Southey Contracting a division of Southey Holdings (Pty) Ltd v Metal & Engineering Industries Bargaining Council and Others (C 1053/12) [2013] ZALCCT 44; [2014] 3 BLLR 291 (LC) (5 December 2013)

REPUBLIC OF SOUTH AFRICA Not reportable Of interest to other judges the labour court of South Africa, cape town judgment . case no: C 1053/12 In the matter between: SOUTHEY CONTRACTING a division of SOUTHEY HOLDINGS (PTY) LTD Applicant And meibc First Respondent commissioner teresa erasmus Second Respondent m g de jager Third Respondent Heard: 29 November 2013 Delivered: 5 December 2013 Summary: Dismissal for incapacity arising from employer’s client barring employee from premises. Arbitration award reviewed, set aside and remitted. judgment STEENKAMP J Introduction [1] The employee, Mr M J de Jager (the third respondent), was dismissed by his employer, Southey Contracting (the applicant). The reason for his dismissal was styled as “incapacity”. It arose from the refusal of a third party, Saldanha Steel, to allow the employee on its premises. The employee referred an unfair dismissal dispute to the Metal and Engineering Industries Bargaining Council (MEIBC) (the first respondent). Commissioner Teresa Erasmus (the second respondent) found that the dismissal was procedurally and substantively unfair. She ordered the applicant to pay the employee compensation equivalent to three months’ remuneration. The applicant applies to have the award reviewed and set aside. [2] Central to the review application is the reason for dismissal. Background facts [3] The employee was a Boilermaker Mechanical Foreman rendering services to Saldanha Steel (Pty) Ltd on behalf of the applicant. That comprised the bulk of his work. On 14 December 2011 he underwent a polygraph test at the behest of Saldanha Steel, arising from copper theft. The test showed “deception”. [4] On 21 December 2011 Saldanha Steel (“the client”) notified the applicant of a “non-compliance report” issued as a result of work undertaken by the employee on the applicant’s behalf. The applicant’s divisional director, John Ryall, visited the client’s site on 10 January 2012 to discuss the non-compliance report. The client told him that the employee would no longer be allowed on its site. [5] And 15 January 2012, while the employee was still on leave, the applicant told him to attend a meeting at its Cape Town office on 17 January 2012. The applicant did not tell the employee why he had to attend the meeting or that it would take the form of a disciplinary or incapacity hearing. [6] At the meeting on 17 January 2012 Ryall told the employee that Saldanha Steel had barred his access to its premises. He told the employee to approach Saldanha Steel to try and sort out the problem and that he had a week to do so. [7] The employee went to the premises of Saldanha Steel on the same day. The head of security, Willem Nieuwoudt, refused to give him access and only spoke to him on the telephone. The employee offered to undergo a second polygraph test for a further polygraph test with an independent institution, but Nieuwoudt refused. [8] On 25 January 2012 the applicant dismissed the employee without any further procedure. The applicant maintains that the reason for dismissal was not the employee’s conduct or the applicant’s operational requirements, but the employee’s “capacity”. The applicant took the view that the employee “was incapacitated, as no suitable alternative was available, no attempt to remedy the situation had been forthcoming from the employee and, further, no end to the incapacity was envisaged, applicant had no option but to dismiss the employee for incapacity.” [9] The employee referred an unfair dismissal dispute to the Bargaining Council. Conciliation failed and the dispute was referred to the arbitrator (the second respondent) for arbitration. The arbitration award [10] Referring to the case of Nape v INTCS Corporate Solutions (Pty) Ltd[1], the arbitrator appeared to agree that an employer may not invoke the clause in a labour broking contract to justify an employee’s dismissal for operational reasons where a client demands that the labour broker employer remove the employee from its premises. Although the present relationship may be akin to that of the tripartite relationship between a labour broker, its client and its

employee, the arbitrator did not seem to appreciate that the applicant in this case was not a labour broker. She also did not appear to appreciate that the reason given by the applicant for the employee’s dismissal was not operational requirements, but incapacity. [11] Nevertheless, the arbitrator did go on to note: “The question therefore remains whether the [employee]’s dismissal by the [employer] in respect of alleged incapacity was both substantively and procedurally fair.” [12] Having posted correct question, though, the arbitrator did not address that question. Instead, she noted that the applicant had not called the employee to a disciplinary hearing and “did not take any disciplinary steps” against the employee before dismissing him. She found that the employee was not subjected to a disciplinary hearing, and that, therefore, is dismissal was procedurally

unfair. She then found that the dismissal was also substantively unfair, apparently for the following reasons: “[The employee] was entitled not to be unfairly dismissed. The [employee] was banned from assignment with client, Saldanha Steel, on instruction of client. Saldanha Steel may not limit the [employee]’s right not to be unfairly dismissed. The [employer] has a right of recourse against client for unfair dismissal claims. Saldanha Steel, the client, decided to exclude that [sic] [the employer] remove the [employee] from its premises. Saldanha Steel and the [employer] may not limit an employee’s right not to be unfairly dismissed.” Evaluation / Analysis [13] The arbitrator appeared to base her award on the question whether the employee was fairly dismissed for misconduct. But that was not the reason for dismissal. The reason given by the employer – rightly or wrongly – was incapacity. In order to decide whether the reason for dismissal was a fair reason, and whether the employer followed a fair procedure, the arbitrator first had to answer that question. She did not do so. She found that the employee was not fairly dismissed for misconduct; but that was not the reason given for his dismissal. In short, in the words of the Supreme Court of Appeal in Herholdt v Nedbank Ltd[2], the arbitrator misconceived the nature of the enquiry before her. The award must be reviewed and set aside on that basis. [14] This is not a case where the court should substitute its decision for that of the arbitrator. The dispute should be remitted to another arbitrator in order to conduct a proper enquiry into the merits of the dispute, i.e. whether incapacity was a fair reason for dismissal. Conceptually, it may be; but, as Davis JA held in Samancor Tubatse Ferrochrome v MEIBC[3], that depends on the facts of the case. [15] There is little doubt that the dismissal was procedurally unfair, whether or not the reason for dismissal was a fair reason. And it may well be that, for the procedural unfairness alone, the compensation award of three months’ remuneration would be just and equitable, as contemplated by s 194(1) of the LRA. But that is for another arbitrator to decide. [16] It is, in my view, just and equitable not to make any costs order. Order [17] I therefore make the following order: 17.1 The arbitration award issued by the second respondent, commissioner Teresa Erasmus, under the auspices of the first respondent, the MEIBC, is reviewed and set aside. 17.2 The dispute is remitted to the Bargaining Council for a fresh arbitration before an arbitrator other than the second respondent. Anton Steenkamp Judge of the Labour Court of South Africa APPEARANCES APPLICANT: Brendan Guy (attorney). THIRD RESPONDENT: Mirinda Grobler Instructed by Rossouw & Du Plessis, Malmesbury; Marais Muller Yekiso, Cape Town. [1] (2010) 31 ILJ 2120 (LC). [2] [2013] 11 BLLR 1074 (SCA) paras [21] and [25]. [3] (2010) 31 ILJ 1838 (LAC) para [11].

REPUBLIC OF SOUTH AFRICA

Not reportable

Of interest to other judges

the labour court of South Africa, cape town

judgment

. case no: C 1053/12

In the matter between:

SOUTHEY CONTRACTING a division of SOUTHEY HOLDINGS (PTY) LTD Applicant And meibc First Respondent commissioner teresa erasmus Second Respondent m g de jager Third Respondent

Heard: 29 November 2013

Delivered: 5 December 2013

Summary: Dismissal for incapacity arising from employer’s client barring employee from premises. Arbitration award reviewed, set aside and remitted.

STEENKAMP J

Introduction

[1] The employee, Mr M J de Jager (the third respondent), was dismissed by his employer, Southey Contracting (the applicant). The reason for his dismissal was styled as “incapacity”. It arose from the refusal of a third party, Saldanha Steel, to allow the employee on its premises. The employee referred an unfair dismissal dispute to the Metal and Engineering Industries Bargaining Council (MEIBC) (the first respondent). Commissioner Teresa Erasmus (the second respondent) found that the dismissal was procedurally and substantively unfair. She ordered the applicant to pay the employee compensation equivalent to three months’ remuneration. The applicant applies to have the award reviewed and set aside.

[2] Central to the review application is the reason for dismissal.

Background facts

[3] The employee was a Boilermaker Mechanical Foreman rendering services to Saldanha Steel (Pty) Ltd on behalf of the applicant. That comprised the bulk of his work. On 14 December 2011 he underwent a polygraph test at the behest of Saldanha Steel, arising from copper theft. The test showed “deception”.

[4] On 21 December 2011 Saldanha Steel (“the client”) notified the applicant of a “non-compliance report” issued as a result of work undertaken by the employee on the applicant’s behalf. The applicant’s divisional director, John Ryall, visited the client’s site on 10 January 2012 to discuss the non-compliance report. The client told him that the employee would no longer be allowed on its site.

[5] And 15 January 2012, while the employee was still on leave, the applicant told him to attend a meeting at its Cape Town office on 17 January 2012. The applicant did not tell the employee why he had to attend the meeting or that it would take the form of a disciplinary or incapacity hearing.

[6] At the meeting on 17 January 2012 Ryall told the employee that Saldanha Steel had barred his access to its premises. He told the employee to approach Saldanha Steel to try and sort out the problem and that he had a week to do so.

[7] The employee went to the premises of Saldanha Steel on the same day. The head of security, Willem Nieuwoudt, refused to give him access and only spoke to him on the telephone. The employee offered to undergo a second polygraph test for a further polygraph test with an independent institution, but Nieuwoudt refused.

[8] On 25 January 2012 the applicant dismissed the employee without any further procedure. The applicant maintains that the reason for dismissal was not the employee’s conduct or the applicant’s operational requirements, but the employee’s “capacity”. The applicant took the view that the employee “was incapacitated, as no suitable alternative was available, no attempt to remedy the situation had been forthcoming from the employee and, further, no end to the incapacity was envisaged, applicant had no option but to dismiss the employee for incapacity.”

[9] The employee referred an unfair dismissal dispute to the Bargaining Council. Conciliation failed and the dispute was referred to the arbitrator (the second respondent) for arbitration.

The arbitration award

[10] Referring to the case of Nape v INTCS Corporate Solutions (Pty) Ltd[1], the arbitrator appeared to agree that an employer may not invoke the clause in a labour broking contract to justify an employee’s dismissal for operational reasons where a client demands that the labour broker employer remove the employee from its premises. Although the present relationship may be akin to that of the tripartite relationship between a labour broker, its client and its

employee, the arbitrator did not seem to appreciate that the applicant in this case was not a labour broker. She also did not appear to appreciate that the reason given by the applicant for the employee’s dismissal was not operational requirements, but incapacity.

[11] Nevertheless, the arbitrator did go on to note:

“The question therefore remains whether the [employee]’s dismissal by the [employer] in respect of alleged incapacity was both substantively and procedurally fair.”

[12] Having posted correct question, though, the arbitrator did not address that question. Instead, she noted that the applicant had not called the employee to a disciplinary hearing and “did not take any disciplinary steps” against the employee before dismissing him. She found that the employee was not subjected to a disciplinary hearing, and that, therefore, is dismissal was procedurally

unfair. She then found that the dismissal was also substantively unfair, apparently for the following reasons:

“[The employee] was entitled not to be unfairly dismissed. The [employee] was banned from assignment with client, Saldanha Steel, on instruction of client. Saldanha Steel may not limit the [employee]’s right not to be unfairly dismissed. The [employer] has a right of recourse against client for unfair dismissal claims. Saldanha Steel, the client, decided to exclude that [sic] [the employer] remove the [employee] from its premises. Saldanha Steel and the [employer] may not limit an employee’s right not to be unfairly dismissed.”

Evaluation / Analysis

[13] The arbitrator appeared to base her award on the question whether the employee was fairly dismissed for misconduct. But that was not the reason for dismissal. The reason given by the employer – rightly or wrongly – was incapacity. In order to decide whether the reason for dismissal was a fair reason, and whether the employer followed a fair procedure, the arbitrator first had to answer that question. She did not do so. She found that the employee was not fairly dismissed for misconduct; but that was not the reason given for his dismissal. In short, in the words of the Supreme Court of Appeal in Herholdt v Nedbank Ltd[2], the arbitrator misconceived the nature of the enquiry before her. The award must be reviewed and set aside on that basis.

[14] This is not a case where the court should substitute its decision for that of the arbitrator. The dispute should be remitted to another arbitrator in order to conduct a proper enquiry into the merits of the dispute, i.e. whether incapacity was a fair reason for dismissal. Conceptually, it may be; but, as Davis JA held in Samancor Tubatse Ferrochrome v MEIBC[3], that depends on the facts of the case.

[15] There is little doubt that the dismissal was procedurally unfair, whether or not the reason for dismissal was a fair reason. And it may well be that, for the procedural unfairness alone, the compensation award of three months’ remuneration would be just and equitable, as contemplated by s 194(1) of the LRA. But that is for another arbitrator to decide.

[16] It is, in my view, just and equitable not to make any costs order.

Order

[17] I therefore make the following order:

17.1 The arbitration award issued by the second respondent, commissioner Teresa Erasmus, under the auspices of the first respondent, the MEIBC, is reviewed and set aside.

17.2 The dispute is remitted to the Bargaining Council for a fresh arbitration before an arbitrator other than the second respondent.

Anton Steenkamp

Judge of the Labour Court of South Africa

APPEARANCES APPLICANT: Brendan Guy (attorney). THIRD RESPONDENT: Mirinda Grobler Instructed by Rossouw & Du Plessis, Malmesbury; Marais Muller Yekiso, Cape Town.

[1] (2010) 31 ILJ 2120 (LC). [2] [2013] 11 BLLR 1074 (SCA) paras [21] and [25]. [3] (2010) 31 ILJ 1838 (LAC) para [11].

[1] (2010) 31 ILJ 2120 (LC).

[2] [2013] 11 BLLR 1074 (SCA) paras [21] and [25].

[3] (2010) 31 ILJ 1838 (LAC) para [11].