Public 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. Go to www.worklaw.co.za Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This month's newsletter looks in depth at the issue of joinder - a legal procedure to join the successful appointee in a grievance arbitration brought by an unsuccessful applicant. We also look at two new decisions, one dealing with whether a company director can be 'dismissed' by resolution of shareholders without protection from the LRA. The second decision deals with the need for employer consistency in the application of alcohol related policies.
This public newsletter is a free edited version of the subscriber newsletter.
LATEST CASE REPORTS
IS A DIRECTOR AN EMPLOYEE?
Can a company hide behind the decision of its shareholders and say that it (the company) didn't dismiss a director, but rather it was the decision of shareholders in terms of Company law? The issue arose in the case PG Group (Pty) Ltd v Mbambo NO & others [2005] 1 BLLR 0071 (LC). A Financial Director's services as director were terminated by the board of the holding company and sole shareholder of the employer company. The employee's services were terminated by giving him notice in terms of the company's articles of association, (requiring that he resign as director). He referred a dispute about an alleged unfair dismissal and sought reinstatement.
The company's case was that it was not its wish to dismiss the employee and that the decision to dismiss was taken by its holding company, being the sole shareholder. By removing a director in this way, a certain knock-on effect is achieved in respect of the contract. It was argued that it ends the contract but it is not a dismissal in the sense defined in s 186(1)(a) of the LRA.
The Labour Court did not accept this argument. It held that neither the LRA, nor the Companies Act specifically precludes a director from enjoying the protection of the Labour Relations Act. It said that the courts have consistently rejected the argument that managerial employees should be excluded from protection against unfair dismissal. The fact that a person is a director of a company does not necessarily mean that he or she cannot also be an employee in terms of the Labour Relations Act. However, the court said that in the light of the dual capacities in which a director holds office, it is questionable if directors are entitled to reinstatement.
THE DISCIPLINARY CODE v THE ALCOHOL POLICY
Most disciplinary codes regard drunkenness as a serious act of misconduct, often justifying dismissal. At the same time many enlightened employers have adopted policies which recognise that alcoholism is a disease which needs to be treated, not dealt with in terms of disciplinary code. What happens if an employer does not use the alcohol policy and proceeds only in terms of the disciplinary code? This happened in Black Mountain v CCMA & others [2005] 1 BLLR 0001 (LC). While operating a 50-ton vehicle at the employer's mine, the employee caused an accident. He was immediately tested for the intake of alcohol and it was established that he was significantly beyond the legal limit. Following a disciplinary enquiry the employee was dismissed for both damage to company property and being under the influence of alcohol whilst operating heavy machinery.
When the fairness of the dismissal was contested at the CCMA, the Commissioner held that the dismissal was unfair because the employer had not complied with its 'Standard Procedure for Alcohol and Drug-related Behaviour', saying that this policy prevailed over the disciplinary code. As the employer had not followed the steps in this policy (requiring suspension of disciplinary action pending mandatory referral of the employee to assessment by a therapist) the dismissal was unfair. When taken on review, the Labour Court upheld the Commissioner's decision. The lesson for employers is to treat alcohol-related offences in terms of both the disciplinary code and an alcohol policy, if both exist. Once again, an employer has been made to comply with policies it chose to implement.
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Worklaw is a comprehensive labour law advice and information service, developed by some of South Africa`s most experienced labour arbitrators. Worklaw subscribers get free advice from experienced arbitrators via e-mail, can research the law and leading cases, are updated monthly on new cases, trends etc, and can use excellent training material, to name a few of these services. Subscribers are invited to an annual labour law workshop covering the key cases and trends from the past year.
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Bruce Robertson
March 2005
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