Head of the Department of Education v Mofokeng (JA14/2014) [2014] ZALAC 50; [2015] 1 BLLR 50 ; (2015) ILJ 2802 (LAC) (1 October 2014) per Murphy AJA [Musi JA and Kathree-Setiloane AJA concurring]

LAC summary:

Appeal allowed and Labour Court decision set aside.  Unfair labour practice related to promotion.  Review of arbitration award – employer merging two schools and upgrading the merged school- employee former principal recommended for position of principal by school governing body- employer advertising position- employee unsuccessful during interview — commissioner finding that employee non-promotion unfair- evidence showing that employer had discretion to advertise the position- recommendation not binding on the employer- review test restated- commissioner failing to apply his mind to the evidence.

Excerpts

[1] The first respondent has been employed as an educator by the appellant since 1981.  In August 2004, he referred a dispute to the Education Labour Relations Council (“ELRC”) alleging an unfair labour practice on the part of the appellant in relation to his non-appointment to the post of principal at the school at which he was employed, after it had been upgraded.

[2] Section 191 of the Labour Relations Act [1] (“the LRA”) provides inter alia that if there is a dispute about an unfair labour practice, the employee may refer the dispute to a bargaining council having jurisdiction for conciliation and arbitration.  The alleged unfair labour practice in this case is one contemplated by section 186(2)(a) of the LRA which defines an unfair labour practice to include “any unfair act or omission that arises between an employer and an employee involving… unfair conduct by the employer relating to the promotion, demotion…of an employee”.

. . . .

[29] The arbitrator’s reasoning is open to question principally because he failed to apply his mind to and ignored the relevant consideration that the appellant was entitled to regard the principal post at Credo as new and vacant, in terms of paragraph 2.5(a) of Chapter B of PAM, when the school was re-graded.[4] As just discussed, the letter of 19 January 2001 was written and the two SGB recommendations were made before the re-grading of the school and the upgrading of the post. The letter provides no basis for an entitlement for the first respondent to remain in the post after the school was re-graded. The letter cannot override Chapter B of PAM. It also makes no misrepresentation of any kind justifying an estoppel.

Moreover, the letter did not promote the first respondent to PL4. He was and remains employed at PL3. The arbitrator accordingly misconceived the true issue before him by not appreciating or ignoring the relevant consideration that the re-grading resulted in the creation of a new and vacant post at a level higher than the one occupied by the first respondent. He thus did not apply his mind to the question for decision namely whether the non-promotion of the first respondent to the newly vacant post of principal was an unfair labour practice. This failure resulted in his not grasping the fact that the collective agreement permitted or obliged the appellant to resort to a competitive interview process, which it did, to fairly and legally appoint Mr Chuta. With that, the appellant fell into the category of employee regarded in terms of paragraph 2.5(c) of Chapter B of PAM “as in excess as a result of operational requirements”. The evidence confirms that the first respondent was thereafter treated fairly in accordance with paragraph 2.4 of Chapter B of PAM. He was offered reasonable alternative placements which he declined, and was permitted to remain as de facto deputy principal at Credo at the same level and the same terms and conditions of employment. The fairness of the interview process selecting Mr Chuta is not in contention.

[30] The failure by an arbitrator to apply his or her mind to issues which are material to the determination of a case will usually be an irregularity.

However,

have held that before such an irregularity will result in the setting aside of the award, it must in addition reveal a misconception of the true enquiry or result in an unreasonable outcome.[7]

[31] The determination of whether a decision is unreasonable in its result is an exercise inherently dependant on variable considerations and circumstantial factors.

A finding of unreasonableness usually implies that some other ground is present, either latently or comprising manifest unlawfulness.

Accordingly, the process of judicial review on grounds of unreasonableness often entails examination of inter-related questions of rationality, lawfulness and proportionality, pertaining to the purpose, basis, reasoning or effect of the decision, corresponding to the scrutiny envisioned in the distinctive review grounds developed casuistically at common law, now codified and mostly specified in section 6 of the Promotion of Administrative Justice Act[8] (“PAJA”); such as

    • failing to apply the mind,
    • taking into account irrelevant considerations,
    • ignoring relevant considerations,
    • acting for an ulterior purpose,
    • in bad faith, arbitrarily or
    • capriciously etc.

The court must nonetheless still consider whether, apart from the flawed reasons of or any irregularity by the arbitrator, the result could be reasonably reached in light of the issues and the evidence.[9]

Moreover, judges of the Labour Court should keep in mind that it is not only the reasonableness of the outcome which is subject to scrutiny.

As the SCA held in Herholdt, the arbitrator must not misconceive the inquiry or undertake the inquiry in a misconceived manner.

There must be a fair trial of the issues.[10]

[32] However, sight may not be lost of the intention of the legislature to restrict the scope of review when it enacted section 145 of the LRA, confining review to “defects” as defined in section 145(2) being

  • misconduct,
  • gross irregularity,
  • exceeding powers and
  • improperly obtaining the award.

Review is not permissible on the same grounds that apply under PAJA. Mere errors of fact or law may not be enough to vitiate the award.

Something more is required. To repeat: flaws in the reasoning of the arbitrator, evidenced in the failure to apply the mind, reliance on irrelevant considerations or the ignoring of material factors etc. must be assessed with the purpose of establishing whether the arbitrator has undertaken the wrong enquiry, undertaken the enquiry in the wrong manner or arrived at an unreasonable result.[11]

Lapses in lawfulness, latent or patent irregularities and instances of dialectical unreasonableness should be of such an order (singularly or cumulatively) as to result in a misconceived inquiry or a decision which no reasonable decision-maker could reach on all the material that was before him or her.

[33] Irregularities or errors in relation to the facts or issues, therefore, may or may not produce an unreasonable outcome or provide a compelling indication that the arbitrator misconceived the inquiry.[12]

In the final analysis, it will depend on the materiality of the error or irregularity and its relation to the result. Whether the irregularity or error is material must be assessed and determined with reference to the distorting effect it may or may not have had upon the arbitrator’s conception of the inquiry, the delimitation of the issues to be determined and the ultimate outcome.

If but for an error or irregularity a different outcome would have resulted, it will ex hypothesi be material to the determination of the dispute. A material error of this order would point to at least a prima facie unreasonable result.

The reviewing judge must then have regard to

    • the general nature of the decision in issue;
    • the range of relevant factors informing the decision;
    • the nature of the competing interests impacted upon by the decision; and
    • then ask whether a reasonable equilibrium has been struck in accordance with the objects of the LRA.[13]

Provided the right question was asked and answered by the arbitrator, a wrong answer will not necessarily be unreasonable.

By the same token, an irregularity or error material to the determination of the dispute may constitute a misconception of the nature of the enquiry so as to lead to no fair trial of the issues, with the result that the award may be set aside on that ground alone.

The arbitrator however must be shown to have diverted from the correct path in the conduct of the arbitration and as a result failed to address the question raised for determination.[14]

[34] In the present case, the arbitrator erred in his failure to understand the provisions of paragraph 2.5 of Chapter B of PAM, in particular the fact that the post of principal became vacant once (and only once) the school was upgraded to PL4, and that the arrangement was a legitimate product of collective bargaining consistent with the purposes of the LRA.

He furthermore misunderstood that the appellant was not obliged to accept the recommendation of the SGB, which was in any event made prior to the upgrading.

His failure to properly apply his mind to these issues which were material to the determination of the dispute, and then to apply the provisions of the applicable collective agreement[15] to them, led him to misconceive the nature of the inquiry and failing to address the question raised for determination in the arbitration;[16] namely whether the non-promotion of the first respondent at the end of a competitive appointment process was permitted, justified and fair in accordance with the applicable collective agreement.

His point of departure was an incorrect assumption that the first respondent had a preferential right to promotion without the necessity of a competitive appointment process.

The failure of the arbitrator to properly apply his mind to these issues and additionally to the material facts that on becoming supernumerary the first respondent had been offered legitimate alternatives and had not been financially prejudiced, reflected not only his failure to address the question raised for determination, but that he made a decision which no reasonable decision-maker could have made in that he wholly misconstrued the policy introduced by the collective agreement.

There was in view of that no fair trial of the issues and the outcome was unreasonable. The award must consequently be set aside.

[35] The Labour Court accepted most of the reasoning of the arbitrator and incorrectly concluded that the first respondent’s qualifications and the recommendation of the SGB meant that there was no need to advertise the post. For the reasons stated that conclusion is not correct and the learned judge erred accordingly.

[36] In the result, the appeal must be upheld. The appellant did not prosecute the appeal in an appropriate manner by not filing a record compliant with the provisions of the rules. For that reason it is just not to make any order as to costs.”