Seardel Group Trading (Pty) Ltd t/a Cape Underwear Manufacturers v Southern African Clothing and Textile Workers Union (CA 8/06) [2009] ZALAC 33; [2009] 11 BLLR 1051 (LAC) (16 July 2009)

1

IN THE LABOUR APPEAL COURT OF SOUTH AFRICA

Held in Durban

Case no: CA 8/06

In the matter between

Seardel Group Trading (Pty)Ltd

t/a Cape Underwear Manufacturers ...............................................Appellant

And

Southern African Clothing

And Textile Workers Union ....................................................1st Respondent

Sarah Keet and 105 others ..............................2nd and Further Respondents

___________________________________________________________

JUDGMENT

ZONDO JP

Introduction

[1] This is an appeal from a judgment and order of the Labour Court made by Nel AJ in terms of which he found that the dismissal of the second and further respondents by the appellant was substantively unfair and ordered their reinstatement with retrospective effect to a date 12 months before the date of the judgment. Subsequently the appellant applied to the Labour Court for leave to appeal to this Court against Nel AJ’s order. Nel AJ refused leave to appeal. The appellant then petitioned the Judge President of this Court for leave to appeal. This Court granted the appellant leave to appeal to this Court.

[2] The appellant complied with that part of the order of the Labour Court which required it to reinstate the second and further respondents and reinstated them. It was only that part of the order that required the reinstatement order to operate retrospectively for 12 months that the appellant did not comply with. That is also the part of the order that the appellant seeks to have overturned in this appeal.

The facts

[3] Most of the facts in this matter are not disputed although there are some which are disputed. In their pre-trial minute the parties set out many of the common cause facts. Those common cause facts upon which the parties agreed at the time of their pre-trial minute are to be found in paras 2-27 of the parties’ pre-trial minute. In the pre-trial minute a reference to “the first applicant” is a reference to the first respondent in this appeal, a reference to “the individual applicants” is a reference to the second and further respondents in this appeal and a reference to “the respondent” is a reference to the appellant in this appeal. Those paragraphs read as follows:

“2. The identity and locus standi of the parties are not in dispute.

3. From 1 to 9 July 2004 the Respondent suffered an unprotected strike in which the Individual Applicants and other employees participated. Although the Respondent’s disciplinary code provides that participation in an unprotected strike may result in dismissal, the participants, including the Individual Applicants, received a final written warning for their participation in the strike.

4. The final written warnings were not challenged through the provisions contained in the Labour Relations Act and were current on 4 May 2005.

5. The Respondent had implemented short time to commence on the 5th and 6th May 2005.

6. On 3 May Ms Alexander advised employees in the Satin Department that about 9 ironers and 11 packers were required to work on Thursday 5 May 2005, which was a scheduled short time day due to the fact that an order for Respondent’s most important client had to be finalised. Some of the employees were upset about the fact that only certain employees were invited to work extra hours

during the short time.

7. Respondent has a set procedure that should be followed when employees are upset about an issue:

7.1. The Shop Stewards would request a meeting with Respondent’s HR Manager to discuss the issue.

7.2. Whether the issue was resolved or not during the discussions, the departmental managers would convene line representative meetings to discuss the matter in their departments.

8. On the morning of 4 May 2005, the shop stewards requested a meeting with the Respondent in order to discuss the short time. The Respondent at approximately 12h50 convened a meeting between the shop stewards and its Human Resource Manager, Ms J Sanders.

9. Ms Alexander had set up a line rep meeting in the Satin Department after lunch to discuss the issues.

10. The Respondent’s Bra Department and Cutting Room have their lunch break from 13h00 to 13h30 and its Satin, and Panties and Underpants Departments have their lunch break from 13h30 to 14h00.

11. At the meeting two issues were tabled by the shop stewards, namely:

11.1. The fact that some employees were asked to work on the next day, despite same being a short time day; and

11.2. The fact that the Respondent had outsourced ironing to a CMT firm.

12. The aforementioned issues were discussed for approximately 20 minutes whereafter Ms Sanders informed the shop stewards that she would investigate the matter and that the shop stewards should return after the lunch breaks when she hoped to have an answer for them.

13. The shop stewards left the office of Ms Sanders at approximately 13h20 and reported back to the employees during their lunch breaks.

14. All of the employees returned to their workplaces at the end of the first lunch break (13h30).

15. During the second lunch break, a hooter sounds at 13h55 to alert employees that they have to move from the canteen to their workplace, and the employees are supposed to be at their workplaces and commence working when the second hooter goes off at 14h00. When there is a report back meeting, the employees are ordinarily granted a grace period until 14h05 in order to report to their workplaces. The vast majority of employees, who attended the second lunch break, complied with this requirement on 4 May 2005.

16. At 13h55, Ms van Rensburg, an organiser for First Applicant, telephoned the Respondent and advised the Shop Stewards that the Individual Applicants should not exceed their lunch break.

17. Ordinarily the gates to the respective work places are left open during ordinary working hours. It is common cause that the Respondent locked the gates to the work places, except the Bra Department on the day in question, however there dispute as to when the gates were locked and the reasons therefore.

18. The gates that had been locked, were unlocked at approximately 14h50 whereafter all of the employees (including the Individual Applicants) returned to work.

19. A meeting was held between the shop stewards and Ms Sanders shortly afterwards. The shop stewards accused the Respondent of causing the strike by locking the gates, thus preventing the employees from entering their work places. Ms Sanders replied that she had undertaken to report back on the issues after an investigation and that the strike was unnecessary.

20. At approximately 14h57, the Respondent transmitted a telefax to the First Applicant asserting that an unprotected strike had taken place. It is common cause that at this stage all of the employees had returned to work.

21. The First Applicant telephoned the Respondent at 15h01 to enquire on the situation at the company. The Respondent advised that the situation was under control and that a meeting would be held with the shop stewards to discuss the situation.

22. It is common cause that no ultimatum was issued by the Respondent during the alleged strike.

23. On 6 May 2005 the Respondent directed a letter to the First Applicant advising that the Individual Applicants would be suspended and called to appear before a collective disciplinary hearing.

24. The disciplinary hearing was held on 17 May, 27 May, 2 June and 3 June 2005. The chairperson (Mr J Baard) found the Individual Applicants guilty of participation in an unprotected strike and imposed a sanction of summary dismissal.

25. An appeal hearing was held before an independent Industrial Relations Consultant (Mr C F Zietsman) on 1 July 2005. The decision of Mr Baard was upheld.

26. On 27 July 2005 the First Applicant referred an unfair dismissal dispute to the Bargaining Council on behalf of the Individual Applicants. The dispute was conciliated on 17 August 2005 without success and a certificate of outcome was issued on 18 August 2005.

27 On 16 November 2005, the Applicants referred a dispute to this Honourable Court.”

[4] Oral evidence of various witnesses was led in the Labour Court which supplemented the common cause facts agreed to between the parties in the pre-trial minute. In its judgment the Labour Court dealt with the oral evidence that was led before it. As already stated above, it came to the conclusion that the dismissal was substantively unfair and ordered the appellant to reinstate the employees concerned with retrospective effect for 12 months.

[5] As the appellant does not appeal against the declaration of the Labour Court that the dismissal was substantively unfair nor does it appeal against the order of reinstatement as such but only appeals against the retrospective operation of the reinstatement order, it is, in my view, not necessary to go into much detail on the evidence that was led because most of the evidence led would have been relevant to the question whether or not the dismissal was fair and, if so, whether reinstatement was an appropriate order

and those matters are not in issue in the appeal. Accordingly, it seems to me that it will only be necessary to refer to those matters or aspects of the evidence led in the Court a quo which are relevant to the question of whether or not the Labour Court should have ordered that the reinstatement of the employees be retrospective in its operation and, if so, by how long a period. In this regard it must be noted that in its judgment the Labour Court traversed many aspects of the evidence led before it. In saying this I am not unmindful of the fact that the appellant complains that there are respects in which the Labour Court misconstrued certain aspects of the evidence led before it. I shall be alert to this argument as I deal with the matter.

[6] The dominant reasons for the finding by the Labour Court that the dismissal was substantively unfair were:

(a) that the refusal or failure to work was of a short duration;

(b) that the employer had acted insensitively in the way it had handled the issue of wanting certain of the workers to work on the first day of the short time;

(c) the employees’ unhappiness about the employer wanting some of them to work on the first day of the short-time was justified even though their conduct was not.

(d) the employer was far more to blame than the employees for that which in the end led to the workers expressing their unhappiness by arriving late at their work stations.

(e) The conduct of the employees did not differ much from their “normal Wednesday behaviour of singing”.

(f) the consequences of the strike on the appellant were insignificant if it had any consequences at all.

(g) the Court a quo did not believe that the existence of a current final written warning entitles an employer to dismiss employees who commit a similar “offence” within the currency of that “offence” without proper consideration of all the facts relevant to the particular case; it said that each matter had to be considered in the light of all the relevant facts “and mitigatory and aggravating factors ought to be considered.” Very strangely, after making this point the Court a quo said:

“Certainly special circumstances should be shown by the employees involved where they have a current final written warning if they commit misconduct similar to that for which they had the warning, to avert dismissal.”

the employees were not blameless although the employer was far more to blame than the employees.

[7] With regard to the shopstewards, the Court a quo held that because it had found the dismissal to be unfair, it did not “deem it necessary to deal with the question whether the shopstewards were striking or with the so-called special case employees.”

[8] As to why the Court a quo made the operation of the reinstatement order as retrospective as it did, it first took into account that the law as it stood at the time was that the Labour Court could not make a reinstatement order operate retrospectively for more than twelve months. It once again said that the workers were not blameless but did not specify where their portion of the blame

lay. It also stated: “As it stands, if I order 12 months retrospective reinstatement, the dismissed employees will suffer a period of no income. A gap therefore remains between their actual dismissal and their reinstatement, even if I order 12 months retrospective reinstatement.” What the Court a quo said in these two statements is difficult to understand because the fact of the matter is that, if it ordered reinstatement with 12 months’ retrospectivity, that would mean that the employees would get backpay equivalent to 12 months remuneration.

[9] Soon after the above statements, the Court a quo said that, although no evidence had been led as to for how long the short time continued after the dismissal, “that will also continue to negatively affect the unfairly dismissed employees.” The Court then held that it regarded it as just and equitable to make the order that it made. It ordered the employees’ reinstatement “on conditions no less favourable than those that prevailed at the time of their dismissal as well as not being more favourable than those which as a matter of fact prevailed at the respondent after the dismissal of the applicants, with specific reference to the

working of short time.” It is clear from the wording of this part of the order made by the Court a quo that the Court a quo sought to ensure that the employees should not, by virtue of the order of reinstatement and its retrospective operation, obtain advantage in terms of back pay which they otherwise would not have had if they had not been dismissed. This was in the light of the fact that they were dismissed at the commencement of the working of short time and no evidence had been led before the Court a quo on how long short time had been worked after their dismissal. The Court a quo ordered that the operation of the reinstatement order be retrospective for 12 months. The order was made on the 18th August 2006. The Court a quo then ordered that, if the parties were unable to resolve any difficulties that could arise in the

implementation of the order of reinstatement with regard to the implications of the fact that short time was to be worked when the employees were dismissed, they could approach the Court a quo for a further ruling. The appellant was ordered to pay the respondents’

costs.

The appeal

[10] The appeal is against that part of the order of the Court a quo that made the operation of the order of reinstatement retrospective for 12 months. The respondent opposed the appeal. Counsel for the appellant accepted, quite correctly, that sec 193 of the Labour Relations Act, 1995 confers upon the Labour Court a discretion to make an order of reinstatement that operates with retrospective effect. He accepted, too, that such discretion is the so-called narrow discretion and that the grounds upon which this Court can interfere with the exercise of that discretion by the Court a quo in a particular case are limited.

[11] Counsel for the respondents submitted that in this case none of the grounds upon which this Court can interfere with the exercise by the Court a quo of its discretion exists and that for that reason the appeal should be dismissed. Counsel for the respondents emphasised various factors in this case to support his submission that there is nothing wrong with the manner in which the Court a quo exercised its discretion to make the operation of the order of reinstatement retrospective for 12 months. In this regard he

pointed out that, even if the conduct of the employees constituted a strike, which he submitted it was not, such strike was of a very short duration. He also emphasised the fact that the appellant had handled the matter of getting some of the employees to work on the first day of the operation of short time in a very insensitive manner. Most of the points relied upon by Counsel for the respondents sought to show how unfair the dismissal had been and that, therefore, in the light of such unfairness, the Court a quo was justified in making the operation of the order of reinstatement retrospective for 12 months.

[12] Counsel for the appellant submitted, correctly in my view, that this Court would be entitled to interfere with the Court a quo’s exercise of its discretion in this regard if it could be shown that the Court a quo had misdirected itself in any way. In this regard Counsel for the appellant submitted that one respect in which the Court a quo misdirected itself is that it dealt

with the matter on the basis that the duration of the “strike” or the conduct complained of was fifteen minutes when in fact the duration of the “strike” was fifty minutes. Counsel submitted that there is a vast difference between fifteen minutes and fifty minutes and that, had the Court a quo, got this fact right, it is unlikely that it would have made the operation of the reinstatement order retrospective for 12 months.

[13] I agree with Counsel for the appellant that the Court a quo dealt with the matter on the basis that the “strike” or failure to resume work after lunch lasted for fifteen minutes when in fact the evidence was that it had lasted for fifty minutes. I also agree that this constituted a misdirection which would justify interference by this Court with the exercise by the Court a quo of its discretion under sec 193 of the Act.

[14] In the light of the above misdirection this Court is entitled to reconsider the matter of whether or not the operation of the reinstatement order should have been retrospective and, if so, for how long. In my view when one has regard to substance rather than form, particularly in relation to the question whether the reinstatement order should have been made to operate retrospectively,

the conduct of the employees in this case in not resuming their work because they were aggrieved by the appellant’s conduct in how it had dealt with the issue of short time, can be taken to have been a strike. Such strike can be taken to have been unprotected or illegal as the statutory procedures were not followed. The employees made themselves guilty of such misconduct when they were still on a final written warning for going on an illegal strike within the previous 12 months. This was very serious and the employees were lucky that the Court a quo did not find that their dismissal was fair. By saying this I should not be understood to suggest that the dismissal was not unfair. I am simply emphasising that the existence of the final written warning against the employees should have been given much greater weight than the Court a quo seems to have done.

[15] Another respect in which the Court a quo misdirected itself is in regard to the economic or financial position of the appellant at the time of the dismissal. Although the appellant did not lead any direct evidence about what its economic or financial position was, the fact that it had decided to resort to the working of short time is sufficient to indicate that it was going through a difficult time. This is a factor that the Court a quo should have taken into account in determining whether the order of reinstatement

should operate retrospectively and, if so, the extent thereof. The Court a quo did not take this factor into account. It must also be accepted that in all probability the employees also went through a hard time between the date of their dismissal and the date of the order of the Court a quo reinstatement without income for either the whole or much of that period.

[16] There is really not much that the Court a quo said in support of its decision to make the operation of the order of reinstatement retrospective for twelve months. The second and further respondents must have gone without income for either the entire period or for most of the period extending over 12 months between the date of dismissal and the date of the reinstatement order. During

that period the appellant would have continued with its operation and the absence of the second and further respondents is unlikely to have affected its profitability in any significantly adverse manner. If the appellant had acted fairly by imposing a fair sanction upon the second and further respondents for their misconduct, the second and further respondents would not have been dismissed and there would not have had to be any period when they had no income at all. Of course, they would have earned less than their normal income for the period from the date of dismissal to the date of the reinstatement order because of the short time.

[17] Counsel for the appellant relied heavily upon this Court’s decision in NUMSA and others v Fibre Flair CC [2000] 6 BLLR 631(LAC) for his contention that the Court a quo should not have made the operation of the reinstatement order retrospective at all. In that case the employees were still on a current final written warning for going on an illegal strike when they again went on another illegal strike. Their illegal strike had lasted for 35 minutes. They were dismissed. In adjudicating the subsequent dismissal dispute the Labour Court found the dismissal to have been substantively unfair, made an order of reinstatement but refused to make the operation of that order retrospective for any period. An appeal was noted to this Court. In this Court the decision of the Labour Court refusing to make the operation of the order of reinstatement retrospective was attacked but this Court refused to interfere with the order of the Labour Court on the basis none of the grounds upon which it could interfere had been shown to exist.

[18] That this Court did not interfere in the manner in which the Labour Court had exercised its discretion in Fibre Flair does not necessarily mean that it agreed with how the Labour Court had exercised its discretion in that case nor does it mean that it

would also have refused to make the operation of the order of reinstatement retrospective if it had found a ground upon which it

could interfere and had had to exercise the discretion itself. The very basis of how an appellate court exercises its power in an appeal over a decision of a lower court that is based upon the exercise of a narrow discretion is that it is not entitled to interfere with the exercise of such a narrow discretion by the lower court or tribunal simply because it does not agree with how that discretion was exercised by the lower courts.

[19] In this case I have found that there is a basis to interfere with the exercise by the Labour Court of its discretion because it misdirected itself. The presence of such a misdirection confers upon this Court the power to interfere and exercise the discretion itself afresh. When this Court exercises such discretion afresh, it is at large to make such decision as the Labour Court would have been free to make in the exercise of the discretion.

[20] In this case I am of the view that, when regard is had to all the circumstances of this case and what I have said above, an order that is fair and equitable on the retrospectivity or otherwise of the operation of the reinstatement order would be a three month retrospectivity. This means that in my view, the Court a quo should have made the reinstatement order retrospective in its

operation for three months. The Court a quo made its order on the 17th August 2006. If the operation of the reinstatement order was made restrospective for three months, it would have operated with effect from 17 May 2006. Accordingly, that is the three months that will be covered by the order that I propose to make.

[21] Like the Court a quo, I do not intend that the second and further respondents should earn full wages for the period of the retrospectivity of the reinstatement order if in fact during that period of three months short time was worked and the second and

further respondents would have worked short time during that three months had they not been dismissed. Equally, I do not intend that the second and further respondents should be paid less than their full wages for that period of three months if as a matter of fact short time had ceased to be worked by that time and the second and further respondents would have worked normal time during that period of the three months if they had not been dismissed. Accordingly, the parties will have to agree on what the position was with regard to whether short time was worked during that period of three months and whether the second and further respondents would have worked short time during that period of three months if they had not been dismissed. If they cannot agree, either party may refer that issue to the Labour Court for determination in accordance with par 2 of the order of the Labour Court in this matter.

[22] The finding that I have made above that the retrospectivity of the operation of the order of reinstatement should have been limited to three months cannot apply to each and every one of the second and further respondents because there are certain individuals among the second and further respondents whose cases must treated differently from the manner in which the majority is treated. Counsel for the respondents submitted that these individuals did not participate in the alleged strike and should therefore, not have been dismissed in the first place. He submitted that, even if it can be said that the Court a quo erred in making the reinstatement order operate with a retrospectivity of 12 months was wrong in respect of the majority of the second and further respondents, it cannot be said that such retrospectivity in the operation of the reinstatement order was not justified in respect of these individuals.

[23] The individuals who fall into a special category are the following:

A: shopstewards

Babeza, a shopsteward;

Fisher, a shopsteward;

Swart, a shopsteward;

Samuels, a shopsteward;

B: The so-called shoppers

Letitia Job

Madge Kapot

Jamila Isaacs

C: The bereaved

Lillian April who had lost his brother and had attended his brother’s funeral.

[24] Counsel for the appellant sought to persuade us that there was no need for any of the individual respondents to be treated separately. I am, however, satisfied that the above three categories of the workers deserve to have the specific circumstances in which they were at the time of the workers’ conduct complained of properly considered. I do not propose to discuss each

category in any detail. It will suffice to point out certain features of each category.

[25] Babeza testified that at the time of the workstoppage she was either performing shopstewards work trying to resolve the dispute or running a personal errand of the human resources manager who had sent her to collect some meat on her behalf that was to be used for the human resources Manager’s sister’s birthday. In her evidence Babeza denied having participated in the workstoppage. Babeza had also been the one who had telephoned Sanders’ office before 14h00 to warn Sanders that there might

be a strike. The other shopstewards, namely, Fisher, Swart and Samuels testified. Generally speaking during the time when the worstoppage was on, the shopstewards performed the shopstewards duties. They held meetings to try and have the dispute resolved.

Fisher was accused of provocative behaviour in that he performed catwheels in the passage. Fisher testified that she had no reason to join the workstoppage.

[26] The category referred to above as the shoppers relates to three employees who went shopping during the lunch break because there was a sale but when they returned to resume work found the gates locked. They did not attend the report back meeting of the

union. Their evidence was not contradicted. The last category is that of Lillian April. She testified that she had attended her brother’s funeral on the morning of the day in question. She arrived back during the lunch break. She delayed reaching her workstation because the passage she used was blocked. However, she made it clear that she had never decided to take part in the workstoppage. This is understandable because, she could not just join the workstoppage when she must still have been thinking about her brother’s death.

[27] In the light of the specific circumstances of the above groups I am satisfied that they did not participate in the workstoppage and did not commit any misconduct. That being the case, I am of the view that the Court a quo ought to have approached their cases differently to those of the rest of the workers and they deserve to be awarded a full retrospectivitity of the operation of the reinstatement order subject to the implications of short time.

[28] With regard to costs in this Court I am of the view that the requirements of the law and fairness dictate that no order as to costs should be made. The parties have a continuing employment relationship and although the appellant may have been substantially

successful, that is not the only consideration in regard to costs in this Court.

[29] In the premises I make the following order:

1. The appeal is upheld in part.

2. There is no order of costs on appeal.

3. Subject to 4 below, the order of the Labour Court is amended by the deletion of the words “12 months” therein and the replacement thereof with the words: “three months”.

4. The amendment of the order of the Labour Court contained in 3 above does not apply to the respondents identified as:

(a) Babeza, a shopsteward

(b) Fisher, a shopsteward

(c) Swart, a shopsteward

(d) Samuels, a shopstewards

(e) Letitia Job

(f) Madge Kapot

(g) Janula Isaacs, and

(h) Lillian April

In their case the order of the Labour Court as it stood when it was issued will apply.

Zondo JP

I agree.

Khampepe ADJP

Davis JA

Appearances:

For the Appellant: Mr JJ Gauntlett SC together with Mr AT Myburgh

Instructed by: Deneys Reitz INC

For the Respondent: Mr CS Kahanovitz

Instructed by : Cheadle Thompson & Haysom INC

Date of judgment : 16 July 2009