Samancor Tubatse Ferrochrome v MEIBC (Maloma & Stemmett NO) [2010] ZALAC 7 [2010] 8 BLLR 824; (2010) ILJ 1838 (LAC) dated 12 March 2010 per Davis JA.
How should employers respond when a skilled employee, who is essential to the operations of the business, is arrested on suspicion of having committed a serious criminal act and detained in custody for a lengthy period of time?
Should employers simply terminate employment and invite the employee to make representations upon release from prison? Can employers rely on a valid and fair reason, related to conduct or capacity or based on operational requirements, and what constitutes a fair procedure?
In the recent Labour Appeal Court decision in Samancor Tubatse Ferrochrome v MEIBC (Maloma & Stemmett NO) [2010] ZALAC 7 dated 12 March 2010 Davis JA, in a unanimous judgment, overturned the Labour Court review judgment of Francis J in Samancor Ltd v MEIBC (2009) 30 ILJ 389 (LC) and set aside an award of reinstatement by Mr J Stemmett and substituted an award of 6 months remuneration as compensation because the employer had not proved that a fair procedure had been followed. The employer purported to hold a ‘post-dismissal hearing’ but had already made up its mind to terminate employment.
Mr Maloma was a furnace operator with about 10 years service when he was arrested on suspicion of having committed an armed robbery and detained. Within a month of his arrest and detention, which ultimately lasted 150 days, the employer terminated his services and had the letter delivered to the police station where he was detained. The employer alleged that the reason for termination was ‘operational incapacity’. After his release a post-dismissal ‘hearing’ was held in terms of the employer’s disciplinary code and the decision to terminate employment was upheld.
Davis JA considered the scope of the term ‘incapacity’ and rejected the narrow interpretations of both the arbitrator and Francis J. In effect they had decided that the employer’s allegation exceeded the defined scope of the definition of incapacity as understood in the Labour Relations Act 66 of 1995 [“LRA”] read with the Code of Good Practice: Dismissal, being schedule 8 to the LRA.
Davis JA found support for his judgment in Du Toit et al Labour Relations Law: A Comprehensive Guide. However reference was made to the 4th edition and not the 5th edition, published in 2006. The relevant page references in the new edition are 420-422.
What is rather startling is the erroneous reliance or reference in para [9] by Davis JA to Jabari v Telkom SA (Pty) Ltd [2006] 10 BLLR 924 (LC) as a LAC case when in fact it was only a Labour Court case and then only a judgment by an acting judge. To make matters worse Davis JA then quoted with approval a passage from Martin Brassey’s work Commentary on the Labour Relations Act at para A8 – 76 but omitted a crucial passage. The correct extract follows with the omitted passage in bold:
“Incapacity may be permanent or temporary and may have either a partial or a complete impact on the employee’s ability to perform the job. The Code of Good Conduct: Dismissal conceives of incapacity as ill-health or injury but it can take other forms. Imprisonment and military call-up, for instance, incapacitate the employee from performing his obligations under the contract. The dismissal of an employee in pursuance of a closed shop is for incapacity; so is one that results from a legal prohibition on employment”.
In para [9] Davis JA holds that there
‘is thus no justification for the limitations placed by the court a quo [Francis J] or second respondent [Stemmett NO] upon the meaning of incapacity as adopted’.
In paras [10] to [12] Davis JA provides reasons for finding that the termination was substantively fair and concludes as follows in para [13]:
‘In my view, given the facts of the present dispute, it was not reasonable to expect appellant [Samancor] to have kept the position open and available to fourth respondent [Maloma] for an indefinite period of time, particularly in circumstances where he held an important position within the organisation. The potential indefinite length of the absence from work of a person holding a position which could not easily be filled by [a] temporary employee renders this case one of incapacity as I have applied that term. For a similar approach, see the Industrial Relations Court of Australia in Young v Metropolitan Ambulance Service (1997) IRCA 81’.
It was pointed out in a recent post on the website Notice: Employer’s reason for termination must be lawful, valid & fair that:
‘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”’.
Unless and until our law is amended to accommodate the ‘exceptions’ it will be necessary to extend the meaning of ‘incapacity’. It should also be pointed out that as far back as 1993 André van Niekerk, now a highly respected judge in the Labour Court, noted in “Absence, illness, incapacity & operational requirements” (1993) 3:4 Contemporary Labour Law 31:
‘These categories are not water-tight. It is quite feasible that in some circumstances, a dismissal might arguably be squeezed, perhaps with some discomfort, into all 3 categories’.
Reference was made to Martin Brassey in “The dismissal of strikers” (1990) 11 Industrial Law Journal 213 where the example of theft was given and it was argued that it could fall into all 3 categories.
To conclude reference also needs to be made to Anglo American Farms t/a Boschendal Restaurant v Komjwayo (1992) 13 ILJ 573 (LAC) at 590 where Thring J referred to an arbitration award of Martin Brassey in MAN Truck & Bus (SA) (Pty) Ltd / UAMAWU (1991) 12 ILJ 181 (Arb) with approval. There the overlap between the 3 categories was referred to and it was stated:
“The overlap illustrates that (absenting any improper motive, like victimization or union bashing) we are ultimately asking a single question: did the dismissal make commercial sense in the circumstances?”.
my worry with regard to operational incapacity is that if employee is arrested for two or less than five days you can still charge that person or what?. because our statutes is silent with regard to specific time period.
yours,
Jeffrey
Jeffrey, the point I was trying to make is that it is not necessary to ‘charge’ the employee at all. Put the facts to the employee and and allow the employee to respond. The statutes cannot possibly specify time limits and each matter must be decided on its own facts.
Unfortunately it is necessary to take issue with an article in the latest May 2010 issue of Contemporary Labour Law Volume 19 number 10 pages 91-96. In the article “The dismissal of imprisoned employees revisited: Misconduct, incapacity or operational requirements? What is the appropriate pre-dismissal procedure?” there is a full discussion of Samancor Tubatse Ferrochrome v MEIBC(unreported JA 57/08 of 12 March 2010) discussed in the above post.
On page 93 the author quotes the passages containing the errors referred to above.
In the conclusion on page 95 the author misconstrues the true nature of an employer’s right to terminate employment. In the second bullet point employers are informed that the employee may be “charged with absenteeism or abscondment” and mentions the “sanction” of dismissal. Why not use the language of the LRA and the Code of Good Practice in schedule 8 and provide the employee with written allegations and allow the employee to respond to the facts? In the absence of an acceptable explanation, etc the employer may terminate the contract if there is a valid and fair reason after following the fair procedure.
The author also seems to confuse a situation where the employee is imprisoned and seems to suggest that employers cannot terminate employment until the conclusion of the criminal case. There is ample authority to support the employer’s right to proceed with an internal fair procedure without the need to await the verdict in the criminal proceedings.
It is necessary to repeat that the LRA only requires employers to prove a valid and fair reason related to conduct (not misconduct)or capacity (not incapacity)or based on the operational requirements of the employer.
In the absence of gross or serious misconduct when terminating employment the employer must pay reasonable notice pay in terms of the BCEA (at least 4 weeks)and the common law.