Tag: employers

Buckshot dismissals are risky

By lvan lsraelstam, chief executive of Labour Law Management Consulting

Frequently employers know that serious misconduct has occurred but are unable to prove which employee or employees are responsible. This can occur in a variety of circumstances.

For example:

• Stock may go missing from a warehouse or retail store where any of a number of employees had access to the stock and opportunity to remove it

• Damage may have been caused to business machinery in a workshop used by numerous employees

• Confidential information may have been leaked

• There may be cash shortages in tills or other cash storage points

Employers are often tempted in such cases to discipline everyone who could possibly have been involved in such misconduct. This buckshot approach by employers may be motivated by a number of factors including the thinking that:

• If we fire the lot we will be sure to get rid of the culprit

• Some case law has given the impression that such group dismissals may be justified

In the case of NUSFRAW obo Gomez & others vs Score Supermarkets (2003, 8 BALR 925) a group of managers were dismissed as a result of stock losses amounting to six million rand. While there was no proof that these managers were guilty they were fired. The CCMA arbitrator found that the poor management of the business by the dismissed employees had led to the losses and that this justified the dismissal.

Again in the case of FEDCRAW vs Snip Trading (Pty) Ltd the arbitrator ruled in favour of group dismissals. Here, the employer had a policy which held every employee responsible for stock losses. When stock disappeared several employees were fired despite the absence of direct evidence of their guilt.

The arbitrator found that the concept of group responsibility for stock losses was not unfair under the circumstances.

The outcomes of these two cases have misled a number of employers into believing that group dismissals are inherently fair. However, this will only hold true in exceptional circumstances. It will depend on the extent to which the employees specifically have responsibility for prevention of losses and have the means of preventing losses. It will also depend on the viewpoint of each individual arbitrator.

For example, in NUM & Others vs RSA Geological Services (2004, 1 BALR 1) fifteen employees were dismissed after kimberlite was found dumped down a borehole. The CCMA upheld the dismissal of five of the employees because there was some evidence of their individual guilt. However, the arbitrator ordered the reinstatement of the other ten employees as there was insufficient proof that they had been implicated in the dumping of the kimberlite.

Again in SAGAWU obo Cingo & Another vs Pep SA Limited (2004, 10 BALR 1262) the entire staff of one of the employer’s stores were dismissed for stock losses. The CCMA found that the group dismissal was unfair because the employer had failed to prove that the dismissed employees were guilty of misconduct. The dismissed employees were reinstated with full retrospective effect.

The apparent lack of consistency in case law and the powerful laws protecting employees from unfair dismissal sound a strong warning to employers not to act against employees before they fully understand their legal rights. The correct actions of the employer will differ from case to case depending on a number of legal subtleties and interpretations.

By Ivan Israelstam, chief executive of Labour Law Management Consulting 

South African labour legislation gives employees a plethora of rights against the employer. So much so that many employers wonder whether the resultant burden on them makes it worth continuing to run the business.

For example, employees have, amongst others, the right to:

• Join trade unions
• Go on strike
• Procedural fairness at disciplinary hearings
• A fair reason for dismissal
• Protection form unfair demotions
• Be promoted under certain circumstances
• Minimum wages in many cases
• Sick leave, holiday leave, maternity leave and compassionate leave
• Overtime pay
• Consistent treatment
• Protection from unfair discrimination
• Representation at CCMA by a trade union representative

On the other hand, labour legislation gives employers few rights; and those that they do have are very restricted. That is, employers may exercise limited rights as long as, in doing so, they do not infringe the numerous rights given to employees.

However, one area that employers can exercise their rights is that of fiduciary duty. This means that the employee has, in certain ways, the duty to put the employer’s interests first. This does not mean that the employee must, as a way of benefiting the employer, forfeit his/her rights to leave, legal working hours or fair discipline. It does mean that the employee may not advantage himself/herself unfairly at the expense of the employer.

Specifically, this means that the employee may not:

• Place him/herself in a position where his/her interests conflict with those of the employer
• Make a secret profit at the expense of the employer
• Receive a bribe or commission from a third party
• Misuse the employer’s trade secrets
• Give a third party the employer’s confidential information.

While this principle applies generally to employees it applies more strongly to senior employees. In deciding on the extent of fiduciary duty that an employee has the courts consider a number of factors including:

• The degree of freedom that the employee has to exercise discretion in making and executing business decisions
• The opportunity for the employee to exercise this discretion in his/her own interests
• The extent to which the specific circumstances open the employer to abuse of the employee’s discretion
• The extent to which the employer relies on the employee for expertise and judgement in conducting the business
• The extent to which the employee is in a position of trust.

Clearly, the more junior the employee the less these fiduciary factors are likely to prevail. That is, with some exceptions, junior employees normally do not have the right or duty to make crucial business decisions or the opportunity to misuse decision-making power.

The line between who is a senior employee and who is not and the line between who is in a position of trust and who is not are blurred. Whether, for example, a junior salesperson is in a position of trust or not depends on the specific circumstances of each case. Therefore, in order to protect itself from employees acting against the employer’s interests every employer should:

• Build in checks and balances that prevent the abuse of power
• Inform all employees of their fiduciary duties in relation to their positions of trust
• Make sure employees at all levels know the seriousness of breach of their fiduciary duties
• Take swift, fair and consistent action against employees who breach their fiduciary duties
• Obtain expert legal advice before acting against suspects.

Dismissal for poor performance

While the law allows employers to decide what the proper standards of performance are, the employer will, if taken to the CCMA, be required to prove the fairness of the dismissal.

Employers must therefore ensure that their performance management systems and practices are designed to enable the employer to prove at arbitration that:

• The employee knew what the required performance standard was;

• The standard was realistically achievable;

• The employee was given sufficient opportunity to achieve the standard; and

• It was the employee’s fault that he/she failed to achieve the standard.

How must the employer’s systems be geared to provide legal proof in these four areas?

Did the employee know what the performance standard was?

The employee’s signed employment contract or performance agreement must spell out that, for example, that he/she is required to make 10 sales per month, reach 2 million rand turnover per year, pack 100 boxes per month or make 3 widgets per hour.

Was the standard achievable?

The employer’s formal records of actual past performance of the employee and others who have done the same work must clearly show that the agreed standard (e.g. 10 sales per month) has regularly been achieved and that therefore the standard is achievable and fair.

In the case of White vs Medpro Pharmaceutica (2000, 10 BALR 1182) the employee failed to meet her targets in nine out of ten months. The CCMA nevertheless found her dismissal to be unfair because the employer had set targets that were not achievable in the CCMA’s view.

Has the employee been given sufficient opportunity to achieve the standard?

The employer’s records relating to the employee’s performance must clearly show that, for example, the employee:

a) Has been given sufficient work to do to provide the necessary practice to become proficient
b) Has the time to get the work done properly.

Was it the employee’s fault that the performance standard was not met?

The employer’s performance monitoring records must show that:

• The employer has consistently provided the employee with the necessary work materials, training and equipment;

• The market demand for employer’s product has not reduced; or

• That there were no other reasons beyond the employee’s control for the employee’s poor work performance.

In Robinson vs Sun Couriers (2003, 1 BALR 97) the CCMA found Robinson’s dismissal to be unfair because the employer had neither established the reason for the poor performance nor brought any proof that the poor performance was the employee’s fault.

Employers must therefore be able to prove that they have:

• Set targets that are provably reasonable;

• Adjusted targets when new circumstances dictate this;

• Given employees a real chance to achieve the desired performance level; and

• Removed all obstructions to the achievement of the standards.

Thus the format of a good performance control system would be as follows:

• Details of the quantity, quality and time frame requirements of each employee;
• Proof that these standards have been achieved regularly;
• The nature of the specific tasks that the employee has been given during each performance period, the number of hours that the employee has been given to perform those tasks;
• The availability to the employee of all resources in good order needed for successful completion of the work; and
• The contact details of a reputable expert in labour law and performance management.

By Ivan Israelstam, chief executive of Labour Law Management Consulting

Many employers often find themselves in a predicament when employees resign without adhering to the notice periods stipulated in the contract of employment. In order to address the recourse available to employers, it is important to first look at what legislation prescribes for notice periods.

Notice periods

A reasonable notice period that either party in an employment relationship needs to abide by is derived from common law, however section 37 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) has specifically developed the common law and makes specific provision for notice periods. Depending on the length of service of the employee, notice periods range from one (1) week, two (2) weeks or one (1) month, however it is common for companies to provide for notice periods which differ from the BCEA or any other relevant legislation including collective agreements. This is permitted only if the notice periods are not less than the periods stipulated in the relevant legislation. An employee may not be required to give longer notice than the employer. It is important to note that there are provisions whereby the notice periods are waived and that include matters of a constructive dismissal.

Employer’s remedies

Employees who fail to give notice as per the stipulated notice period are in breach of contract and the employer has specific remedies to compel the employee to adhere to the contractual obligations.

Order for specific performance

The first recourse is for the employer to refer the matter to the High Court to request an order compelling the employee to comply with the conditions of the employment contract (order for specific performance). In terms of section 77A (e) of the BCEA, the court may use its discretion whether or not to grant or deny an order for specific performance in terms of the reasonableness of the matter.

The court indicated in Nationwide Airlines (Pty) Ltd v Roedinger & another [2006] JOL 17221 (W) that the applicant was entitled to enforce the three (3) month notice period against the respondent, as the respondent only gave one (1) month’s notice. The respondent was deemed a professional employee and entered into the employment relationship on his own accord. The respondent was fully aware of the conditions in the contract of employment and that the agreed notice period had not been forced on him. The court furthermore took into consideration the potential operational risk as flights might have to be cancelled due to the airline not having a replacement for the respondent, who was the only pilot qualified to pilot a particular Boeing, which would have resulted in a substantial financial loss for the business.

In contrast, in Santos Professional Football Club (Pty) Ltd v Igesund & another [2002] JOL 10021 (C), the head coach of the professional football team indicated that he would like to resign due to another competitive offer of employment he received. The team referred the matter to the High Court and sought relief in terms of an order for specific performance. They deemed it unfair for the coach to breach the conditions stipulated in the fixed term contract purely because he received a better offer of employment.

The High Court had to take into consideration whether the order would be viable and appropriate. It was found that the coach would not be as committed as he ought to be, should he be compelled to adhere to his contract. The coach’s dignity as well as the employment relationship between the coach and management were taken into consideration. It was found that the working relationship was irreparably broken, therefore a future working relationship would not be viable. In this case the order for specific performance was denied.

Claim for damages

The second remedy for the employer is to terminate the employee’s contract and to sue for damages. Claiming for damages is not as easy as employers might envisage it to be due to employers being required to physically prove that there was harm caused as a result of the employee not serving notice. Employers cannot simply rely on the mere fact that the employee was in breach of the employment contract.

In Rand Water v Stoop & another (2013) 34 ILJ 576 (LAC), the court found that where employees have breached their contract of employment by failing to act in good faith, in relations to section 77(3) of the BCEA, the Court may decide whether or not the employer may claim for damages incurred as a result of the breach of contract.

In Aaron’s Whale Rock Trust v Murray and Roberts Ltd and Another [1992] 3 All SA 390 (C), the court held:

“Where damages can be assessed with exact mathematical precision, a plaintiff is expected to adduce sufficient evidence to meet this requirement. Where, as is the case here, this cannot be done, the plaintiff must lead such evidence as is available to it (but of adequate sufficiency) so as to enable the Court to quantify his damages and to make an appropriate award in his favour. The Court must not be faced with an exercise in guesswork; what is required of a plaintiff is that he should put before the Court enough evidence from which it can, albeit with difficulty, compensate him by an award of money as a fair approximation of his mathematically unquantifiable loss.”

Withholding statutory payment

In practice, employers find it frustrating and costly as the financial implication of referring the matter to court equals more than the physical harm caused by the employee not serving notice. Therefore employers have been advised to include a clause in the employment contract to specifically indicate that should an employee fail to serve their full notice period, the employer is entitled to withhold final remuneration until the employee serves such notice. This will compel employees to return to abide by their contractual obligations.

In the two key judgments of Singh v Adam (2006) 27 ILJ 385 (LC) and 3M SA (Pty) Ltd v SA Commercial Catering & Allied Workers Union & Others (2001) 22 ILJ 1092 (LAC) it was specifically held that the employment contract is a reciprocal contract to which these provisions apply. The employer can therefore refuse to pay out any final payments until the employee has rendered proper performance.

Conclusion
It is evident that employers have various remedies in place regarding employees who are in breach of contract in terms of serving their notice period as per the employment contract. The remedies of applying for an order of performance and claiming for damages will result in costs incurred and may not necessarily be successful. Employers are therefore advised to include a clause in their employment contract whereby the employer may withhold the amount equal to the required notice from the employee’s final statutory payments until the employee serves notice as agreed in the contract of employment.

Source: LabourNet

After the landmark sexual harassment case involving Real Security was reported in 2003 I warned employers of the dire consequences if they do not take decisive preventive action. The automatically unfair dismissal claim was based on the fact that the employee was forced to resign because her employer allowed her to be discriminated against by the supervisor who sexually harassed her.

The Court cited section 60 of the EEA that says:

(1) “If it is alleged that an employee, while at work, contravened a provision of this Act, or engaged in any conduct that, if engaged in by the employee’s employer, would constitute a contravention of this Act, the alleged conduct must immediately be brought to the attention of the employer.

(2) The employer must consult all the relevant parties and must take all the necessary steps to eliminate the alleged conduct and comply with the provisions of this Act.

(3) If the employer fails to take the necessary steps and it is prove that the employee has contravened the relevant provisions, the employer must be deemed also to have contravened that provision.”

The Court awarded the employee compensation for unfair dismissal, unfair discrimination, medical expenses, pain, suffering and impairment of her dignity. In total she was awarded R82000,00 which equated to 41 months’ pay which is almost three and a half years’ pay.

Despite the warning that the outcome of this case sounded, employers are still not implementing measures to prevent sexual harassment and are obviously still losing cases in the Labour Court.

For example, in the recently decided case of Christian vs Colliers Properties (2005, 5 BLLR 479) Ms Christian was appointed as a typist by the employer. Two days after starting work the owner of the business asked her if she had a boyfriend and invited her to dinner. He also invited her to sit on his lap and kissed her on the neck. When she later objected to the owner’s conduct he asked her whether she was “in or out”. When she said that she was “not in” he asked her why he should allow her employment to continue. She was dismissed with two days pay and referred a sexual harassment dispute.

In a default judgement the Court decided that:

• The employee had been dismissed for refusing the owner’s advances

• This constituted an automatically unfair dismissal based on sexual discrimination

• Newly appointed employees are as deserving of protection from sexual harassment as are their longer serving colleagues

The employer had to pay the employee:

• 24 months’ remuneration in compensation

• Additional damages

• Interest on the amounts to be paid

• The employee’s legal costs

13 years after this case decision employers are still getting into trouble because they fail to utilise the best available labour law expertise to:

• Inculcate acceptance that a business can be ruined financially by allowing sexual harassment to occur

• Design a comprehensive sexual harassment policy

• Ensure that every owner, manager and employee understands the severe consequences of committing such acts

• Communicate to all concerned that such misconduct will result in severe penalties including possible dismissal

• Ensure that all employees feel entirely free to report sexual harassment.

• Train all employees in the abovelisted issues as well as in what constitutes sexual harassment, how to deal with it, where to report it and the company’s supportive policy towards sexual harassment victims

By lvan lsraelstam, chief executive of Labour Law Management Consulting

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