Zimu v Commission for Conciliation Mediation and Arbitration and Others (JA 23/10) [2011] ZALAC 34 (28 September 2011)

IN THE LABOUR APPEAL COURT OF SOUTH

AFRICA

HELD AT JOHANNESBURG

CASE NO: JA 23/10

In the matter between:

FANCY SIZAKELE ZIMU .............................................................................Appellant

and

COMMISSION FOR CONCILIATION, MEDIATION ........................First Respondent

AND ARBITRATION

BRAAM VAN WYK N.O. .............................................................Second Respondent

EDGARS CONSOLICATED STORES LIMITED ............................Third Respondent

______________

JUDGMENT

MURPHY AJA

[1]. The appellant appeals with the leave of this court against the judgment of the Labour Court (Basson J) of 29 October 2009 setting aside the arbitration award of the second respondent (“the commissioner”) and substituting it with an order declaring the appellant’s dismissal to be substantively fair.

[2]. The appellant was employed by the third respondent (“Edgars”) at their “Legit” store in Brooklyn, Pretoria. She was employed from 1998 until her dismissal in late June 2005. She was dismissed after a disciplinary enquiry at which she was charged with the following counts of misconduct:

“1. Failure in your duty to demonstrate acceptable conduct in that during the period 7 until 11 January 2005, at Legit Brooklyn, you failed to safeguard your user ID and password thereby creating a potential for fraudulent activity to be committed;

2. Failure to be honest and act with integrity in that during the period 7 until 11 January 2005, at Legit Brooklyn, you misrepresented facts to the company by signing the banking deposit slips without having checked it (sic). Such acts may result in the breach of the trust relationship between you and the company.

3. Failure in your duty to be competent and diligent in that during the period December 2004 and February 2005, at Legit Brooklyn, you failed to follow and implement float controls and banking procedures. Such acts resulted in the amount of R300,00 not being accounted for.

[3]. The appellant pleaded guilty to all three charges at the disciplinary enquiry held by the employer on 20 June 2005. The charges considered to be most serious were the first two related to the events that took place between 7 and11 January 2005. It is common cause that the appellant was absent from work during that period, but that her user ID and password had been used during her absence to do the daily banking. It is further undisputed that on the appellant’s return to work after 11 January 2005 she signed certain bank deposit slips in respect of monies deposited in the bank during her absence, such signature being intended to convey that she had checked the deposits, when she in fact had not done so. This latter conduct forms the basis of the second charge of dishonesty and a lack of integrity resulting in the breach of the trust relationship.

[4]. The record filed by the parties in this matter is not satisfactory. The transcript of the arbitration proceedings is of poor quality with much of the testimony being recorded as “inaudible”. Additionally, some of the exhibits submitted during the arbitration do not form part of the record. However, because the facts are entirely common cause, and the issue argued on review before the Labour Court and now before us is a narrow one, it is possible, and desirable in the interests of justice to both parties, to hear and conclude the appeal notwithstanding the defects in the record.

[5]. At the conclusion of the disciplinary enquiry, the chairperson, Mr. R Matthews, summarily dismissed the appellant. In his evidence during the arbitration, Mr Matthews explained that after the appellant pleaded guilty he invited her to adduce evidence and make submissions in mitigation, but she declined to do so. The employer, however, made submissions in aggravation. The appellant was issued with a written warning on 21 April 2004 for failure to abide by the company directives in relation to stock control and banking procedures. The appellant was a relatively senior employee in the store and had responsibility to protect the interests of the company by ensuring that all “cash control procedures and policies were implemented and followed throughout the stores and not to break the rules herself”. The employer was of the view that her dishonesty in signing the deposit slips had diminished the trust it had in her to the extent that the continuation of her employment with the company had become intolerable.

[6]. As Mr. Thapelu Ntwari, a senior employee relations officer employed by the third respondent, explained at the arbitration, it is a breach of company procedures and rules for an employee to divulge his or her user ID and password to another employee, because that would enable the other person to access company information on the system and possibly to overwrite it. The confidentiality of the user ID and password is an ingredient of the system aimed at accountability, which ensures integrity in the record keeping system.

[7]. The appellant’s admitted breach of the rule did not cause any loss to the company, nor did she derive any personal benefit or advantage from having divulged her user ID and password, which was used by her senior, Ms Sylvia Kunene, the store manager, during her absence between 7 and 11 January 2005. These facts notwithstanding, Mr Matthews considered that the signing of the banking deposits involved a lack of honesty and integrity towards the company which had damaged trust to the extent of rendering continuation of the employment relationship intolerable. He accordingly terminated her employment with immediate effect. As I discuss more fully later in this judgment, Ms Kunene was subject to discipline before a different enquiry. She was not dismissed, but was instead issued with a final written warning.

[8]. The only issue before the Commission for Conciliation, Mediation and Arbitration (“CCMA”) was whether the sanction of dismissal was inappropriate on the grounds of contemporaneous inconsistency. It was not contended that the dismissal was unfair on the grounds of the penalty being inappropriately harsh or disproportionate.

[9]. Item 3(6) of the Code of Good Practice: Dismissal 1provides:

“The employer should apply the penalty of dismissal consistently with the way in which it has been applied to the same and other employees in the past, and consistently as between two or more employees who participate in the misconduct under consideration.” (my emphasis)

The requirement that a penalty be applied consistently with the way in which the penalty has been applied to other employees in the past is referred to as historical consistency. It differs from contemporaneous consistency which requires that the penalty be applied consistently as between two or more employees who commit the same misconduct.2 An inconsistency challenge will fail where the employer is able to differentiate between employees who have committed similar transgressions on the basis of, inter alia, differences in personal circumstances, the severity of misconduct or on the basis of other material factors. A fortiori, there can be no claim of contemporaneous inconsistency in respect of employees who are punished differently in relation to distinct acts of misconduct. Accordingly, an employer will not be guilty of inconsistency if it is able to differentiate between the two acts of misconduct or the actors involved. 3

[10]. As mentioned, the appellant alleges contemporaneous inconsistency. The allegation arises out of the comparison of her own disciplinary sanction with that meted out to her senior colleague, Ms Sylvia Kunene, the store manager, who attended a different disciplinary enquiry in late June 2005 before a different chairperson, Mr. J Bennett. The charges preferred against her were:

“1. Failure in your duty to demonstrate acceptable conduct, in that during the period 7 to 11 January 2005 at Legit Brooklyn you used the user ID and password of (sic) belonging to Fancy Zimu to authorize the store banking.

2. Failure in your duty to demonstrate acceptable conduct, in that during the period 7-11 January 2005 at Legit Brooklyn you failed to abide by the Company policies and procedures for banking when you performed banking on your own.

3. Failure in your duty to be competent and diligent, in that during the period December 2004 to February 2005 you failed to follow and implement float controls and banking procedures. Such acts resulted in the amount of R200,00 not being accounted for.

4. Failure in your duty to be obedient and show respect, in that on the 4th January at Legit Brooklyn you failed to abide by the Company’s petty cash policy and procedures when you failed to capture the correct information and sign the petty cash slip. This act resulted in R76.20 being unaccounted for.”

[11]. Mrs Kunene pleaded guilty and also failed to submit arguments in mitigation. The aggravating factors were that she was the most senior manager in the shop and also had a prior warning for similar offences. However, Mr. Bennett, who was not called as a witness in the arbitration proceedings, merely imposed a final written warning in respect of charges 1 and 2 (taken together for the purpose of sanction because they related to the same incident), and written warnings for each of charges 3 and 4. Although he did not testify before the CCMA it is reasonable to infer that he did not consider that there had been a breach of trust of a

nature making the continuation of the employment relationship intolerable.

[12]. It is important to note that there is some coincidence between charges 1 and 2 as preferred against Ms Sylvia Kunene and charge 1 as preferred against the appellant. There may also have been some coincidence between charges 3 and 4 against Ms Sylvia Kunene and charge 3 against the appellant. What is clear though is that Ms Sylvia Kunene did not face any charge similar to charge 2 preferred against the appellant. The appellant was charged with misrepresenting facts to the company by signing deposit slips which she had not checked. Ms Sylvia Kunene was not charged with a similar transgression.

[13]. The commissioner found that the dismissal was substantively unfair for the following reasons:

(i) The contention that Kunene was not dishonest was far-fetched and devoid of reality because she had used the appellant’s user ID and password.

(ii) The third respondent was obliged, in keeping with the principle of contemporaneous consistency, to have dismissed both the appellant and Kunene, or to have imposed a final written on both.

(iii) The failure to call Mr. Bennett to justify the difference in sanction meant that the third respondent had failed to discharge its evidentiary burden to rebut the challenge of consistency.

[14]. Before the Labour Court, the third respondent submitted that the commissioner had acted unreasonably and committed a reviewable irregularity in finding that it had inconsistently applied discipline in dismissing the appellant. Basson J succinctly dealt with the submission as follows:

“I am in agreement with the submissions on behalf of the applicant (third respondent) that the commissioner failed to properly consider

the evidence that was presented to him: (i) Firstly the respondent (appellant) was charged with dishonesty. Kunene was charged with misconduct which amounted to negligence or a failure to follow a proper work procedure or rule. In other words, the charges were completely different. This fact also appears from an answer by a certain Ms.Ntwari who gave evidence to the effect that the respondent was not honest and that she had mislead the applicant. This evidence was not materially challenged under-cross examination.

(ii) Secondly, the respondent was dismissed on 24 June 2005 some six days before Kunene received her final written warning. (iii) Thirdly, there were two different chairpersons for the disciplinary enquiries.

I am satisfied that the commissioner did not properly consider the evidence that was presented to him and that if he had, he would have concluded that the respondent, unlike Kunene, had not merely breached the company’s procedures, but that she in fact had made a fraudulent misrepresentation which constitutes dishonest conduct.”

The learned judge accordingly set aside the award and substituted a finding that the dismissal was substantively fair.

[15]. The appellant has persisted on appeal with the submission that the charges were similar, contending also that the charges facing Kunene were more serious because she was in fact the appellant’s superior and it was she who had requested the appellant for her user ID and password to enter the system while the appellant was on leave. In my view, the appellant misconstrues the implication of the different charges. While I differ from the Labour Court’s characterisation of Ms Sylvia Kunene’s misconduct as negligence, there is a significant difference in the misconduct alleged. Both Ms Sylvia Kunene and the appellant were in deliberate and wilful breach of the company rule that user ID’s and passwords should remain confidential. To that extent their misconduct was the same. However, the appellant was charged with a distinct charge of misrepresenting facts to the company which the Labour Court characterised as “a fraudulent misrepresentation”. Ms Sylvia Kunene committed no similar misconduct and there is no evidence that she was in any way associated with such conduct, which occurred at a different time to the breach of the rule governing the safeguarding of user ID’s and passwords. The offence occurred some time after her return from leave. On that occasion the appellant, acting alone, consciously, deliberately and with the intention to mislead applied her signature to

deposit slips and thereby conveyed the impression, and made a false representation, that she had personally checked the banking, when she had in fact not done so. Kunene was not charged with any such offence, nor was there any evidence associating her with it, and accordingly she was not guilty of it. For that reason, the chairperson of the enquiry was entitled to impose a different penalty in relation to it because it was a distinct act of misconduct. There can be no contemporaneous inconsistency when different penalties are applied to distinct acts of misconduct, provided the penalty is appropriate in all other respects.

[16]. It would be unfair and wrong to describe the appellant’s conduct in this case as fraud. The criminal offence of fraud consists of the unlawful making, with intent to defraud, of a misrepresentation which causes actual prejudice or which is potentially prejudicial to another. While the appellant may have made a false statement, possibly with the intent to deceive, her misrepresentation caused no prejudice, actual or potential, because when she signed the deposit slips, the funds in question had already been banked in the bank account of the third respondent. Yet, nonetheless, the appellant breached the duty of good faith which she owed the employer by misrepresenting the truth and thereby evinced a weakness or flaw in her character rendering her untrustworthy and of doubtful suitability for the position of trust she held.

[17]. The appellant has demonstrated through her misconduct that her signature is worth little and is an unreliable means of certification. Because of the unfortunate high degree of fraud and theft in our society, employers are entitled to set the bar high in relation to their requirements of honesty and integrity among employees, especially those who bear responsibility for safeguarding the employer’s records and finances. An added element or incidence of deceit will justify a sterner and different penalty in comparison to that meted out to a co-perpetrator who has not made herself guilty of the same deceit. Where an employee has shown a measure of deceitfulness or a lack of probity, the substratum of trust indispensable to the continuation of the employment relationship will invariably be damaged. In the face of that kind of wrong, courts and arbitrators will be justified in imposing severe sanctions.

[18]. For those reasons, I am in agreement with the court a quo that the commissioner did not properly apply his mind to the critical distinguishing fact that the appellant had been charged with dishonesty whereas Ms Sylvia Kunene had not. That failure resulted in a highly relevant consideration not being taken into account which further caused there to be no rational basis justifying the relation between the evidence and the commissioner’s decision. By totally ignoring the distinct charge of dishonesty, the commissioner did not adjudicated the main question requiring determination, meaning that the employer was denied a fair trial of the issue. The Labour Court was therefore correct to conclude that the decision reached by the commissioner was not one that a reasonable decision-maker could reach, and in substituting a finding that the dismissal was substantively fair.

[19]. The point about consistency was certainly arguable. Hence it cannot be said that the prosecution of the appeal was unreasonable. For that reason fairness dictates that the parties should pay their own costs.

[20]. In the result, the appeal is dismissed and the parties are to pay their own costs.

______

I agree

____

WAGLAY DJP

______

MOCUMIE AJA

Date of hearing : 15 September 2011

Date of Judgement: 28 September 2011

For the Appellant: Retail & Allied Workers Union

For Third Respondent: Adv MJ van As, Sandton

Instructed By: DENEYS REITZ, Sandton

1Schedule 8 of the Labour Relations Act 66 of 1995

2Southern Sun Hotel Interests (Pty) Ltd v CCMA [2009] 11 BLLR 1128 (LC) at par 10

3Rustenburg Platinum Mines Ltd (Bafokeng Rasimane Platinum Mine) v CCMA [2006] 11 BLLR 1104 (LC) at par 24.