In this insight, we provide an explanation of the new Sidumo test by Zondo JP in recent LAC case of Fidelity Cash Management Service v CCMA (Conway).

Original Sidumo test

In October 2007, the Constitutional Court overturned the landmark decision of the Supreme Court of Appeal.

Sidumo v Rustenburg Platinum Mines Ltd

  • [Navsa AJ et al, 5.10.2007]
  • [2007] 12 BLLR 1097; (2007) 28 ILJ 2405 & [2007] JOL 20811 (CC)

overturning

Rustenburg Platinum Mines Ltd v CCMA

  • [Cameron JA et al, 26.09.2006]
  • [2006] SCA 115 (RSA); [2006] 11 BLLR 1021; [2007] 1 All SA 164; 2007 (1) SA 576; (2006) 27 ILJ 2076 & [2006] JOL 18359 (SCA)

New Sidumo test by Zondo

On 5 December 2007, the Labour Appeal Court delivered an important judgment explaining inter alia the nature and effect of the Sidumo case.

Fidelity Cash Management Service v CCMA (Conway)

  • [Zondo JP et al, 5.12.2007]
  • [2008] 3 BLLR 197 & [2008] JOL 21211 (LAC)

That case lists or summarises the essential requirements relating to reviews regarding termination of employment and the requirement of a fair reason relating to conduct and these are summarised below.

  • Termination of employment will only be justifiable if the alleged acts of misconduct are allegations made prior to the termination of employment by the employer.
  • The fairness of the termination of the employment of an employee must be determined on the basis of the reasons given by the employer at the time of termination.
  • In the absence of special circumstances, an appeal should not be allowed if an employer seeks to justify such termination for any other reasons.
  • Employees are not obliged to attend disciplinary inquiries because the purpose thereof is to comply with the audi alteram partem rule before the employer takes a decision that affects the employee’s rights or interests adversely.
  • If an employee fails to attend such an inquiry the employer may proceed and make a decision regarding termination of employment in the employee’s absence.
  • If an employer alleges a dereliction of any duty it is necessary to determine if it was the employee’s duty in the first place.
  • Such an enquiry begins with any contract of employment.
  • Any duty provided for in such a contract must be reasonable and that depends on a number of factors.
  • In certain instances a written directive, rule or regulation containing such a duty would have to be shown.
  • If reliance is placed on any specific responsibilities contained in any “job description” it must be produced as evidence prior to the termination.
  • Reliance can only be placed on other documents, such as policies or manuals, if they form part of the contract of employment.
  • An employee’s duties must be found within the four corners of an employment contract if that contract provides that it constitutes the entire contract between the parties and that no other contract or promises apply.
  • It is permissible to incorporate additional duties by reference in the employment contract.
  • The parole evidence rule is offended when an attempt is made to adduce oral evidence of other duties not contained within the written contract of employment, especially when that contract provides that it is the entire contract between the parties.
  • When reviewing an award it is necessary to consider what findings were made with regard to the reasons provided by the employer for the termination of employment.
  • It is necessary in every matter to determine what issue was before the commissioner and if any duties of the employee are relied by the employer.

As already stated an employee’s duties are determined by the terms and conditions of the contract of employment between such parties.

Sidumo judgment of the Constitutional Court

Commissioners called upon to decide whether there was a fair reason to terminate employment must –

(a) not apply the so-called “reasonable employer test”,

(b) not defer to the employer; and

(c) decide that issue on the basis of their own sense of fairness.

Commissioners perform an “administrative action” when arbitrating in terms of the compulsory provisions of the LRA.

The Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) does not apply to such “administrative action”.

It is no longer permissible to rely on the justifiability of “administrative action” in relation to the reasons given for an award as a ground of review under sec 145 of the LRA.

The grounds of review in sec 145 of the LRA are suffused by the criterion of reasonableness and awards must be lawful, reasonable and procedurally fair.

Approach of a CCMA commissioner when deciding whether termination is fair or unfair

The commissioner’s sense of fairness and not that of the employer must prevail. In terms of the Sidumo judgment, the commissioner must:

(a) “take into account the totality of circumstances” (par 78);

(b) “consider the importance of the rule that had been breached” (par 78);

(c) “consider the reason the employer imposed the sanction of dismissal, as he or she must take into account the basis of the employee’s challenge to the dismissal” (par 78);

(d) consider “the harm caused by the employee’s conduct” (par 78);

(e) consider “whether additional training and instruction may result in the employee not repeating the misconduct”

(f) consider “the effect of dismissal on the employee” (par 78);

(g) consider the employee’s service record.

The Constitutional Court emphasised that this is not an exhaustive list.

Commissioners must also consider the Code of Good Practice: Dismissal and the relevant provisions of any applicable statute, including the LRA.

Sections 188 and 192(2) of the LRA will usually be relevant.

After considering all the above factors commissioners must decide whether, in all the circumstances, the employer has proved that there was a fair reason to terminate employment and in doing so they would use their own sense of fairness.

The award or decision must be reasonable with commissioners using their own sense of justice and fairness.

However, commissioners must not act arbitrarily, capriciously or be mala fide.

Sidumo’s test of unreasonableness as a ground of review for CCMA arbitration awards

The grounds for reviewing awards set out in section 145 of the LRA are ‘suffused by reasonableness’.

Awards, as “administrative actions”, must be lawful, reasonable and procedurally fair.

The test for determining whether arbitration awards are reasonable or unreasonable is whether the commissioner’s decision or finding

“is one that a reasonable decision-maker could not reach”. (par 110 of the Sidumo case).

The question is not whether the award or decision is one that a reasonable decision-maker would not reach.

A Court deciding the reasonableness or otherwise of a decision must ensure that the decision falls within the bounds of reasonableness as required by the Constitution.

In assessing the reasonableness or otherwise of an arbitration award, or other decision of a CCMA commissioner, it could happen that the Court feels that it would have arrived at a different decision or finding to that reached by the commissioner.

The task of determining the fairness or otherwise of a dismissal is primarily that of commissioners.

This does not mean that decisions or arbitration awards cannot be legitimately scrutinised by the Labour Court on review.

When dealing with such awards and decisions an uneasy balance needs to be struck between, two extremes –

(a) interfering too easily; and

(b) refraining from interfering.

Gross unreasonableness is not required for such interference.

The test on review is not whether the dismissal is fair or unfair but whether the commissioner’s decision is one that a reasonable decision-maker could not reach in all of the circumstances.

To ensure that such awards are not lightly interfered with the test is a stringent one.

Awards will be final and binding unless such the decision or award is one that a reasonable decision-maker could not have made in all the circumstances.

The grounds of review in sec 145 of the LRA are not obliterated but are suffused by reasonableness.

However, awards can still be reviewed on the ground, for example, that the CCMA had no jurisdiction or any other grounds specified in sec 145 of the LRA.

There are differences in the approaches in Carephone and Sidumo regarding the grounds of review set out in sec 145 of the LRA.

(a) Carephone sought to construe the section with a constitutional imperative at the time that an administrative action had to be justifiable in relation to the reasons given for it.

(b) Sidumo construes the section to meet the current constitutional requirement that an administrative action must be lawful, reasonable and procedurally fair.

The reasonableness of a commissioner’s decision does not depend, at least not solely, upon the reasons given for the decision.

Such reasons will play a role in the subsequent assessment, but other reasons, not relied upon by the commissioner to support a decision or finding, but which can render the decision reasonable or unreasonable, can be taken into account.

“In Pharmaceutical Manufacturers of SA in Re Ex Parte President of the RSA 2000 (2) SA 674 (CC) at par 86 the Constitutional Court, dealing with rationality as a minimum threshold requirement applicable to the exercise of public power, held that the question whether a decision is rationally related to the purpose for which the power was given calls for an objective inquiry. It then said:

‘Otherwise a decision that, viewed objectively, is in fact irrational might pass muster simply because the person who took it mistakenly and in good faith believed it to be rational. Such a conclusion would place form above substance and undermine an important constitutional principle'”.

“The same can be said of the determination of the reasonableness or otherwise of a decision or finding or arbitration award made by a CCMA commissioner under the compulsory arbitration provisions of the Act”.

Whether CCMA arbitration awards, decisions or findings are reasonable must be determined objectively with due regard to all the evidence and issues that were before the commissioner.

For instances where the Labour Court has recently set aside arbitration awards on review because a reasonable decision-maker could not have made such awards, see:

Hulett Aluminium (Pty) Ltd v BC Metal Industry

  • [Molahlehi J, 6.12.2007]
  • [2008] 3 BLLR 241 (LC)
  • [Review application granted – Sidumo test applied – set aside award of reinstatement – held that award (by Prof Cowling) was one that no reasonable decision-maker could have made – accounts clerk – alleged dishonesty – policy breached – discussed consistency of treatment]

Transnet Ltd v CCMA (Mabentsela)

  • [Basson [AC] J, 29.10.2007]
  • [2007] JOL 20974 (LC)
  • [Review application granted – Sidumo test applied – award set aside – assault – only procedural fairness in issue – 3 grounds rejected – award unrelated to evidence adduced at arbitration]

There are further instances where the Labour Court recently set aside arbitration awards on review, without applying the Sidumo test, see:

Rand Water Board v CCMA (Sindiso)

  • [Molahlehi J, 12.11.2007]
  • [2008] JOL 21094 (LC)
  • [Review application granted – award set aside – gross irregularity – facts not adduced in evidence – CCMA ordered to pay costs jointly and severally with former employee]

Consol Speciality Glass v NBC Cleaning Industry

  • [Cele AJ, 8.11.2007]
  • [2008] JOL 21073 (LC)
  • [Review application granted – award set aside – CCMA exercised discretion improperly – fair reason to terminate related to conduct – employee lied]