Discussion of Maroga v Eskom in the High Court and the need for lawful and fair dismissals.

Subsequent note: upheld by the full bench on 16 November 2011 in Maroga v Eskom Holdings.

What is a ‘cause of action’ [‘eis oorsaak’ in Afrikaans) and what is a ‘right of action’?   Why is it important?   How does it work in the real world?

Black’s Law Dictionary

Black’s Law Dictionary (7th ed) (1999), Bryan A. Garner (editor in Chief) provides answers to the first question.

“Cause of action” means ‘1.   A group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person’ [page 214].

“Right of action’ means ‘1.   The right to bring a specific case to court. 2.   A right that can be enforced by legal action’ [page 1324].

It is important mainly because it determines the forum where the dispute must be resolved.   In SA Maritime Safety Authority v McKenzie (17/09) [2010] ZASCA 2 (15 February 2010) [2010] 5 BLLR 488 (SCA) per Wallis AJA (as he then was) the Supreme Court of Appeal decided that an employee did not have a cause of action at common law to institute action in the High Court based on the employer’s failure to provide the employee with a ‘right to be heard’ prior to termination of employment.   As was stated in para [9]:

‘When properly construed, the contention on behalf of the appellant (SAMSA) is that the right in terms of s185 of the LRA, taken together with the remedies for a breach of that right contained in s194 and the procedures prescribed for adjudicating disputes over unfair dismissals in s191, constitutes a complete statement of the extent of the rights in respect of unfair dismissal.   They are entirely statutory in origin and content and give rise to no contractual obligation’.

As authority Wallis AJA quoted from a judgment of Cheadle AJ in Booysen v SAPS [2008] 10 BLLR 928; (2009) 30 ILJ 301 (LC) at para 37:

‘The right to fair labour practices is given effect to by the LRA and other labour legislation.   Apart from challenges to the constitutionality or interpretation of that legislation or the development of the common law where there is no legislation, the right plays no other role and does not constitute a separate source for a cause of action’.

See also an earlier post regarding the importance of the SCA judgment: SCA: No implied term of ‘fair dealing’ in employment contracts

According to media reports in Business Report of 2 May 2010 Jacob Maroga, the former chief executive of Eskom, applied to the High Court for a declaration that Eskom had unlawfully terminated his employment contract.   In other words he contended that Eskom has acted unlawfully, as opposed to unfairly, by summarily (without notice) terminating his employment (and presumably his appointment as a director) without affording him the ‘right to be heard’ or the opportunity to respond to any allegations concerning his alleged poor performance (incapability) prior to termination.   See now the report – Maroga v Eskom (HC-FB).

Judge Moroa Tsoka is reported to have held that in terms of his employment contract the employee had the ‘right to be heard’ and that given the circumstances Eskom had unlawfully terminated his employment in terms of the common law.   In other words Eskom breached the contract and created a cause of action based on the common-law breach of contract entitling Mr Maroga to enforce his rights in the High Court.   It should be noted that in terms of section 77(3) of the Basic Conditions of Employment Act 75/1997 [“BCEA”] the Labour Court would also have had jurisdiction to enforce his common-rights even though the right was not based on any ‘unfair dismissal’ cause of action created by the Labour Relations Act 66/1995 [“LRA”].

What is the distinction between the 2 cases?   Wallis AJA in the SCA made it clear that in the absence of any contractual ‘right to be heard’ there was no implied term that an employment contract could only be terminated ‘with just cause’.   In other words, in the absence of any contractual rights, employers are allowed in terms of the common law to terminate employment ‘just because’ and without ‘just cause’.

For that reason the LRA developed the right to fair labour practices from 1979 onwards and ultimately created a statutory right for all employees, covered by the LRA, ‘not to be unfairly dismissed’ nor ‘to be subjected to unfair labour practice’ [LRA s 185].   However, according to Wallis AJA, in a unanimous decision, that did not mean that the common law had been ‘developed’ to create a cause of action based on ‘just cause’.

In the absence of any agreement to the contrary between the parties or in any collective agreement any cause of action based on that statutory right has to be referred to the CCMA, or appropriate bargaining council, for conciliation within a certain time and failing resolution of the dispute to be arbitrated or adjudicated depending on the reason for termination.   Awards may only be reviewed in the Labour Court whereas judgments of the Labour Court may be appealed against, with leave, to higher courts.

With regard to remedies the LRA provides that the primary remedy is reinstatement in the absence of a substantively valid and fair reason to terminate.   When the High Court determines that an employer has unlawfully terminated employment it is usually ordered that the termination is null and void.   That would mean the employee is still employed.   According to the media report Judge Tsoka declined to order reinstatement because it would not be in the public interest to do so.   In the absence of his reasons it is difficult to comment but his decision not to order that the termination was null and void must be questioned.

The distinction between ‘just because’ and ‘just cause’ must be credited to Richard Bloch, a prominent USA arbitrator who visited South Africa a number of times with another famous USA arbitrator Arnold Zack in the early stages of the development of our labour law.   Richard Bloch used those expressions to explain that in the USA the general rule is ‘EAW’ or ‘employment at will’ (‘just because’) and it was only when employers agreed with a trade union to allow dismissal disputes to be privately arbitrated that employers had to prove ‘just cause’.