Employment law update – Q&A

June 1st, 2014
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By Moksha Naidoo

Question:

I need some case law related to constructive dismissals and specifically to remedies where constructive dismissals took place and what the impact was, if any, on the trust relationship between employer and employee?

Answer:

Before addressing the question it would be prudent to give an overview on constructive dismissals. Constructive dismissal is a unique form of dismissal that was introduced in the 2002 amendments to the Labour Relations Act 66 of 1995 (LRA). In effect, an employee claiming a constructive dismissal terminates the employment relationship having the subjective belief that the employer has, in the absence of any rational or operational need, created an intolerable working environment.

The employee, in doing so and in terms of s 186(1)(e) of the LRA, can refer an alleged unfair dismissal dispute to the Centre for Conciliation, Mediation and Arbitration (CCMA). The matter would be conciliated and if not settled, set down for arbitration.

At arbitration the onus rests with the employee to establish that the employer created an intolerable working environment. Thus the employee’s subjective beliefs must be tested against an objective standard, namely, would a reasonable employee under the same conditions conclude the working environment is indeed intolerable?

It does not necessarily follow that an employee who successfully discharges this onus would necessarily be entitled to any remedy. The onus would thereafter shift to the employer to provide reasons why such conditions were created. If the employer can establish that the conditions complained of emanate from an economic or any other operational requirement of the employer, then the employee’s termination would not be seen as unfair.

It would be useful to read the judgment in Member of the Executive Council for the Department of Health, Eastern Cape v Odendaal & Others (2009) 30 ILJ 2093 (LC), (at para 60 – 63) where the court gave a general ‘exposition’ on the law regarding constructive dismissals and, in doing so, referred to a number of relevant and binding authorities on the subject.

Regarding the issue of remedy, s 193 of the LRA states that, should a dismissal be deemed unfair, an arbitrator may award the employee reinstatement, re-employment or compensation. It is trite that the remedy of reinstatement is the primary remedy available to an employee. (See Equity Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration and Others 2009 (1) SA 390 (CC); (2008) 29 ILJ 2507 (CC) at para 36).

However, when dealing with constructive dismissals, it is generally accepted that reinstatement is not an appropriate remedy. Logically this makes sense; the issue of remedy arises only once the employee has successfully established that the employer made working conditions intolerable for no rational reason – why then would the arbitrator place the employee back into the very same conditions he or she resigned from? For this reason compensation is generally the appropriate remedy for an employee who is successful in his or her claim for constructive dismissal.

Then again like in all aspects of law there is often an exception to the exception. Recently in Western Cape Education Department v General Public Service Sectoral Bargaining Council & Others (2013) 34 ILJ 2960 (LC), the court held that it was not unreasonable for an employee to be reinstated under circumstances where the intolerable working conditions he had resigned from had changed and no longer existed if he were to be reinstated.

Question:

I have a client who applied for a position as a truck driver at the municipality. My client was appointed, and received a salary for a period of two months for this position. On the third month he was demoted to the position of a general worker, the position he was in before. Even his salary was reduced. Kindly advise on how to go about this matter.

Answer:

Your starting point is to ascertain which bargaining council your client falls under. Once you know this you should read that bargaining council’s main collective agreement and determine what internal dispute resolution path must be followed, if any, before referring an unfair labour practice dispute to the bargaining council.

The reason for this is that employees falling under the public service sector are generally governed by a collective agreement that obliges them to follow stipulated procedures before referring their disputes to the bargaining council. Such procedures include, but are not limited to, following an internal grievance procedure and thereafter, should the dispute remain unresolved, referring the matter to the bargaining council. Referring a dispute to the bargaining council without having followed any agreed internal procedure could provide grounds for the employer to raise an in limine on the basis that the referral is premature. The applicable collective agreement will also set out the time lines for both lodging an internal grievance as well as for referring the matter to the council.

In terms of the Labour Relations Act 66 of 1995 (LRA) demotion disputes are regulated by s 186(2)(a). In the absence of an employee falling under the jurisdiction of a bargaining council, employees must refer their unfair labour practice disputes to the Centre for Conciliation, Mediation and Arbitration (CCMA) within 90 days from when the act or omission, which constitutes the alleged unfair labour practice, arose or within 90 days of when the employees became aware of the dispute – this as opposed to a 30-days time period for which to refer an unfair dismissal dispute.

In keeping with this comparison, an employee claiming an unfair labour practice bears the onus of establishing the conduct of the employer was unfair, which is contrary to an unfair dismissal dispute where the employer bears the onus to prove the fairness of a dismissal.

It is open for an employee to claim an unfair demotion if he or she is subject to a reduction in any one of the following remuneration, responsibilities or even status.

In Matheyse v Acting Provincial Commissioner, Correctional Services & Others (2001) 22 ILJ (LC), the court held:

‘From a comparison of the duties, responsibilities and powers that ensue to the two posts, there can be little doubt that a transfer to Malmesbury as Head: Resource Management would result in substantially reduced or diminished authority, power, status and responsibilities for the applicant. This constitutes a demotion.’

The fact that your client’s remuneration, responsibilities and status have been reduced, strongly suggests that your client has been demoted. Whether or not such demotion is fair will depend on the circumstances that gave rise to the employer’s conduct and how one presents argument on behalf of the employee before the arbitrator.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

This article was first published in De Rebus in 2014 (June) DR 43.

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