South African Revenue Service v CCMA (CCT19/16) [2016] ZACC 38 (8 November 2016) per Mogoeng CJ (Nkabinde ADCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Madlanga J, Mbha AJ, Mhlantla J, Musi AJ and Zondo J concurring):

The Constitutional Court may have set an important precedent that could be followed in future.  There is no doubt that the employee made deplorable racist comments.  That was gross misconduct and provided a valid and lawful reason to dismiss.  But did it also provide a fair reason to dismiss?  That depended on whether the remarks seriously damaged or destroyed the necessary employment relationship of trust and confidence.  They undoubtedly did have that effect and the dismissal should have been fair as well.

And in terms of the common law and the BCEA it would have been lawful, being a ‘cause recognised in law’, to dismiss him without notice and to deprive him of any other benefits.  But SARS breached his employment contract and that made the dismissal unlawful and substantively unfair in terms of s 185 of the LRA.  SARS initially agreed that he would be suspended without pay, receive a final written warning and go for counselling.

But SARS then reneged on that agreement and summarily dismissed him.  In the final result SARS did not dispute that the dismissal was substantively unfair but argued that he should not have been reinstated.  SARS tendered payment to him of six months remuneration as compensation.

The employee was compensated but not reinstated and each party paid its own costs in all the proceedings.  As Australians would say there was a ‘fair go all round’.

Excerpts without footnotes

[17]   Upon receipt of the report on the outcome of the disciplinary enquiry, the SARS Commissioner changed it from a final written warning to a dismissal. This was however done without affording Mr Kruger the opportunity to contest the appropriateness of the higher and terminal sanction.  As a result, Mr Kruger challenged the fairness of his dismissal.  He referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) for conciliation and later arbitration.  The issues to be decided by the CCMA arbitrator (Arbitrator) were as follows—

“2.1     Whether the dismissal of [Mr Kruger] was procedurally and substantively unfair.

2.2       Whether a Commissioner of [SARS] had powers to convert a sanction of final written warning, and suspension without pay to dismissal.”

[18]   Mr Kruger was understandably aggrieved by the SARS Commissioner’s alteration of the sanction, from a final written warning to a dismissal. Understandably because of the non-observance of his right to be heard prior to making a decision detrimental to his interests and in circumstances where the Commissioner did not appear to have the legal authority to do so.  His referral of the dispute to the CCMA was on a somewhat tightly defined basis.

And that was the legal impermissibility of the Commissioner’s substitution of the sanction, during the lifespan of the collective agreement that binds SARS.  For that collective agreement has, he contended, effectively denuded SARS of its common law power to alter the sanction imposed on its employees by a SARS-appointed Chairperson of the disciplinary enquiry.  Mr Kruger argued that that power was for all intents and purposes wholly vested in the independent Chairperson.  To have the sanction altered in the manner purportedly done by the Commissioner would, according to Mr Kruger, require a review application to the High Court in terms of section 158(1)(h) of the Labour Relations Act[1] (LRA).  He thus maintained that the substitution of the sanction was both substantively and procedurally unfair.

[19]   SARS was apparently content with a referral in these narrow terms. The main issue the Arbitrator was called upon to decide was thus whether the SARS Commissioner was in law entitled to substitute the sanction as he did.  Meaning, if he was not empowered to do so, that would be dispositive of issues relating to the substantive and procedural unfairness of the dismissal.

[20]   Having listened to the evidence and heard all the parties’ submissions, the Arbitrator concluded that it was legally impermissible for the Commissioner to substitute the sanction imposed by the Chairperson of the disciplinary enquiry. The legal basis for that approach is, according to the Arbitrator, that SARS has, in terms of the collective agreement that binds it, effectively waived its common law powers to reverse, as it did, the decision of the Chairperson of the disciplinary enquiry.  Our case law, that she relied on, also seems to support those legal propositions in relation to the legal authority of the Commissioner.[2]

[21]   And based on those LAC judgments that were binding on her,[3] the Arbitrator ruled that the SARS Commissioner exercised power that was no longer available to him to exercise. On that basis alone, not on the basis of the merits or demerits of the case, the Arbitrator concluded that the substituted sanction of dismissal was unfair.  She then granted the following award:

“6.1     The respondent, South African Revenue Services is therefore ordered to reinstate the applicant, Jacobus Kruger on the conditions stated by the chairperson at the disciplinary hearing, which were:

            Final written warning valid for six (6) months;

            Suspension without pay for ten (10) days;


6.2       The order is to be complied with within ten (10) days of it being served on the parties.”

This was the restoration of the position as it was before the Commissioner’s offending intervention.

[22]   The Arbitrator did not specify whether her finding that Mr Kruger’s dismissal was unfair was based on the absence of a fair reason to dismiss (substantive unfairness) or a failure by SARS to follow a fair procedure before the dismissal. It can be accepted that the Arbitrator implicitly found that the dismissal was substantively unfair.

. . . . .


[34]   Initially, SARS challenged the Arbitrator’s decision on the basis that her construction of the collective agreement as not allowing its Commissioner to substitute the Chairperson’s sanction was flawed. Also that the dismissal was substantively and procedurally fair because its Commissioner was, in terms of SARS’ disciplinary code, well within his rights to increase the sanction.

That ground was abandoned the day before the matter was heard by this Court.  In considering the merits, it is thus necessary to bear in mind that, to the extent that the Arbitrator may have impliedly concluded that Mr Kruger’s dismissal was substantively unfair, SARS does not attack that finding.  It attacks only the reinstatement part of the award.  We are therefore only asked to consider the appropriateness or reasonableness of the reinstatement.  And the question is whether the reinstatement is reviewable and, if so, on what basis.

. . . . .


. . . . .

The question is thus whether the reinstatement of Mr Kruger, which really is the only live ground of review remaining, was a decision that no reasonable decision-maker could have made in the circumstances.

[37]   Section 193(1) of the LRA provides for remedies that the Labour Court or an arbitrator may grant to an unfairly dismissed employee. They are an order of reinstatement or re-employment, alternatively compensation.[1]

Section 193(2) then tells us when the Labour Court or an arbitrator must grant the remedy of reinstatement or re-employment and when it cannot.  It does so in these terms:

“The Labour Court or the arbitrator must require the employer to reinstate or re‑employ the employee unless—

(a) the employee does not wish to be reinstated or re-employed;

(b) the circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable;

(c) it is not reasonably practicable for the employer to reinstate or re-employ the employee; or

(d) the dismissal is unfair only because the employer did not follow a fair procedure.”

. . . . .

[42]   Unlike in Crown Chickens where an employee was dismissed for one incident,[1] in this case we have two inextricably-linked incidents of saying of a fellow employee that he is a kaffir.

This abusive and derogatory language was directed not only at Mr Mboweni but all of Mr Kruger’s fellow African workers.  He impugned their thinking or intellectual capacity and underminingly pronounced on their perceived inherent leadership or managerial incapabilities.  None of his African colleagues was in his world-view worthy of effectively exercising authority over him.  His was a demonstration of the worst kind of contempt, racism, and insubordination.  A proper reflection on these racial statements alone would have been enough to lead the Arbitrator to the inescapable conclusion that reinstatement was the most inappropriate remedy.

. . . . .

[44]   After concluding that Mr Kruger’s dismissal was unfair, the Arbitrator immediately ordered his reinstatement without taking into account the provisions of section 193(2). She was supposed to consider specifically the provisions of section 193(2) to determine whether this was perhaps a case where reinstatement is precluded.  She was also obliged to give reasons for ordering SARS to reinstate Mr Kruger despite its contention and evidence that his continued employment would be intolerable.  She was required to say whether she considered Mr Kruger’s continued employment to be tolerable and if so, on what basis.  This was not done.  She does not even seem to have considered whether the seriousness of the misconduct and its potential impact in the workplace, were not such as to render reinstatement inappropriate.  And those are the key factors she ought to have considered before she ordered SARS to reinstate Mr Kruger.

[45]   Worse still, this was a case of an employee who, though guilty of racism, did not acknowledge his racist conduct, apologise to all concerned, show remorse or genuinely volunteer to take part in whatever programme could be designed to help him embrace the values of our Constitution, especially equality, non-racialism and human dignity. Having initially pleaded guilty to what in effect amounts to racism in a workplace, he later denied having used the word kaffir.  He was disbelieved by the Arbitrator.  In other words the Arbitrator was dealing with someone who tried to conceal his racist remarks and lie about them.

. . . . .

[48]   Furthermore, the Arbitrator should have been alive to the enormous problems racism has caused and continues to cause in this country. She should also have factored into her decision the special role that SARS as an organ of State, is required to play in the fight against racism and in efforts aimed at its eradication both in the workplace and in society.  She appears to have ignored or given insufficient weight to these crucial factors.

[49]   By ordering SARS to reinstate Mr Kruger the Arbitrator acted unreasonably. She also does not appear to have been mindful of the fact that in terms of section 193(2) of the LRA, reinstatement would not follow as a matter of course.  It would in fact not be an option “if circumstances surrounding the dismissal [were] such that a continued employment relationship would be intolerable”.  No reasonable arbitrator could have ordered reinstatement.  That reinstatement part of her award is thus unreasonable and should be reviewed and set aside.