Henkel South Africa (Pty) Ltd v National Bargaining Council for the Chemical Industry and Others (JR648/15) [2016] ZALCJHB 447 (2 December 2016)

THE LABOUR COURT OF SOUTH AFRICA,

HELD AT JOHANNESBURG

Not reportable

case no: JR 648/15

In the matter between:

HENKEL SOUTH AFRICA (PTY) LTD First Applicant and NATIONAL BARGAINING COUNCIL FOR THE CHEMICAL INDUSTRY First Respondent COMMISSIONER NOMUSA MBHELE N.O Second Respondent KAMLESH GANESH Third Respondent

Heard: 16 November 2016

Delivered: 02 December 2016

Summary: (Review – conclusion of arbitrator unsustainable in respect of one charge – unjustified disparity of treatment – substantive unfairness – compensation)

JUDGMENT

LAGRANGE J

Introduction

[1] This is a review application of an arbitration award in which the arbitrator found that the applicant (‘Henkel’) had not discharged the onus of proving that the dismissal of the third respondent Mr K Ganesh (‘Ganesh’) was substantively fair, though it was procedurally fair.

[2] Ganesh was employed as the Safety Health Environment and Quality Manager (SHEQM) of the company for fourteen years with an unblemished record. He was found guilty by Henkel of the following charges:

2.1 Gross negligence:

2.1.1 In that the results of the initial first Waste Audit in June 2010 indicated that Avuna who is responsible for the removal of Henkel hazardous waste obtain permission to transport waste from the local authorities. In your role as SHE manager you failed to ensure that this permission was obtained and submitted to Henkel. This non-compliance was again discovered in the SHE Audit conducted in 2014.

2.1.2 In that you allowed a company that is not certified to carry Henkel hazardous waste, thus risking the company’s image and reputation.

2.2 Dereliction of duty:

2.2.1 In that you failed to provide proof that periodic audits were done on Avuna, and ensure that corrective actions are closed out, which is one of your main responsibilities as the SHEQ M.

2.3 Failure to follow SHEQ procedure:

2.3.1 In that you have failed to ensure that a safe disposal certificate is signed and provided to Henkel by Avuna every time they dispose of waste.

2.3.2 In that in your role as SHEQ in you never assessed if the landfill site where Henkel waste is disposed is in fact allowed to receive the waste.

2.4 Exposing the company

In that all the actions as per above, exposed Henkel to huge financial and reputational risks.

The arbitration award

[3] The arbitrator’s findings on the charges may be summarised as follows:

3.1 Although the permit issued to Avuna was not available when the audits were conducted, Avuna actually did have a permit to carry hazardous waste and Ganesh was merely negligent in not ensuring that the permission was submitted to Henkel.

3.2 In relation to Ganesh’s alleged dereliction of duty, Henkel failed to prove that Ganesh had an obligation to submit yearly audits. In so far as Henkel claimed that these duties were part of Ganesh’s job description, the arbitrator found that the job description in question had only been created during the disciplinary enquiry and Henkel had not produced the previous contract to prove that he had always been responsible for such duties.

3.3 In relation to the claim that Ganesh had not followed procedures, the arbitrator found that the person responsible for the collection, filing, storage and maintenance of waste disposal certificate records was Mr Wearne, the Quality Control Manager (‘QCM’) , who did not even report to Ganesh. Accordingly, it was improper to charge the applicant with this offence.

3.4 On the question of assessing if the landfill site was in fact permitted to receive hazardous waste, it was evident that there was only one site used to dispose hazardous waste and Avuna had permission to dispose Henkel’s waste there.

[4] An issue had arisen during the arbitration concerning 400 tons of waste that allegedly went missing, which Ganesh was held responsible for, but the arbitrator found that there was no evidence submitted by Henkel to prove that the waste did go missing in order to conclude that it had been illegally disposed of.

Grounds of review

[5] Firstly, the applicant argues that the arbitrator misconstrued the nature of the permit held by Avuna. The permit issued by a municipality is not the same as a permit for transporting hazardous waste issued in terms of the National Environmental Management: Waste Act, 59 of 2008, (‘NEMA’). Moreover, the permit only covered one vehicle. The applicant argues that the arbitrator failed to appreciate that Ganesh testified at his enquiry that Avuna might have used a subcontractor to transport hazardous waste, which was something he ought to have known if he had carried out his duties diligently. By implication, had the arbitrator appreciated this, the arbitrator could not have concluded that he was not grossly negligent in the performance of his duties.

[6] Ganesh earnestly sought to persuade the arbitrator that the permit issued on 21 January 2010 by Ekurhuleni municipality to Avuna approving its registration as a ‘waste transporter’ was sufficient to establish that it was authorised to transport hazardous waste because NEMA Regulation 1(2) states that “(t)he term waste in these regulations has the meaning assigned by the act and is deemed to include both general and hazardous waste” and because Regulation 1(1) defines a “waste transporter” as “any person who conveys or transfer waste”.[1] The Ekurhuleni permit only contained vehicle registration details of one vehicle, whereas it was not disputed that more than one vehicle was being used to transport Henkel’s hazardous waste. Ganesh also sought in part to rely on a 2009 letter from the service provider managing the Holfontein landfill site, Enviroserve Waste Management (Pty) Ltd, purporting to confirm that Avuna had submitted the necessary documentation to dispose of hazardous waste at the site as proof that it was authorised to transport hazardous waste. The letter claims that part of the documentation received from Avuna concerned “(t)ruck/s registration number & proof that is register to transport dangerous goods” (sic - emphasis added). In the notes to the June 2010 Henkel audit of Avuna, two distinct questions had to be verified, namely: was Avuna authorised to transport waste by the local authority and secondly was it authorised to transport hazardous waste. Ganesh maintained that the permit from Ekurhuleni effectively disposed of this issue and it had been provided, even though it was not picked up during the later audit in 2014 because the person conducting the audit did not know where to look.

[7] On the evidence before the arbitrator, I cannot say it was not reasonably possible to have interpreted the permit issued by Ekurhuleni as authorising Avuna to transport hazardous waste using the single vehicle identified, even if the letter from Enviroserve, which subsequently was contended by Henkel to have been forged, was at best only indirect evidence of Avuna being specifically authorised to transport hazardous waste. The thrust of the first charge was the supposed absence of any proof that Avuna was not authorised to transport hazardous waste, and not whether Ganesh had also been negligent in failing to ascertain that all the vehicles used by Avuna fell within the scope of the permit, though this does indicate a degree of negligence on Ganesh’s part since he knew more than one vehicle was being used.

[8] Henkel further argues that the arbitrator irrationally concluded that, Ganesh was not obliged over a period of four years to update the status of Avuna annually in terms of the 2010 audit report. The arbitrator also misconstrued the relevance of which job description was applicable because that had no bearing on how he was supposed to execute his duties and responsibilities. What the arbitrator failed to appreciate was that, Ganesh was the most senior SHEQ manager in the South African operations of the company, with overall responsibility for safety, health environment and quality compliance and was “expected to lead by example.”

[9] When Mr K Dixon, the General Manager of Operations and Supply Chain and Ganesh’s line manager gave evidence, he claimed that it was ‘a general practice’ that the SHEQM should visit waste disposal facilities and that Ganesh would not have sent an email to try and prove Avuna had been audited if he did not think he was responsible for doing it. Ganesh challenged him to show where it said he had to visit facilities on an annual basis. Dixon then referred to a portion of the contentious job description of the SHEQM which states follows:

“Audits

· Managing plant inspections and SHE audits, issuing reports on the results of such inspections and following up on progress made.

· Manage and coordinate all corrective actions related to SHE findings from 2nd and 3rd party audits.

· Managing Branch internal SHE audits, issuing reports on the results of such inspections and following up on progress made.”

[10] Ganesh put it to Dixon that this formed part of the job description of the SHEQ coordinator, not his own job description. Ganesh relied on an earlier job description. Dixon conceded that the job description he produced had been amended shortly before the enquiry but claims that Ganesh ought to have been aware of it and that it was in line with job descriptions of SHEQ managers of Henkel in other countries. Ganesh disputed that he had ever been made aware of the job description presented by Dixon and pointed out, correctly that, it appeared to mirror the functions of the quality control manager’s job description. Thus, in respect of the expectations regarding audits listed in the job description under Accountability/End Result, the description of the tasks to be performed and how that performance was to be measured are identical. This pattern of replication is repeated in almost every one of the different functions contained in the two job descriptions to such an extent that the jobs are almost indistinguishable. By contrast, the job description provided by Ganesh paints his responsibilities regarding audits in much broader terms. I cannot fault the arbitrator’s scepticism about the job description produced by Dixon, which seems to have been tailored to saddle Ganesh with the identical responsibilities of the QCM.

[11] Nonetheless, the audit duties set out in the job description relied upon by Ganesh did require him to regularly follow up on internal audit findings and to conduct internal audits as per the internal audit schedule. Similarly, he was tasked with conducting audits on suppliers in keeping with the schedule. Although Ganesh defended himself as set out above in relation to the alleged failure to ensure that Avuna had the necessary permits to transport hazardous waste, he did concede that it was part of his responsibilities to ensure that issues cropping up in the 2010 audit report of Avuna needed to be revisited but attributed his failure to do so to an oversight in respect of the permit and more generally to his commitment to work on other sites in the Middle East and Africa. The arbitrator appears to have completely overlooked Ganesh’s overall responsibility for seeing that such audits were conducted and focused narrowly on whether the job description presented by Dixon was the correct one. The arbitrator also failed to consider that Ganesh accepted some responsibility for his management role in this regard, even if he correctly attributed the primary responsibility for performing such tasks to Wearne, who seems to have got off lightly by comparison.

[12] Henkel contends that the arbitrator failed to take account of the evidence that Ganesh had been made aware of the problem relating to the issuing of waste disposal certificates to Avuna by the Holfontein site, but took no steps to address the situation, even if the quality control manager was partly to blame for not verifying that the safe disposal certificate was signed and issued to Henkel every time Avuna disposed of the waste. There is little doubt that the primary responsibility for ensuring that Avuna obtained the safe disposal certificates, Wearne’s conduct was excused because he had reported the problem, inter alia, to Ganesh’s department.

[13] The applicant also points out that if Ganesh had personally assessed the Holfontein site, he would have realised Avuna was not disposing of all Henkel’s hazardous waste at the site. In this regard, the arbitrator’s conclusion that there was no evidence proving that as much as 400 tons of waste had not been properly disposed of is significant. The fact that this was the case was never seriously disputed by Ganesh during the arbitration. Unaccounted for waste on such a scale ought to have sounded very loud alarm bells for Ganesh that something was seriously wrong with the Avuna contract. The contract ran for a number of years and it is virtually impossible to believe Ganesh would not have become aware of non-compliance on such a scale if he had been reasonably diligent in auditing Avuna.

[14] What concerned the applicant in particular is that the arbitrator failed to look at the charges holistically and failed to realise that Ganesh showed indifference to the existence of the irregularities when they had been uncovered and displayed an inappropriate lack of concern. An example of this was his suggestion that because Avuna was owned by a former employee of Henkel, it was not so essential to monitor Avuna closely. Further, his attempt simply to blame others for all the irregularities inescapably showed

that he took no responsibility for any of them which made it difficult for Henkel to trust him in future. Henkel also claimed that

it was untenable for the arbitrator to decide that no reputational damage had been suffered when the subcontractor was facing criminal

prosecution. The arbitrator had also completely neglected to take account of the cost of cleaning up the waste which was not properly

disposed of by Avuna.

[15] In conclusion, I am not satisfied that the arbitrator’s conclusion about Ganesh’s negligence relating to his overall responsibility for the conduct of audits was justifiable and that finding ought to be set aside and replaced with a finding of guilt. In relation to the other charges, I accept that it is possible that a reasonable arbitrator might reach the same conclusions as the arbitrator in this instance.

[16] On the question of the substantive fairness of the dismissal, I am satisfied that the scale and duration of the problem with the Avuna contract together with the potential repercussions of a large quantity of hazardous waste being unaccounted for does seriously call into question how much confidence Henkel could have in Ganesh accepting overall responsibility for and acting on such issues in future, even if other more junior managers such as Wearne ought to have been shouldered with a similar degree of blame for the failure to conduct regular audits. It is clear that the crux of Ganesh’s defence was that he was being held solely responsible for responsibilities that should have been shared. In the case of the audit functions which were plainly set out in Wearne’s

job description, it appears from his evidence that Wearne was never charged for non-performance of this important aspect of his duties and no explanation was provided for not charging him for this. Henkel’s defence was that, Wearne was charged with misconduct after Ganesh was dismissed, but was acquitted. It is also a matter of grave concern that Dixon sought to charge Ganesh with non-compliance with the detailed audit duties, which were expressly assigned to Wearne as part of his QCM job description, by amending Ganesh’s job description to include those duties, whereas Wearne himself was never charged with neglecting those duties.

[17] In the circumstances, although the arbitrator’s conclusion on Ganesh’s performance of his audit function cannot be justified, in light of the gross disparity of treatment between Ganesh and Wearne, it is difficult to accept that Ganesh’s dismissal was substantively fair in all respects.

[18] Notwithstanding this conclusion, I also accept that it would be untenable in terms of section 193(b) of the LRA for Ganesh to return to work for Henkel in his former position, as the only way to deal with the significant lack of trust created by Ganesh’s casual approach to his responsibilities would be to subject him to a level of supervision that is inappropriate and impractical having regard to his seniority. Consequently, this is a case in which compensation appears to be the appropriate remedy.

[19] Having regard to Ganesh’s otherwise good record since October 2000 and given that the primary reason for finding his dismissal substantively unfair relates to unjustified disparity of treatment for failing to fulfil audit responsibilities, nine months’ remuneration is appropriate compensation.

Order

[20] The arbitration award of the second respondent dated 4 March 2015 issued under case number GPCHEM 59-14/15 is reviewed and set aside in the following respects:

20.1 The arbitrator’s finding that the third respondent was not guilty of dereliction of duty as described in paragraph 2.2 above is replaced with a finding that he was guilty of this charge.

20.2 The arbitrator’s order that the third respondent be reinstated is replaced with an order that the applicant must pay the third respondent compensation amounting to 9 months’ remuneration within fifteen days of receipt of this judgement, amounting in total to R 352,686.42.

[21] No order is made as to costs.

_______________________

Lagrange J

Judge of the Labour Court of South Africa

APPEARANCES

APPLICANT:

S Saunders instructed by

Fluxmans Inc.

THIRD RESPONDENT:

H Ngoato of Ngoato Attorneys

[1] Notice no 614 of 2013 published in GG 35572 dd 10/08/12