Craig Bosch has an article in the SASLAW Newsletter March 2010 p 5
“It isn’t easy getting notice(d): how arbitrators should deal with an employer’s failure to give or pay notice”
and states that the article ‘is intended to stimulate debate as opposed to attempting to provide a definitive answer’. This is an attempt to contribute to the debate.
The decision referred to by Craig Bosch is Worldnet Logistics (Cape) (Pty) Ltd v Maritz NO (2009) 30 ILJ 1144 (LC), a judgment of Molahlehi J, where an award by the commissioner of 3 months remuneration as a form of notice pay, despite a finding of substantive and procedural fairness, was upheld on review. It is respectfully submitted that on the particular facts of that case the commissioner would have been justified in finding that the employer had failed to prove substantive fairness in that there was an absence of serious misconduct justifying the summary termination and resulting in the termination being unlawful and unfair. An award of 3 months remuneration in the form of notice pay was appropriate.
Leaving aside termination of employment based on operational requirements and fair procedures it is necessary to examine the current law concerning termination of employment related to the employee’s conduct and capacity (mainly performance).
The LRA gives effect to the constitutional right to “fair labour practices” and creates a statutory cause of action for employees in the form of a “right not to be unfairly dismissed”. It should also be mentioned in addition the common law provides employees with a cause of action should employers terminate employment unlawfully or wrongfully. For this reason many employers pay reasonable notice pay when terminating the contract to ensure that it is at least lawful. If challenged employers must prove that any summary termination (without reasonable notice) was justified and in response to the employee’s material breach of contract or serious misconduct. In other words employers must prove that they cancelled the contract as a result of the repudiation of the contract by the employee. Such contractual claims may be instituted in the Labour Court or the civil courts. See BCEA section 77(3).
The word “dismissal” is used deliberately in the LRA and defined because not all terminations of employment result from the actions of the employer. Employees voluntarily resign or die and even employers die with the result that the contract is terminated, but there is no “dismissal” as defined in the LRA.
It is submitted that the true focus of the LRA should be on the reason for termination on not on the 3 categories referred to in the LRA. It is also submitted that the use of the word “sanction” should be avoided. It does not appear in the LRA and suggests some form of “criminal” measure.
It is submitted that properly interpreted the LRA requires employers to prove, on a balance of probabilities:
#1 a reason related to the employee’s conduct or capacity;
#2 the lawfulness and validity of the reason;
#3 the fairness of the reason, in the sense of being fair to both employer and employee.
It is necessary to examine each of those elements in more detail.
#1 It is important to note that the LRA does not require the reason to relate to misconduct or incapacity implying that the LRA does not require employers to prove that employees have breached any provision of their employment contracts or acted contrary to the law. This requirement simply prevents employers from relying on anything for which the employee is not responsible. It is interesting to note that the law in the United Kingdom allows employers to rely on “other substantial reason” whereas our LRA does not do so. In other words it is possible in the UK for employers to justify a termination in unusual circumstances such as the demands of a third party. Our courts have been forced to fit such instances into one of the 3 “categories”.
#2 It is submitted that the use of the word “reason” clearly implies a reason that is not unlawful, wrongful or illegal [“unlawful”]. In other words employers who terminate employment contracts summarily, without notice or payment instead thereof [“notice”], and cannot prove that the employee in question materially breached the contract, or whose misconduct was serious, act unlawfully. For that reason alone the employer will have failed to prove a fair “dismissal” and it should be regarded as substantively unfair. On this argument employers who are not able to prove any material breach of contract must act lawfully and pay the notice as required by the common law and the BCEA, usually “at least 4 weeks”. It must also be pointed out that the BCEA s37(6) only exempts employers from giving notice “for a cause recognised by law”. Only material breaches of contract fall into that category.
There is LAC authority for the submission that unlawful terminations are regarded as unfair – see SACCAWU v Mahawane Country Club [Zondo JP (Davis & Du Plessis AJJA concurring), 14.09.2001]; [2002] 1 BLLR 20 & (2002) 23 ILJ 902 (LAC) and the following extract from the judgment with emphasis added:
“Consideration of the fairness of the dismissal
[5] As the second and further appellants were dismissed for alleged misconduct and they dispute the fairness of their dismissal, the respondent must show that they committed a material breach of their contracts of employment before it can be said that it had a right in law to terminate the contracts. If it fails to show a material breach of the contracts in circumstances where the dismissal was summary, this will mean that the respondent had no right in law to terminate the contracts. If it did not have such a right in law, then the dismissal will almost invariably be unfair. If, however, it had such a right, that would not be the end of the inquiry. The respondent would still have to show that it exercised that right in a fair manner.
[6] The first question that arises in this matter is, therefore, whether the conduct of the second and further appellants in refusing to sign the service agreements constituted a material breach of their contracts of employment. In our law an employer only has a right to summarily terminate a contract of employment where the employee has committed a material breach of the contract of employment. The respondent labelled the conduct of the second and further appellants as a “failure to comply with a reasonable official order”.
7] Although an employee is obliged to obey an instruction from his employer failing which he may be disciplined, this does not apply to a situation where the employee’s refusal does not constitute a breach of the employee’s contract of employment or where the employee’s conduct cannot be said to be unlawful. As the second and further appellants were dismissed for refusing or failing to sign written contracts of employment, the respondent had to show that it was a term of their contracts of employment that they were obliged to sign the written contracts of employment that they were required to sign. The respondent has not proved this”.
It also needs to be mentioned that article 11 of the 1982 ILO Convention 158 on Termination of Employment provides:
“A worker whose employment is to be terminated shall be entitled to a reasonable period of notice or compensation in lieu thereof, unless he is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue his employment during the notice period”.
#3 With regard to the fairness of the reason recently the SCA decided that to be fair it is also necessary for employers to prove that the conduct must have had the effect of seriously damaging or destroying the trust relationship. See SCA confirms reason to terminate employment must be valid & fair and Edcon Ltd v Pillemer NO [2009] ZASCA 135; [2008] 5 BLLR 391 (SCA). See also earlier Ignorance of employment law and labour law is inexcusable.
To sum up: in addition to any common law cause of action for breach of contract employees also have a statutory cause of action not to be “unfairly dismissed”. If employers fail to prove that the reason was lawful, valid and fair the termination should be regarded as substantively unfair. Summary termination will only be lawful if the employer proves that the employee materially breached the contract. In all other instances reasonable notice must be provided in terms of the common law and the BCEA to ensure the lawfulness of the termination.