Goldfields Logistics (Pty) Ltd v Smith (JA 42/08) [2010] ZALAC 33 (24 August 2010) per Tlaletsi JA [Waglay DJP & Revelas AJA concurring] when the employer’s appeal was upheld.

Employer’s appeal allowed by Labour Appeal Court.  Assume you conduct a nationwide transport and logistics business and operates a vehicle fleet of approximately 140 heavy duty trucks.  Truck breakdown is a frequent (daily) occurrence.  Most breakdowns occur on the road and those that occur at night expose the drivers and other road users to safety risks.  It is necessary that constant repair work be undertaken without delay.  You employ 13 diesel mechanics and their core duties include the repair of broken trucks.  Although their normal working hours are from 07h00 to 17h00 they are also required to perform standby duty without additional allowances.

Question:

What should you do if one mechanic refuses to standby without an allowance?   Dismiss for a reason related to ‘misconduct’ ?

Answer:

No.   Dismiss lawfully for a valid and fair reason based on operational requirements.

Excerpts

“[32] In my view, there would be instances where a legitimate operational requirement exists, which would justify a dismissal on operational requirement and also a fair reason on the basis of which an employer may discipline the employee for misconduct which would lead to a dismissal.

Such a scenario should give an employer a choice of procedure to follow.   I am not aware of any provision that would compel the employer to follow a particular route.

It should be permissible for the employer to opt for the use of operational requirement provided that it is not for improper motive and that the requirements of section 189 of the Act are met.

Such an option may prove to be fair and advantageous to the employee.   Whether the employer acted fairly or not would depend on the circumstances of a particular case.”

LRA sections: 185, 188, 189, 189(5), 189(6).

Related posts

Judgments referred to by LAC

Extracts from LAC judgment with footnotes omitted and emphasis added

The Appeal

[26] The appellant applied for leave to appeal against the judgment of the Labour Court and his application was dismissed with costs.   Appellant obtained leave from this Court after petitioning the Judge President.   The appellant has raised a number of grounds upon which the judgment of the Labour Court is challenged in its Notice of Appeal.   The grounds of appeal amount a challenge of the findings of the Labour Court on facts and points of law and that the Court erred in finding that the dismissal of the respondent was procedurally and substantively unfair.   In particular, it was contended that the Labour Court erred in finding:

26.1 that the appellant was precluded from dismissing the respondent for operational requirements for his failure to perform standby;

26.2 that the consultative process under section 189 of the Act could only relate to the quantum of the standby allowance;

26.3 that the appellant failed to show sufficient reasons why it could not offer a standby allowance of more than R50.00 per week and that the appellant concomitantly failed to show that the dismissal of the respondent was for a fair reason.

26.4 that the dismissal was procedurally unfair in that the appellant did not approach the consultative process with a real intention to reach consensus on the issues listed in sections 189(2) and (3) of the Act.

.   .   .   .

[28] It is a right of every employee not to be unfairly dismissed.   Sec 188(1) of the Act provides, inter alia, that a dismissal that is not automatically unfair, is unfair if the employer fails to prove that the reason for the dismissal is a fair reason related to the employee’s conduct or capacity, or based on the employer’s operational requirements and that the dismissal was effected in accordance with a fair procedure.   Sec 188(2) enjoins any person considering whether or not the reason for the dismissal is a fair reason or whether or not the dismissal was effected in accordance with a fair procedure to take into account any relevant Code of Good Practice issued in terms of the Act.   In this regard the applicable code is provided in Schedule 8, the Code of Good Practice: Dismissal.

[29] In SA Airways v Bogopa & Others this Court held that an employer should generally speaking not use procedures relating to dismissal for operational requirements to solve problems relating to poor work performance of its employees.   The Court held further that:

“There is a reason why there are different procedures for the different permissible reasons for dismissal.   There is a procedure applicable to dismissal for misconduct.   There is a different procedure applicable to dismissals for incapacity.   There is yet a different procedure applicable to dismissals based on the employer’s operational requirements.   Where an employer wants to have an employee dismissed because he has done something unacceptable to him – which should be dealt with through disciplinary procedures, it is unacceptable for the employer to use retrenchment to get rid of such employee because he knows that whatever the employee has done wrong would not constitute a fair reason to dismiss him on disciplinary grounds.  Equally, it would not be acceptable for an employer to dismiss an employee for misconduct to avoid having to pay such employee severance pay upon retrenchment when there is no fair reason to dismiss the employee on disciplinary grounds.”

[30] In Mazista Tiles (Pty) v NUM & Others this court held that an employer who is desirous of effecting changes to terms and conditions applicable to his/her employees is obliged to negotiate with the employees and obtain their consent and may not do so unilaterally.   The Court held further that:

“It may so happen, as it was the position in the case, that the employees refuse to enter into any agreement relating to the alteration of their terms and conditions because the new terms are less attractive or beneficial to them.   While it is impermissible for such employer to dismiss his employees in order to compel them to accept his demand relating to the new terms and conditions, it does not mean that the employer can never effect the desired changes.   If the employees reject the proposed changes and the employer wants to pursue their implementation, he has the right to invoke the provisions of section 189 and dismiss the employees provided the necessary requirements of that section are met.”

[31] The court concluded that the fact that the dismissal came about after the employees’ rejection of the proposed changes cannot affect the fairness of the dismissal if the employer established that it was effected for a fair reason relating to his operational requirements and not in order to compel the employees to accept the proposed changes.

[32] In my view, there would be instances where a legitimate operational requirement exists, which would justify a dismissal on operational requirement [sic] and also a fair reason on the basis of which an employer may discipline the employee for misconduct which would lead to a dismissal.  

Such a scenario should give an employer a choice of procedure to follow.   I am not aware of any provision that would compel the employer to follow a particular route.  

It should be permissible for the employer to opt for the use of operational requirement [sic] provided that it is not for improper motive and that the requirements of section 189 of the Act are met.  

Such an option may prove to be fair and advantageous to the employee.   Whether the employer acted fairly or not would depend on the circumstances of a particular case.

[33] In this appeal the finding by the Labour Court that standby duties formed part of the respondent’s contract of employment is not challenged.   It is indeed a correct finding.   It means that the respondent had an obligation to do standby duty.   However, having found that standby duties formed part of the respondent’s employment contract, the Labour Court seems to have imposed a duty on the appellant to negotiate standby allowance to seek compliance with the contractual obligation.   In my view there was no obligation on the appellant to negotiate with the respondent on the question whether he should do standby or not.   The practice at the appellant had always been that diesel mechanics performed standby duties without being paid an allowance.

[34] The appellant was entitled to instruct the respondent to perform standby duties and, failing compliance with the instruction, to institute disciplinary proceedings against him.   Instead the appellant opted to embark on a process of discussions and negotiations to seek resolution of the problem with the respondent.   It has not been established that there was an improper or ulterior motive on the part of the appellant for not instituting disciplinary proceedings against the respondent.   To the contrary, the process that was embarked upon was a matter of fairness to the respondent as its ultimate aim was to preserve the respondent’s employment.   The decision was taken as a result of the respondent’s belief that he was entitled to an allowance for standby duties.   There is no indication on the record, either before or after the engagement of the respondent’s union representative, that there was any objection to the process that the appellant embarked upon.   The parties continued the process of negotiating quantum of the allowance up until a deadlock was reached.

[35] The failure of the parties to reach consensus, resulted in a situation where the respondent was the only diesel mechanic employed by the appellant who did not want to perform standby duties in line with the practice at the appellant’s business.   The respondent`s refusal to perform standby caused an insurmountable operational requirement for the appellant.   This meant that the respondent did not meet the business needs of the appellant.   The general rule is that employers conclude contracts of employment with employees on certain terms and conditions because its business requires the employees to work on these terms and conditions in order to satisfy its business’ operational needs.

When that contract no longer suit [sic] the operational requirements or the employee no longer seeks to be bound by the agreed terms which are necessary for the employer`s business that may be a valid reason for the employer to terminate that contract of employment.

[36] It was not in dispute that the appellant employed diesel mechanics at its various depots within the republic.   Their core duties are to repair broken trucks.   They were the only qualified mechanics to do repair works.   In the absence of the appellant’s standby system, the appellant will not be able to repair its trucks after hours.   Given that after hours breakdowns occur daily, this would mean that the trucks will only be repaired during day time.   This may result in the trucks arriving at appellant’s customers behind schedule.   Consequently the appellant will not be able to operate its business effectively.

[37] The evidence revealed that abandoning the Standby System would not be viable.   The appellant demonstrated that it would be costly to engage other companies to do the standby duty.   The appellant explored the possibility of paying the respondent an allowance and the parties could not reach agreement on the amount of such allowance.   I do not think that it would be fair to expect the appellant to pay the respondent only an allowance acceptable to him when all the other diesel mechanics have been doing standby duties for years and not being paid standby allowance because it was in line with their terms and conditions of their employment.   It would also be unfair to expect the appellant in order to accommodate the respondent to introduce a costly standby allowance to all its employees.   Furthermore it would not be fair to the appellant to hire the services of third parties to attend to the repair of its trucks at a fee only to keep the respondent in its employment.   The argument that the appellant has failed to provide sufficient reasons why it could not offer more that R50.00 is, in my view, therefore misplaced.

[38] The finding that the appellant failed to prove that the failure to pay the respondent a standby allowance was necessary for the viability of its business imposes a burden on the appellant’s business.   Obviously by paying no standby allowance which has never been a requirement, would be less expensive than to introduce standby allowance.   In other words, it would be better for the from an operational view to retain the existing arrangement.   For the above reasons I am of the view that the appellant has shown that the reason for the dismissal of the appellant was fair.

[39] It is common cause that during November 2004 Hollander met the respondent and the need for him to form standby duties was discussed.   On this occasion the appellant persisted with his demand that he be paid an allowance of R700.00.   Subsequent communications took place on 26 November 2004, 17 January 2005, 25 January 2005 and 10 February 2005.   After these events, the respondent’s dismissal was anticipated as a result of the deadlock reached by the parties.   On 7 April the appellant issued a letter in terms of sec 189(3) of the Act.   On 9 April 2005 the union placed itself on record.   Thereafter three consultative meetings were held with the participation of the union.   In the meantime the dismissal of the respondent was postponed until the consultations were finalised as proposed by the union is therefore misplaced.

[40] A consultation process preceding a dismissal for operational reasons is not merely a procedural requirement.   It must be exhaustive and thorough.   It must be a meaningful joint consensus- seeking process. 

Both parties are free to raise any issue that is relevant to the process and where necessary to request further information or time if reasonable.   In this case it is not the respondent’s case that the time was inadequate, that the process was rushed through; that they were not provided with the necessary information or that the appellant did not consult on any of the issues listed in section 189(2) and (3) of the Act.   The complaint seems to be that the procedure followed is unfair because the appellant did not approach the consultative process with “a real intention to reach consensus.”

[41] The only basis why it is contended that the appellant did not have a real intention to reach consensus is that the appellant failed to accede to a demand for an allowance of either R700.00 or R500.00 per week, or a call out fee of R250.00.   These proposals were in fact counter proposals made to the appellant by the respondent and the union and were found to be unaffordable to the appellant.   The appellant did explain that whatever quantum of allowance is arrived at, it would have to extend it to other diesel mechanics.   In addition, a higher standby allowance would not eliminate safety risks for the respondent and his family which the respondent advanced as the main reason for him not to do standby duties.

[42] In my view, under the circumstances the appellant complied with the requirements of sec 189(5) and (6) of the Act, and the contention that it had no real intention of reaching consensus is without merit.   Indeed there was a deadlock with regard to the quantum of the standby allowance.   The appellant was entitled to move forward and not to continue negotiating for an affordable allowance.   The dismissal of the respondent was therefore procedurally fair.   The appeal should succeed.   No appeal was noted against that part of the order relating to payment of the amount of R23 682.19.