In Edcon Ltd v Pillemer NO [2009] ZASCA 135 [2010] 1 BLLR 1; (2009) ILJ 2642 (SCA) (5 October 2009) the Supreme Court of Appeal  unanimously  disallowed the employer’s appeal in the Labour Appeal Court [LAC], which had heard an appeal from the Labour Court [LC], which in turn heard a review of an arbitration award of the Commission for Conciliation, Mediation & Arbitration [CCMA] reinstating an employee, without arrear salary.   The employee was a quality control auditor with 43 years of unblemished service with Edcon before her employment was summarily terminated.

Employers wishing to terminate employment related to (mis)conduct must comply with the Labour Relations Act [LRA], the Basic Conditions of Employment Act [BCEA] and the common law.  Properly interpreted employers act unlawfully and unfairly unless they adduce clear and convincing evidence, on a balance of probabilities, to justify the decision to terminate employment.  Employers must prove not only a valid but also a fair reason to terminate employment.  Unlike the approach adopted in this matter by Edcon there is no need to “charge” employees and find them “guilty” of anything.  To be valid the reason must relate iter alia to the conduct of the employee.  To be fair the employer must prove that the trust relationship was seriously damaged or destroyed.  Employers are obliged to have regard, not only to the actual conduct,  but also any “mitigating” circumstances.

Comment:

Could Edcon have adopted a holistic and balanced approach?   Edcon could have based the reason for termination on operational requirements and paid notice pay and severance pay in accordance with the employment contract or any company policy.   Alternatively, Edcon could have proved that Reddy’s conduct justified termination but in the absence of “any cause recognised by law” [gross misconduct] Reddy could have received payment instead of reasonable notice and an ex gratia severance benefit, given that the BCEA s 41 only creates to right to severance pay if the employer’s reason for termination is based on operational requirements.   As previously mentioned in “Ignorance of employment and labour law is inexcusable“ this provision appears to be in direct conflict with ILO Convention of 1982.

Case law

This is how Mlambo JA traversed the factual background.

“[3]       … Reddy was the beneficial user of a company vehicle, a Toyota Corolla (the Corolla), courtesy of Edcon’s car scheme policy (the policy).   In June 2003 the Corolla was involved in a collision with another vehicle whilst driven by Reddy’s son, Andre.   Reddy was not in the Corolla at the time.   In terms of the policy Reddy was obliged, amongst others, to report the accident to Edcon, the South African Police Service and the relevant insurance company within 24 hours and not carry out repairs to the Corolla without the approval of the insurance company.   Reddy did none of the above, arranging, instead, with her husband to repair the Corolla at his panel beating shop at own cost.   As fate would have it, a combination of factors led to Edcon getting to know of the collision some six months later.   This was when Reddy, who was unhappy with the Corolla’s performance, took it to a Toyota dealer for a check up.   On inspection the service personnel discovered collision damage which had apparently not been repaired properly.   When the service personnel appraised Reddy of this fact she approached her manager, Mr Clive Dwyer, with a request to authorise payment for the required repairs.   She did not, however, disclose to Dwyer that the Corolla had been in a collision.   He discovered this when he contacted the service personnel.

[4]        On being confronted by Dwyer, Reddy initially denied that the Corolla had been involved in a collision but later admitted the occurrence, stating that the collision had occurred whilst she was driving it at a time when she was still employed by a company that had later merged with Edcon.   Dwyer referred the matter to Mr Sayendiran Danny Naidoo, a security manager employed by Edcon, for investigation.   When Naidoo spoke to Reddy, she repeated her lie that she was the driver when the collision took place, stating that a minibus taxi had crashed into her.  She did tell Naidoo, though, that she had given the Corolla to her husband to repair at his panel beating shop”.

Naidoo recommended Reddy’s suspension on full pay pending finalisation of his investigation.   At Naidoo’s request for a further statement Reddy changed her version, this time stating that the collision had occurred whilst Andre was driving, but that she was a passenger.   Her final statement was when she came clean and told the truth with an offer to repay the costs associated with the required repairs.   Andre had also, in the mean time, made a statement to Naidoo confirming that he was driving the Corolla and that he was alone when the collision occurred.   It is common cause that in terms of the policy Andre was entitled to drive the Corolla as he was in possession of a valid driver’s licence.

[5]        In due course Edcon convened a disciplinary enquiry to look into the matter, chaired by Ms Yasmeen Ismail, an employee.   The charge levelled against Reddy was:

‘failure to be honest and act with integrity in that you committed an act, which has affected the trust relationship between the company and the employee in that on 8 June 2003 to 8 October 2003: You failed to report an accident of a company vehicle .   .   .   which your son was driving on the day of the accident (8 June 2003) and this resulted in a breach of trust between yourself and the company’.

Reddy pleaded guilty to the charge at the commencement of the enquiry, stating that her ignorance of the policy rule that Andre was entitled to drive the Corolla had driven her to be deceitful as an attempt to protect him.   She was found guilty and dismissed from her employment”.

CCMA

Bess Pillemer, in the CCMA, found there was no direct evidence from Edcon to show that the trust relationship had been destroyed.

When the matter eventually reached the SCA it was confirmed [para 15] that

“Reduced to its bare essentials, the standard of review articulated by the Constitutional Court is whether the award is one that a reasonable decision maker could arrive at considering the material placed before him”.

In para [18] the SCA stated:

“Naidoo was Edcon’s sole witness in the arbitration and Reddy testified in support of her own case.   The records of the disciplinary enquiry and appeal hearing, as well as all statements collated by Naidoo during the investigation, were also before Pillemer as well as the correspondence from Barnes and Dwyer” and in para [19] it is further stated:

“What becomes immediately apparent is that Naidoo’s evidence did not, and could not, deal with the impact of Reddy’s conduct on the trust relationship.   Neither did Naidoo testify that Reddy’s conduct had destroyed the trust relationship.   This was the domain of those managers to whom Reddy reported.   They are the persons who could shed light on the issue.   None testified”.

In para [20] Mlambo JA refers to an important judgment of Conradie JA in the LAC:

“In De Beers Consolidated Mines Ltd v CCMA & others (2000) 21 ILJ 1051 (LAC) at paras [17] to [27] Conradie JA considered the relationship between an employee’s dishonesty and continued employment, and the bearing of such factors as long service, which Pillemer also considered.

In the present context he said (at para [23]):

‘The seriousness of dishonesty – ie whether it can be stigmatized as gross or not – depends not only, or even mainly, on the act of dishonesty itself but on the way it impacts on the employer’s business’.

But to get here evidence showing adverse impact, if any, on the ‘business’ is critical”.

In conclusion Mlambo JA stated:

“[23]    It is inevitable that courts, in determining the reasonableness of an award, have to make a value judgment as to whether a commissioner’s conclusion is rationally connected to his/her reasons taking account of the material before him/her. . . . In my view, Pillemer’s finding that Edcon had led no evidence showing the alleged breakdown in the trust relationship is beyond reproach.

In the absence of evidence showing the damage Edcon asserts in its trust relationship with Reddy, the decision to dismiss her was correctly found to be unfair.  She cannot be faulted on any basis and her conclusion is clearly rationally connected to the reasons she gave, based on the material available to her.  She did not stray from what was expected of her in the execution of her duties as a CCMA arbitrator”.