AUGUST 2010  NEWSLETTER

Worklaw is a subscription based labour law service developed by leading South African labour lawyers and arbitrators. Worklaw gives you all you need to manage labour law at the workplace.

Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article on ‘Using operational requirement procedures to deal with misconduct during a protected strike’. We also look at two new cases: the first deals with how an employee’s defiant response to the employer’s overpayment can ultimately result in a breakdown in trust. The second deals with proving constructive dismissal.

This public newsletter is a free edited version of the Worklaw subscriber newsletter.   

RECENT CASES

Over-payment, defiance and trust

In the recent case of Theewaterskloof Municipality v SALGBC (Western Cape Division) & Others (LC C966/2008 Judgment: 14 May 2010) a strange sequence of events occurred.  After a managerial employee of 22 years’ service had left the municipality’s transport allowance scheme, the employer included the amount of R3,500 in his salary payment through an administrative error. The employee wrote to the Municipality referring to the fact that he had withdrawn from the transport scheme but at the same time thanked it for the “perk”.

He was again erroneously paid an allowance amount of R3,500 in the following month but later that month the Municipality’s Chief Personnel Officer wrote to him noting that he had incorrectly received the allowance for two months and requested him to make the necessary arrangements with the salaries section for those amounts to be repaid. However the employee did not refund the overpaid amount. Instead, he spent it, although he was well aware that he should not have received it at all. As he put it in his evidence, he spent the money merely because it had been paid to him.

The Municipality came to him with a repayment document. The employee completed this, authorising the Municipality to deduct an amount of R10 per month in respect of his indebtedness for these payments. At that rate, it would have taken about 58 years to liquidate the debt of R7,000.  Discussions with the employee made clear to him that an offer of R10 was totally unacceptable to the Municipality, which considered it to be ludicrous. The response of the employee was disdainful, being that he was a ‘poor white’ and that he could not afford more. Having regard to his post and salary, this too was construed by the Municipality as ridiculous.

About two months later there was a meeting between the employee and senior officers of the Municipality at which it was put to him

• that by accepting the erroneous payments while knowing that he wasn’t entitled to them he had not acted in the best interests of the Municipality;
• that this could be seen as unlawful appropriation of Council funds;
• that certain provisions of the Municipal Finance Management Act had been contravened;
• that since the payment of the R7,000 was unauthorised expenditure it should be repaid within 48 hours alternatively that he could rejoin the scheme and set off that amount by using his vehicle without further payment for a period of two months; and, finally,
• that he should inform the Municipality of his intentions within 48 hours failing which summons would be issued and disciplinary action would be considered.

Following a disciplinary hearing, the employee was dismissed on two charges. This dismissal was referred to arbitration through the applicable bargaining council. The arbitrator found him not guilty of the first charge and although it appeared (albeit ambiguously) that he upheld the finding of guilt on the second charge, he imposed no sanction in respect of it.  Instead, having observed that the sanction of dismissal was not an appropriate sanction under the circumstances, the arbitrator went on to state that he was “… unable to make a finding as to what would have constituted a fair sanction …” In consequence of that view, he failed to properly determine the dispute which had been referred to him.

The arbitrator’s award was taken on review to the Labour Court, which found that he had been fairly dismissed. His conduct was held not to be dishonest in the conventional sense, in that there was nothing furtive in his actions and there was no suggestion that he at any time contemplated that he could ‘get away with’ the two payments which had erroneously been made to him. However, the question of trustworthiness was seen to go beyond offences which are centrally dependent upon proof of outright dishonesty. An offence such as fraud or theft will generally be so destructive of one such facet that the relationship itself would inevitably perish.

Here, the aspect which was damaged by the employee goes to this question: is the Municipality fairly entitled to expect that an employee at the level of manager will at all times act in its best interests, that he will seek to promote its operational requirements, that he will not wittingly retain and spend municipal funds erroneously paid to him, and that he will timeously and purposefully seek to correct his conduct once he has strayed? The court held that the answer must surely be that it not only can but, as an entity of government, is obliged to have such expectation.

We find this to be an interesting case in that it shows that employee conduct which is not dishonest in the conventional sense, may nevertheless lead to a breakdown in the trust relationship if the employer’s expectation is not met regarding the employee acting in its best interests, promoting its operational requirements, not wittingly retaining and spending funds erroneously paid to him, and timeously and purposefully seeking to correct his conduct once he has strayed. The court placed great store on the employee’s lack of remorse and his persistent defiance, and saw those as factors which justified dismissal.

Proving constructive dismissal

The LRA makes provision for a resignation to be defined as a dismissal where that resignation is the result of the employer’s own actions – where the employer makes a continued employment relationship intolerable. But the employee has to prove this.

In the recent case Chabeli v Commission for Conciliation, Mediation and Arbitration and Others (JR2241/08) [2009] ZALC 126 (22 December 2009) the Labour Court confirmed that the test for establishing constructive dismissal is:

• whether the employer, without reasonable and proper cause,
• conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between the employer and employee.
• It is not necessary to show that the employer intended any repudiation of a contract: the court's function is to look at the employer's conduct as a whole and determine whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it.

In Chabeli’s case the employee tendered his notice of resignation and employer accepted the resignation and indicated that it was not necessary for the employee to continue working during the notice period. Over a month later the employee referred a dispute to the CCMA alleging that he was unfairly dismissed by the employer. In the dispute referral forms the employee stated the reason for his resignation as follows: “The employer made the employment conditions so unbearable to an extent that there was a breakdown of trust to an extent that I had no alternative but to resign.”

The Labour Court confirmed that the employee has to establish the existence of the dismissal by showing that he or she terminated the employment relationship because the employer made continued employment intolerable. Thus the onus to show that the dismissal was constructive because the employer had made the continued working relationship intolerable rests with the employee.

The Labour Court in this case placed emphasis on the fact that the letter of resignation did not state the reason for the resignation, nor did the employee establish clearly that continued employment was intolerable. The employee was held not to have been constructively dismissed.

This case is a reminder that proving constructive dismissal is not done by making unsubstantiated allegations. The court will look at all the circumstances – such as the reasons for resignation in the resignation letter – to assess if the employee has discharged the onus of proving that the employer has made working conditions so intolerable that the relationship of confidence and trust between the employer and employee has been damaged or destroyed.

GETTING THE MOST OUT OF WORKLAW

Worklaw is designed to be accessed in a number of ways. You may want to find out the law on a particular topic; if so, go to Unfair Labour Practice or Unfair dissmisal law. If you need to find a case reference or find a case under a specific topic, go to Case Law. If you are still in the dark, use the Help Line, and we’ll answer your query within48 hours .You may want to check if you have taken the correct steps in, say, suspending or disciplining an employee; if so go to Forms/ Checklists. If you want to institute a new policy or procedure; go to Model Disciplinary and Grievance Procedures. If you need to check the actual wording of legislation, this is all set out at Legislation. The Codes of Good Practice on dismissal, sexual harassment, picketing etc can be found at Codes of Good Practice.