Tag: labour law

The meaning of ‘unfair’

By Ivan Israelstam, chief executive of Labour Law Management Consulting 

The Labour Relations Act (LRA), born from the Constitution, provides that “every employee has the right not to be-
(a) unfairly dismissed; and
(b) subjected to unfair labour practice.”

Section 187 of the LRA provides that a dismissal is automatically unfair if it has an unfair reason. The section then lists the reasons for dismissal that would be unfair. For example, if the employee was fired because he/she had exercised his right to take action against the employer in terms of the LRA, this retaliatory dismissal would be automatically unfair. Again, we have an example of the employer’s interference with an employee’s right being defined as “unfair”.

‘Unfair’ is one of the most frequently used terms in labour law. The CCMA receives tens of thousands of referrals each year from employees claiming unfair treatment at the hands of their employers. It is therefore most surprising that this term is not defined in any of the statutes. The result of this is that the decision as to what is “unfair” has to be made by trade unions, employees, employers, judges, arbitrators, and legal practitioners in each individual case where unfairness is being alleged.

While the legal meaning of the term ‘unfair’ is extremely illusive every employer needs to have a proper grasp of the legal meaning of “unfair” in order to avoid the legal repercussions of doing anything unfair to its employees.

Section 188 of the LRA deems a dismissal to be unfair, even if it is not automatically unfair, if the employer fails to prove-
(a) that the reason for the dismissal is a fair reason; and
(b) that the dismissal was effected in accordance with a fair procedure.

This section explains neither what is meant by “a fair reason” nor what a “fair procedure” is. However, common law has established guidelines in these regards and these guidelines have been codified in Schedule 8 of the LRA. For example, item 7(b) includes a requirement that any person deciding whether a misconduct dismissal was fair must, amongst other things determine whether the dismissal was an appropriate sanction for the contravention of the rule that was contravened by the employee.

The word “appropriate” here again gives us a clue to what is “unfair”. That is, if the employer’s decision or action is inappropriate it could be unfair in labour law. The word “appropriate” in a labour law context implies that the employer’s action must be appropriate in the context of the specific situation in which the action was taken. Another way of putting this is that “the punishment must fit the crime”. If the employee is fired for a minor infringement or where circumstances reduce his/her liability a dismissal would usually be inappropriate and therefore unfair.

In summary, the act of an employer would be seen to be unfair if it is one-sided, unnecessary and/or inappropriate under the circumstances or infringes the employee’s rights. As employees have a vast number of very strong labour law rights employers need to ensure they understand these rights. They need to avoid taking any action affecting employees before checking with their labour law expert that it would be safe to take such action and how to go about it.

Be prepared for con-arb at the CCMA

By Ivan Israelstam, chief executive of Labour Law Management Consulting

The CCMA hears over 180 000 cases a year. This can result in backlogs and delays in resolution of disputes. As a consequence the law provides for a speedier dispute resolution process called con-arb, which stands for conciliation-arbitration.

Regardless of whether con/arb is applied the process always begins with conciliation. This is a peace-making process whereby a CCMA or bargaining council (BC) mediator tries to assist the employer and employee to reach an out-of-court agreement and a quick resolution of the dispute. The conciliating commissioner has no authority to make an award (judgement).

On the other hand arbitration is a judicial-type process that usually occurs if a conciliated settlement is not achieved. At arbitration the employer and employee do not negotiate an agreement. Instead, they bring and present evidence as in any court case so that the arbitrator can make a finding.

Con-arb is when, instead of scheduling the arbitration for a later date, it is held on the same day, the very minute that conciliation fails! Thus, the parties have no time after the conciliation meeting to prepare their evidence and arguments for the arbitration!

Therefore, on receiving any con-arb notice a party who does not want con-arb must lodge a formal objection at least 7 days in advance of the set hearing date. However, such an objection will not be valid if the dispute concerns an unfair dismissal relating to probation or an unfair labour practice relating to probation.

As mentioned, the purpose of con-arb is to cut down drastically the time period between conciliation and arbitration. It could also have the effect of forcing the parties to make every effort in trying to settle the matter at conciliation. This is because they are aware of the arbitration that will take place immediately conciliation fails.

It is essential for employers and employees who receive con-arb notices to:

• Realise straight away that it is a con-arb that has been scheduled
• Understand what con-arb means for them in practice
• Begin immediately with preparations for the con-arb.

This is particularly so because the parties seldom get more than 14 days advance notice of a con-arb.

The parties need to enter into intensive preparations the moment they receive a con-arb notification because:

• 14 days is very little for purposes of preparation
• The parties have to prepare for both conciliation and for arbitration
• Preparation for arbitration in particular takes a great deal of time.

Included in these preparations should be:

• The preparation of the witnesses of truthful, relevant and accurate testimonies
• Collecting and preparing documentary and other evidence
• Responses to anticipated evidence that the opposing party could bring
• Preparation of case arguments and case law.

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.

Source: Supermarket & Retailer 

The National Assembly officially passed the new National Minimum Wage (NMW) Bill at the end of May – nearly a full month after it was due to come into effect.

The bill sets a minimum wage of R20 per ordinary hour worked. This wage will be reviewed within 18 months of the commencement of the NMW Act and will be adjusted within two years of the commencement of the Act. Assuming a 45-hour week this equates to R3,900 per month.

While the minimum wage cannot be waived, and will take precedence over a contrary provision of a contract of employment, there is now the looming question among many South Africans on how the executive will manage the implementation of the bill.

According to a new commentary note published by VDMA Attorneys, the Department of Labour responded to this question in May by stating that, if and when the bill is passed, additional resources will be required to ensure that employers comply with the minimum standards.

However, it noted that, as it stands, the department does not have sufficient resources to assign labour inspectors to visit every workplace.

“The director general of the department has outlined a number of strategies to support compliance with the National Minimum Wage,” said VDMA.

“As the first port of call, they expect workers and unions to come forward and inform the department of non-compliance.

“There is also an obligation on the employers to ensure that they comply. Another initiative is what the department calls ‘blitz inspections’, which is an effort to focus on areas which are infamous for non-compliance with labour regulations. The department will issue compliance orders to those who do not conform to the National Minimum Wage,” it said.

It adds that the NMW will also be incorporated into the Basic Conditions of Employment Amendment Bill, which it also extends the jurisdiction of the Commission for Conciliation, Mediation and Arbitration (CCMA).

“Labour inspectors now have the power to refer disputes relating to non-compliance to the to the CCMA and to appear at the CCMA in these disputes,” it said.

“The CCMA will have the power to make a compliance order issued by an inspector, an arbitration award, which award will carry the same weight as an order issued from the Labour Court.”

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.

Government amends UIF Bill

A new Unemployment Insurance Fund (UIF) Bill has been signed into law which will see improved benefits for employees.

The purpose of the Unemployment Insurance Act, No 63 of 2001 is to provide for the payment from the Fund of unemployment benefits to certain employees and for the payment of illness, adoption, maternity and dependents’ benefits related to the unemployment of such an employee.

Among several amendments, the bill:

  • Increases UIF benefits from 238 to 365 days
  • Allows employees to apply over 12 months instead of six
  • Allows employees to apply for maternity leave benefits eight weeks before delivery and up to 12 months after birth
  • Sees a flat rate for maternity benefits (66% of a female employee’s salary)
  • Let’s the female employee who have lost their child in the last trimester qualify for maternity benefits
  • Grants people on learnerships to apply for benefits
  • UIF benefits will not be stopped when a beneficiary dies, but will be paid out to their dependents.
  • Claims from the UIF can be made for longer period

Prior to these amendments, the employee were only able to claim from the UIF for 238 days’ work. Now it is possible to claim from the UIF for 365 days work. These benefits may be claimed over 12 months instead of the previous six months.

Dependents benefits

Dependents’ benefits can be claimed by the spouse or minor children of someone who has died, who had been paying UIF contributions to the Fund.

The dependents of a deceased breadwinner now have up to 18 months in which to apply for the dependent benefit.

This is especially positive for those in low-income jobs because they often learn about such benefits being available to them long after the breadwinner has died, and traditionally in many black communities, widows are not allowed to be outside their homes for long periods while they are in mourning, which takes anything from six months or longer.

Another change is that there is now a provision that allows contributors to the Fund with no dependents to nominate beneficiaries of their choice in the event of death, provided the deceased had no spouse, life partner or dependent children.

Illness benefits

Illness benefits can be claimed if the employee is off work for two weeks due to illness and will not receive a salary from the employer. This has now been changed to seven days, meaning the employee can now claim for illness benefits if they are off work for seven days.

New additions

Learners who were on ‘learnership’, Public Servants and Foreign Nationals are now able to claim for UIF benefits.

Now let’s have a look at the changes to the Maternity Benefit and how they will impact Employees.

Maternity

Previously the employee had six months in which to claim for maternity benefits, meaning that if six months passed before the employee claims, the employee was unable to put in a claim. The time in which the employee can put in a claim has now been increased to 12 months. This means that the employee now has a year within which the employee can submit the employer application for benefits.

If the employee has claimed for maternity benefits before, the employee will recall that if the employee had claimed for any type of benefits within a four-year cycle, such as unemployment, this negatively affected the employee when the employee applied for maternity benefits during this four-year period because the employee would not be able to claim for full maternity benefits.

Fortunately, this has changed and now the employee claim for any other benefits would not affect the employee’s ability to claim for full maternity benefits.

A fixed rate of 66% of a female employee’s salary (instead of the current sliding scale of between 38% and 60%), has now been introduced, subject to the maximum income threshold as set out in the Act.

The following also applies:

Full maternity benefits can now be claimed by female employees who had miscarriages in their third trimester. The contributor is entitled to benefits for 17-32 weeks. To claim, the contributor must have been employed for 13 weeks prior to claiming the maternity-related UIF benefit.

Application for benefits can now be made before or after the birth of a child – but no later than 12 months after the birth of the child.

And after a traumatic experience of losing a child – this may go a long way towards providing the support and time to recuperate.

Source: Labour Net

Under labour law employees have the procedural right to a fair hearing before being disciplined or dismissed for misconduct or poor performance.

The following is a checklist of employee rights that employers holding disciplinary hearings must adhere to – the right to:

• prepare for the hearing
• the assistance of a representative
• an interpreter
• bring witnesses
• cross examine witnesses brought against them
• an impartial presiding officer chairing the hearing.

Other than under a few isolated exceptional circumstances these rights are strongly entrenched.

More employers are starting to afford employees some of these rights but are still falling short as regards the employees’ right to an impartial hearing chairperson. The reasons for this include:

• The employer’s intention is to hold a kangaroo court and get the employee fired regardless of the consequences OR
• Those employees assigned the task of chairing hearings are not properly trained OR
• The employer does not understand what constitutes bias.

There are in fact a number of factors that may suggest that the hearing chairperson could be biased. These include, amongst others, situations where the chairperson:

• Has previously had a clash with the accused employee
• Has prior knowledge of the details of the case
• Is a close friend of the complainant bringing the charge on the employer’s behalf
• Unreasonably turns down requests from the employee for representation, witnesses, an interpreter or other requirements
• Makes a finding that is unsupported by the facts brought before the hearing.

What does not necessarily constitute bias is the refusal of the chairperson to:
• Allow legally impermissible evidence,
• Hear irrelevant testimony or
• Allow unjustified adjournments.

However, it is extremely difficult for a hearing chairperson to distinguish fairly between reasonably and unreasonably turning down the accused’s request for a witness, representative, adjournment or other requirement. The ability to make rulings in this regard that will stand up in court can only be acquired via substantial formal training and solid experience of the hearing chairperson.

In the case of FAWU obo Sotyato vs JH group Retail Trust (2001, 8 BALR 864) the employee confessed to having stolen two bottles of beer from the employer and to drinking one of them during working hours. The arbitrator did not accept the confession as valid and also found that the chairperson of the hearing was biased. This was because the chairperson had caught the accused employee with the beers and had been involved in drawing up the charges. This created a reasonable apprehension of bias and rendered the dismissal procedurally unfair. The employee was reinstated with full back pay.

In SACCAWU obo Mosiane vs City Lodge Hotels Ltd (2004, 2 BALR 255) the employee was dismissed for stealing an item belonging to a guest of the hotel that employed the accused. The arbitrator found the dismissal to be substantively and procedurally unfair because the chairperson of the hearing had been biased and reinstated the employee.

In order to ensure that employers do not lose cases due to chairperson bias or alleged bias at disciplinary hearings employers must ensure that:

• Hearing chairpersons have no involvement in or knowledge of the case prior to the hearing

• Hearing chairpersons have a solid understanding as to what constitutes apprehension of bias

• They contract in a labour law specialist to chair hearings where the employer has no internal official with the necessary qualifications and knowledge to carry out the task properly.

By Ivan Israelstam, chief executive of Labour Law Management Consulting 

How the gig economy could shake up employment law

The gig economy has taken over the world, with most people not fully realising its impact. Put simply, the gig economy is a labour market characterised by freelance, flexible, on-demand work rather than the more traditional nine-to-five working model. Instead of being paid a regular salary, workers are paid for each “gig” they do, such as a car journey, food delivery or a cleaning job.

Typically, workers in the gig economy find jobs by registering on websites or apps and signing up for what they want to do. Around 15.6% of the UK’s workforce make up the gig economy. The figure is 34% in the US and expected to rise to 43% by the year 2020. South Africa will, no doubt, follow suit.

The major difference between the gig economy and traditional freelancing or contractual work is the flexibility and transparency that go with it. Gig freelancers can work from wherever they like, whenever they like and for whomever they like.

Timing of jobs is more spontaneous, and apps and websites now automatically connect people to deliver on requirements in real-time.

The major difference between the gig economy and traditional freelancing or contractual work is the flexibility and transparency that go with itBut how many of these gig workers prefer the work to permanent employment, and how many simply cannot find better pay or jobs elsewhere? With South Africa still recovering from recession and an unemployment rate of 27.7%, there’s no doubt that a lot of these “gigs” are performed because there is nothing better out there.

While some may argue that the gig economy empowers entrepreneurs, others argue that it is purely another means of exploiting workers. In most countries, only employees are entitled to the protection of employment legislation, such as being protected from unfair dismissal, and receiving minimum basic benefits such as holiday pay, sick leave and minimum working hours. Independent contractors are not offered such protection and their recourse is limited to what is contained in their service contracts.

UK test case
Last year in the UK, an employment tribunal ruled that Uber drivers are “workers”, and not self-employed contractors as their contracts stipulated. Uber has always maintained that it does not employ any drivers or own any cars. Instead, it provides the technology platform that enables the connection between driver and passenger. In the court case, judges held that the drivers are workers and should be given a basic set of rights under the law, including a national minimum wage. Uber appealed against this ruling, which was heard in September. A ruling is yet to be handed down.

In South Africa recently, the Commission for Conciliation, Mediation and Arbitration (CCMA) issued a ruling that seven Uber drivers who had been “deactivated” from the Uber platform and had subsequently referred unfair dismissal claims to the CCMA were not independent contractors but must be considered employees. This means these drivers are given employee protection in terms of the Labour Relations Act and the Basic Conditions of Employment Act. Uber South Africa has appealed the ruling and is currently awaiting judgment.

British prime minister Theresa MayWith the new world of work and the rise of the gig economy, the line between who is an employee and who is not is becoming increasingly blurred. But will this change how our courts view these types of workers in the future?

Seeming to shed light on this topic in the UK, the Taylor Review of Modern Working Practices was released in July this year with the hope of addressing the widespread deprivation of employment rights in the gig economy. Prime minister Theresa May had requested Matthew Taylor, chief executive of the Royal Society for the Arts, to conduct an independent review into how employment practices in the UK need to change to keep pace with modern business models.

Interestingly, the Taylor Review suggests that the UK government create a new category of worker, the “dependent contractor”, that sits between contractors and those in full employment, and brings with it some benefits and wage protections. It also called for the employment status to have a clearer definition that better reflects the reality of modern working arrangements.

Recommendations
Here are some of the review’s recommendations to the UK government in relation to gig workers:
It should develop legislation and guidance that adequately set out the tests that need to be met to establish employee or “dependent contractor” status.The national minimum wage legislation should be updated so that “dependent contractors” receive at least the national minimum wage, but on a piece-rate basis.

Under these rules, a gig company would have to demonstrate through its data that at times of normal demand, an average person could earn 20% more than the national minimum wage. However, if that person chose to work at a time of low demand, he or she might not earn the minimum wage; the company would have to use its real-time data to warn them of this in advance.

Government should provide maximum clarity on status and rights for all individuals, by extending the right to written particulars to all in employment. At the moment, employers only need to provide a written statement to employees that outlines their employment terms and conditions from the first day of employment. Workers are not entitled to such a statement.

The Taylor Review received a mixed response in the UK. While some have welcomed some of the proposals and agree that current legislation is no longer fit for purpose and needs updating, others have concerns that some of the proposals will materially increase costs and administration for employers.

The UK government will engage with stakeholders across the country before publishing a full response to the review later this year.

Although there are no immediate plans to revise the legislation to accommodate the gig economy, only time will tell as to whether or not a similar approach will be considered in South Africa.

By Amanda Arumugam for Tech Central

Labour brokers: when is it legal?

South African labour legislation severely constrains the few employer rights that exist. It is therefore no surprise that employers  look for alternative means of hiring labour instead of employing workers directly.

One option is to use labour brokers in an attempt to free employers from many labour law responsibilities in return for a fee.Trade unions, who find this loophole to be a thorn in their sides, call this type of arrangement “Atypical Employment” and have instigated new legislation, effective from April 2015 that severely curtails the purposes for which labour brokers.

Even before the 2015 amendments using labour brokers to evade labour law responsibilities was difficult and labour brokers were already taking struggling to cope with the legal responsibilities that they took over.

For example, in the case of Sibiya & others vs HBL Services cc (2003 7 BALR 796) the employees were employed by a labour broker to provide work to a client. The employees refused to change to a new shift system introduced by the client. When the employees arrived for work the next day to render services under the old shift system the broker’s client locked them out and they referred an unfair dismissal dispute.

The arbitrator found that the employees had been dismissed for refusing to work under the new shift system. As the employees were entitled to refuse the change and as no proper dismissal procedures had been implemented the arbitrator ordered the broker to reinstate the employees with full back pay.

In the case of Springbok Trading (Pty) Ltd vs Zondani and Others (2004 9  BLLR 864) the company wanted to transfer a number of its own employees into the employment of a labour broker that was already providing most of the company’s labour. The company claimed that the union had agreed to the transfer.

The union denied this. Those employees who refused the transfer were retrenched and some of them declared and were successful with a dispute in the Labour Court. On appeal the Labour Appeal Court found that:

• The discussions with the union had been conducted by the very same labour broker to which the employer wanted to transfer the employees. Thus the person who consulted with the union had a lot to gain by the transfer and could not be seen to have consulted in good faith.

• The employer’s stated reason for wanting to implement the transfer was not good enough to justify the retrenchment of those employees who refused the transfer. That is, the employer’s alleged wish to avoid the burden of payroll administration did not justify the loss of employees’ jobs.

• It was unlikely that the trade union would have agreed to the retrenchment of its members.• Consultations on the retrenchments were neither completed nor properly conducted.

• The retrenchments were unfair.The employer’s appeal was therefore dismissed with costs.The 2015 amendments shift most of the responsibility from the labour broker back to the original employers who have therefore lost a key means of relief from the heavy constraints of labour legislation.

All employers and the smaller ones in particular, need to learn, with the help of reputable labour law experts, how to continue to run profitable businesses despite the ever increasingly restrictive labour legislation.

To book for our 10 November Johannesburg seminar on achieving a productive and legally compliant workplace, please contact Ronni via ronni@labourlawadvice.co.za or 084 521 7492.

By Ivan Israelstam, chief executive of Labour Law Management Consulting

Arbitration is not always final

Either party to an arbitration can take the arbitrator’s conduct on review to the Labour Court if they are able to prove that the arbitrator, in making his/her award, has materially broken a rule thereby committing ‘misconduct’.

Arbitrator ‘misconduct’ can and does occur in many different forms including, amongst others, bias, interrogation of witnesses, failure to keep records, ignoring of evidence, refusal to allow a party the right to question witnesses or bring evidence, failure to apply his/her mind, misconstruing of evidence, overstepping his/her authority and failure to consider statutory provisions.

An arbitrator cannot make a fair decision if he/she fails to take into account all of the material evidence placed before him/her. In the case of Crown Chickens (Pty) Ltd vs Kapp & others (2002, 6 BLLR 493 LAC) the arbitrator found that the employee had not called a colleague a “kaffer”. However, the Labour Appeal Court found that the arbitrator had, without good reason, rejected the evidence of two witnesses whose evidence indicated that the employee had called his colleague a “kaffer”. The Court therefore overturned the decision of the arbitrator, found the employee’s dismissal to have been fair and ordered the employee to pay the employer’s legal costs.

In the case of Prince vs CCMA and others (2005, 2 BLLR 159) the employee was fired for stealing money collected from the car park pay station. The CCMA arbitrator found that the employee had been involved in the theft and upheld the dismissal. The Labour Court found that the employer’s evidence had been sketchy and contradictory and that the CCMA commissioner’s award finding had not been based on the facts. The employer was required to reinstate the employee with 44 months’ back pay plus interest. The employer was also ordered to pay the employee’s legal costs.

In an unreported case (Number JR 1606/04) the employee was reprimanded by a manager for failing to phone in while absent from work. The employee left his employment, went to the CCMA and claimed that he had been dismissed. At the CCMA the employer denied that the employee had been dismissed and brought substantial evidence to show that the employee had been instructed to return to work.

During the arbitration hearing the commissioner frequently cross examined the employer’s witnesses and made remarks deriding the evidence of those witnesses. The arbitration award, which was in favour of the employee, failed to take into account the evidence brought by the employer.

The employer took the arbitrator on review to the Labour Court claiming that the award failed to take the facts into account and that the arbitrator was biased. The Court found in favour of the employer and found the dismissal to be both procedurally and substantively fair.

Parties therefore need not give up if they truly believe that, on the proven facts, they were short changed due to irregular conduct on the arbitrator’s behalf.

However, even if the aggrieved party has evidence of arbitrator ‘misconduct’ it is difficult to persuade a court judge that this evidence amounts to solid proof meriting the overturning of the award. In the unreported case described immediately above the employer used proper labour law expertise in order to prove its case. Failure to use such expertise would most likely to have resulted in the employer losing the case.

By Dr lvan lsraelstam, chief executive of Labour Law Management Consulting.

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