

• she did not gain personally from her actions; and

• she seemed remorseful and thus it was unlikely that Naidu would commit similar misconduct again.

Furthermore, Naidu had actually come clean about her actions and raised the issue before ABSA found out about it. The CCMA commissioner concluded that the act of dishonesty and breach of FAIS legislation was not sufficient to warrant dismissal.

On review the Labour Court dismissed the review application on the basis that the dismissal was substantively unfair as another employee had received a final written warning for similar misconduct and thus that the commissioner’s award was reasonable in the circumstances.

ABSA then appealed to the Labour Appeal Court (LAC). At the LAC Naidu argued that ABSA did not apply the parity principle as another employee who had committed similar misconduct was not dismissed and thus Naidu’s dismissal was substantively unfair. Ndlovu JA considered the parity principle and found that the concept of parity requires fairness and equality before the law. This requires like cases to be treated alike. Ndlovu JA, however, found that the parity principle must be applied with caution and the fact that another employee was not dismissed for similar misconduct did not mean that the employer condoned dishonesty. It would not make sense for an employee who commits serious misconduct to get off lightly because a previous employee was not dismissed because of a technicality or differing views of presiding officers. Thus, there needs to be a degree of flexibility so that discretion can be exercised in each case.

Ndlovu JA concluded that there was no justification to condone Naidu’s conduct based on one single instance of misconduct by another employee. Furthermore, Ndlovu JA was of the view that the cases were not exactly alike as the other employee’s case did not involve a financial transaction but a quotation. In addition, the other employee had committed the act in the spur of the moment while it seemed that Naidu had had time to reflect on the potential gravity of her actions and her conduct was premeditated. Thus, these two cases were not identical. Furthermore, they were presided over by different chairpersons. The LAC held that while the issue of parity is an important factor, it is only one factor and is not decisive. One still needs to consider all the facts of the case.

A mitigating factor that was considered was that Naidu’s conduct was not for personal gain but in the best interest of the client. However, Ndlovu JA was of the view that this was not entirely true as prior to this event, Naidu had given the client some bad financial advice and there was a threat that she would be held personally liable for a previous loss of R 40 000. Thus, the switch was probably motivated by a desire to recoup the perceived financial loss. Another mitigating factor that the LAC considered was Naidu’s alleged remorse. The LAC considered the fact that she did not take responsibility for her actions in the internal appeal and was accordingly of the view that the remorse she subsequently showed was not true remorse. It was held further, that even if there had been genuine remorse, this did not constitute an absolute immunity to the sanction of dismissal as remorse is merely one factor to be taken into account.

The LAC held that there are varying degrees of dishonesty and thus each case must be decided on its own facts. Whether the dishonesty in a particular case was gross or not depended on the impact it had on the employer’s business. Naidu’s conduct severely affected the business and ABSA’s reputation. She also occupied a senior position and was involved in significant transactions where a high level of trust was placed in her.

It was held that the trust relationship was irreparably broken down and the remorse, whether genuine or not, was not likely to restore the trust relationship. In the circumstances, the LAC held that the commissioner did not reach a decision that a reasonable decision maker could make and the appeal was upheld.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

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

This article was first published in De Rebus in 2015 (March) DR 37.