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IN THE LABOUR COURT OF SOUTH AFRICA

HELD IN JOHANNESBURG

REPORTABLE

CASE NO: JR 2910/06

In the matter between:

DEVAN LOTTER CONSTRUCTION APPLICANT

and

COMMISSIONER THULANI DUBE 1^ST RESPONDENT

COMMISSION FOR CONCILIATION

MEDIATION AND ARBITRATION 2^ND RESPONDENT

MARIA MAGDALENA DE NECKER 3^RD RESPONDENT

JUDGMENT

molahlehi J

Introduction

1. 1This is an opposed application in terms of which the Applicant seeks an order to review and set aside the arbitration award issued by the First Respondent (the Commissioner) under case number NW1107-06 and dated 10^th October 2006.

Background facts

2. The Third Respondent who I will in this judgment refer to as “the employee” was prior to her dismissal by the Applicant employed as an administrative clerk. Her responsibility in that position included ensuring that once UIF and PAYE deductions were made from the employees’ salaries, they were paid over to the relevant authorities. Before joining the Applicant the employee worked in the same capacity, starting in 1997, for a construction company which was subsequently liquidated.

3. The Respondent effected the salary of the employee through two types of payment, one being through the bank and the other through cash. The cash amount paid to the employee was R2800-00 and the remainder being R2000-00.

4. The employee was charged with two counts of misconduct. The first charge relates to the allegation that the employee had reflected in her pay slip that both UIF and PAYE were deducted from her salary. These amounts were however not paid over to the relevant authorities but paid into the employee’s own salary. The second charge concerned the allegation that the employee had reflected on her salary slip that she had paid an amount of R500-00 as part payment of the loan she had taken from the Respondent.

The Applicant’s case

5. The Applicant called three witnesses in support of its case that the dismissal of the employee was both procedurally and substantively fair. The first witness of the Applicant was the chairperson of the disciplinary hearing, Ms van der Walt (van der Walt). At the arbitration hearing van der Walt testified about the relationship she had with Ms Penny (Penny) who was the initiator during the disciplinary hearing. The two were business partners until after the conciliation of the unfair dismissal dispute of the employee. Thereafter, the relationship between the two deteriorated and at the time of the arbitration hearing they were no longer talking to each other.

6. Van der Walt further testified that when told that she could not be represented by an attorney but by a fellow employee, the employee accepted this ruling and indicated that she would be able to conduct her own defence. And in relation to the charges she testified that the employee conceded to the charges but her explanation was that the offence occurred as a result of an administrative error. As concerning the payment of the R500-00 van der Walt found that the employee had failed to show that she had put such an amount in the envelope as she alleged in her defence.

7. During cross-examination, van der Walt denied having had prior knowledge of the case before the disciplinary hearing nor did she have a meeting at their offices in Potchefstroom with the following people: Ms Penny, Mr Dean Lotter and Piere Lotter the two being managers of the Applicant. She also denied it ever been said to her that the employee should be dismissed to make way for another person.

8. The Second witness of the Applicant was Mr Pierre Lotter, one of the managers of the Applicant. He testified about the duties of the employee which included preparing and issuing pay slips and payment of the Applicant’s accounts. He further testified that towards the end of 2005, the employee was replaced by his wife whilst she (the employee) was away on maternity leave. During this period his wife brought to his attention certain discrepancies in the payment of accounts. He also testified about the R3000-00 loan which the Applicant had granted the employee and which she was to pay back by monthly instalments of R500-00.

9. Mr Devan Lotter, the managing director of the Applicant, testified that he became aware of the discrepancy in the payment of both the UIF and the PAYE during the period when the employee was on maternity leave. He denied having attended a meeting with the chairperson of the disciplinary hearing at Potchefstroom where it is alleged the outcome of the hearing was discussed.

The employee’s case

10. At the arbitration hearing the employee called Penny, the initiator in the disciplinary hearing and a former co-director of van der Walt, to testify on her behalf. Both van der Walt and Penny used to work together at the labour consultancy, Data Force trading as Encore. She testified that two months prior to the disciplinary hearing of the employee she together with van der Walt met with the Applicant’s management. At this meeting Lotter told them that the Applicant wanted to dismiss the employee because his daughter was looking for employment. According to her Lotter suggested that the employee should be charge because she always bring her children to the workplace including failure to pay for the UIF and the loan she had taken with the Applicant.

11. Penny further testified that it was agreed at that meeting that van der Walt would chair the disciplinary hearing and Penny would present herself as the HR officer of the Applicant. Van der Walt also assisted the Applicant in drafting the charges against the employee. On the day of the disciplinary hearing herself and van der Walt arrived in separate cars to create the impression that they did not know each other.

12. Subsequent to her dismissal the employee referred an unfair dismissal dispute to the CCMA. Penny alleges that she was contacted by Lotter after the rerral of the dispute to the CCMA requiring her to fabricate the employee’s contract of employment. After Lotter’s contract and suggestion that she should fabricate employee’s contract she contacted the employee’s attorney and offered to testify on behalf of the employee.

13. The employee in her testimony confirmed her payment structure of R2000-00 cash payment and the R2800-00 being paid into her bank account. She testified that when she applied for maternity benefits at the department of labour she was asked as to whether PAYE had been deducted from her salary. She responded by indicating that there may be a computer error in the non deduction of the PAYE. The reason for this answer was that she was concerned that any other answer could lend the Applicant in trouble because it had not paid PAYE since 1995.

14. In relation to the second charge the employee testified that she had put the R500-00 into an envelope and gave it to Lotter who at that stage was in his car which was in motion. She also indicated that a she became aware of Penny’s willingness to testify on her behalf after referring her case to the CCMA and this she was told by her attorney. She conceded under cross-examination that she never received a receipt from Pierre for R500-00. When asked whether she indicated anywhere that she had overpaid Pierre by R500-00, she stated that she did not. She further conceded that she did not have a record that she had given Pierre the R500-00 but insisted that she told him about the amount and that the amount was given in the presence of a certain Henry. The employee did not call Henry to testify and to corroborate this version.

Grounds for review and the award

15. The Applicant contended that the Commissioner misdirected himself in as far as procedural fairness was concerned. The Commissioner is criticized for adopting a “criminal mode” and not the Code of Good Practice as provided for in the Labour Relations Act 66 of 1995 (the LRA), specifically Item 4 of Schedule 8 of the Code.

16. The Applicant also criticized the findings of the Commissioner as being inconsistent, contradictory, capricious and not justifiable. And the further ground upon which the Applicant relies on is that Commissioner failed to apply his mind as to the appropriateness of the 10 (ten) months compensation he awarded.

17. I have already indicated that the Commissioner found the dismissal of the employee to have been both procedurally and substantively unfair. The essence of Commissioner’s finding in as far as procedural fairness is concerned was that the chairperson of the disciplinary hearing was biased. He found in this respect that the chairperson of the disciplinary hearing could not have been impartial because of the relationship she had with Penny and the fact that the Applicant paid a retainer to their company. This conclusion is based on the evidence of Penny who as indicated earlier served as an initiator of the disciplinary hearing and as the employee’s witness at the arbitration proceedings.

18. The Commissioner also found in this regard that the unfairness arose from the non-disclosure of the relationship between van der Walt and Penny. The evidence of failure to disclose the relationship between the two was also regarded as corroborating the evidence of Penny that the dismissal of the employee was planned at the Potchefstroom meeting.

19. In considering the substantive fairness of the dismissal the Commissioner found the evidence of both Pierre, Lotter, and Duncan Lotter not to have been reliable because they were evasive during cross examination in that they did not want to take responsibility for the running of the Applicant.

20. As concerning the charges which were proferred against the employee, the Commissioner found that “the modus operandi” of the Applicant was to avoid PAYE and UIF. It would seem this finding was based on the fact that the Applicant used two methods of paying the employee’s salary.

21. In relation to the issue of payment of R500-00 the Commissioner accepted the version of the employee as more probable than that of the Applicant.

22. Having found the dismissal to be both substantively and procedurally unfair the Commissioner proceeded to consider the relief. In doing so the Commissioner found that there was no evidence to corroborate the contention of the Applicant that the employee was not employed in March 1997. He found that it was highly probable that the employee was transferred to the respondent. This conclusion seems to be based on the assumption that the employee was transferred from her previous employer to the Applicant in terms of section 197 of the LRA. On the basis of this finding the period of employment of the employee was considerable and it was for this reason that the Commissioner found that it was equitable and just to compensate the employee with a salary equivalent to 10 months, amounting to R48 000-00.

Evaluation of the award

23. In my view the Commissioner in dealing with this matter adopted a peacemeal approach and failed to properly assess the totality of the evidence before him including the circumstances of the case. Had he applied his mind properly he ought to have found that the probabilities did not favour the version of the employee. As indicated above the Commissioner based his finding about procedural fairness on the evidence of a single witness, Penny. It is important to emphasis that Penny volunteered to testify for the employee after serving as the initiator during the disciplinary hearing. She offered to testify after attending the conciliation of the unfair dismissal dispute arising from a case where she was the initiator of the disciplinary hearing against the employee. Her motive of suddenly offering herself to testify is highly suspect. Her offer to testify also happened in the context where her business relationship with the chairperson of the disciplinary hearing had broken down.

24. Penny’s version which the Commissioner accepted projected the chairperson of the disciplinary hearing as biased against the employee. It was on the basis of this version that the Commissioner found the chairperson of the disciplinary hearing to have been “the investigator and the judge.”

25. In my view, had the Commissioner applied his mind he ought to have rejected the version of Penny not only because she was a single witness but also because it was not supported by the probabilities and more importantly it was illogical.

26. The Commissioner found that the non-disclosure of the relationship between Penny and the chairperson of the disciplinary hearing including the allegation that their consultancy had a retainer relationship with the applicant corroborated the version that the applicant “plotted to dismiss the applicant prior to the hearing.”

27. In my view the Commissioner failed in his task of having to fairly and objectively assess the facts and the evidence which was presented before him. His conclusion as will appear fully hereunder was irrational and lacked connectivity to the evidence before him. In this respect it is important to analyse what transpired during the disciplinary hearing to see whether there was a basis for the Commissioner to come to the conclusion that the dismissal was procedurally unfair.

28. The record of the disciplinary hearing reveals that after the chairperson had explained her involvement in the disciplinary proceedings, and her relationship with the applicant, the employee seems to have accepted the bona fides and the ability of the chairperson to chair the proceedings.

29. It should be noted that the explanation arose in the context where the employee asked the following questions:

“Wat is jou associasie met Pierre hulle?”

The chairperson respondent as follows:

“Pierre hulle ken ek nie….

Ek het via Pat my geskakel want ons het al voorheen hy sy my al in `n ander saak gebruik wat ek verhaar gedoen en toe gevra of ek beskekbaar is an van dag `n saak te doen.”

The employee responded as follows:

“Baie dankie.”

30. The said Pat then indicated that she obtained the chairperson’s telephone numbers from a CCMA commissioner. After this explanation the chairperson enquired from the employee as follows:

“Is jy gemaklik daarmee?”

The simple response was:

“Ja baie dankie.”

31. The chairperson then explained the procedure she intended following. She explained that the procedure would include firstly, explaining the rights of the employee and thereafter reading to the employee the charges proferred against her, checking with her whether she understood what they meant and thereafter whether she agrees with allegations contained therein.

32. After explaining the procedure to be followed the Commissioner enquired from the employee about representation. She indicated that she did not have a representative but that her lawyer was present and that she/he would be advising her as the matter progresses.

33. As concerning substantive fairness, the employee testified during the disciplinary hearing that she had intended paying the UIF contribution to the relevant authority during August but was advised by a certain Leintjie at the Department of Labour to wait until after her maternity leave. She further testified that she told Leintjie that the reason for the non contribution in the last three months may have been due to an administrative error.

34. Regarding the issue of the R48-00 which was reflected as deducted on her pay slip but not paid to the relevant authorities the employee testified that she apologised and indicated to the applicant’s manager that this was an amount that would not make her reach or poor. She denied not having been aware of the amount and only became aware when it was brought to her attention by the Applicant’s managers.

35. Contrary to the conclusion of the Commissioner that the Applicant colluded with the employee to evade payment of the relevant statutory contribution, the explanation of the employee was that the non payment may have been due to an administrative error. In her response to this issue the employee never suggested that the Applicant was aware and was party to reflecting deductions in the pay slip but not paying the amount to the relevant authority. However, it should be noted that the essence of this conclusion is that the employee was found guilty as charged.

36. As indicated earlier the collusion theory seems to be based on the two types of payment of the salary of the employee, the one being by cash and the other through the bank account of the employee.

37. The questions and answers given by the employee during cross-examination reveals very clearly failure by the Commissioner to apply his mind to the evidence before him and thus his conclusion that the Applicant colluded with the employee bears no merit. The Commissioner ignored vital evidence and the concessions made by the employee that she intentionally altered her pay slips on her own. She was asked during cross-examination:

“Het jy op enige stadium verlede jaar jou pay slip verander dat dit kan lyk asof daar PAYE van jou verhaal is?”

The critical answer she gives is:

“Ja dit is verander.”

Another important question asked and its answer:

“Wie se pay slips het jy almal verander verlede jaar?-Dit is net myne virdie UIF storie, dat die besigheid nie in die moeilikheid moet kon nie.”

38. I now turn to deal with the issue of compensation awarded to the employee. Section 194(1) of the LRA gives the Commissioner power to award compensation if he or she finds the dismissal to be unfair. The compensation must be “just and equitable in all the circumstances.” This means a Commissioner in considering what compensation to award to an employee, has a discretion which he or she must exercise judicially.

39. In carrying out his task of determining a “just and equitable compensation” the Commissioner has to take into account certain critical facts. In Maepe v CCMA and Others (2008) ILJ 2189 (LAC), the Court held that:

“[11] …where the law is that a Commissioner must take into account a certain factor in deciding a certain question he is obliged to take that factor into account even if none of the parties asks him to take it into account. When he is obliged to take it into account, it is no defence to say that he was not asked to take it into account. If the factor was a critical one and he did not take it into account he may well have committed a gross irregularity the reviewing and setting aside of his award. Accordingly the Commissioner’s omission under discussion is capable of consulting a gross irregularity even if the First Respondent did not ask the Commissioner to take into account the Appellant’s conduct in giving false evidence under oath. Accordingly, I am unable to uphold the submission advanced by counsel for the Appellant in this regard.”

40. It is apparent from the above decision of the LAC and its interpretation by Moshoana AJ in the Junid Manufacturing CC v National Bargaining Council for the Clothing, Manufacturing Industries and Others unreported case number D812/06, that if a factor is critical in the consideration of an issue, the Commissioner is duty bound to consider it irrespective of whether that factor had been raised by any of the parties. Failure to consider such a factor renders the Commissioner’s award reviewable.

41. In the present instance the only factor which the Commissioner took into account was the length of service of the employee. In my view in cases of misconduct one of the factors to consider in determining compensation where the employee has been found guilty is the seriousness of the offence.

42. The Commissioner having failed to apply his mind to the seriousness of the offence committed by the employee in the assessment of what compensation she should receive committed a gross irregularity which rendered his award reviewable. It is also my view that the Commissioner failed to take into account the totality of the circumstances of this case.

43. In Fidelity Cash Management v Anthony Conway (2008) 3 BLLR 197 (LAC), the Court held that:

“[94] 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.

44. The Commissioner also failed to apply his mind in the assessment of the evidence of Penny and her credibility as a witness. The analyses of the facts and circumstances make Penny the most unreliable witness. She misrepresented the true facts and state of affairs during the disciplinary hearing. On her own version she presented a case which she knew was false. Her conscience should have told her that what she was doing was wrong. There is no evidence as to why she could not have recused herself from being the initiator. The other difficulty with Penny is that whilst knowing that the case she was presenting was a lie she never indicated to the chairperson or the employee about this distortion she engaged in. If for whatever reason, she could not find a way of distancing herself from the lie she was going through in presenting the case she had the opportunity to disclose to the employee, the alleged plot to dismiss her at the conciliation hearing where she represented the Applicant and was there on her own. Her evidence was a total fabrication founded on the basis of trying to get back at the chairperson because of the business relationship that had gone sour. In the absence of evidence corroborating the evidence of Penny, the Commissioner ought to have rejected her evidence as being unreliable. The allegation of the Potchefstroom meeting and what was said at that meeting is denied by all the witnesses of the Applicant.

45. Turing to the issue of compensation, the Commissioner misunderstood the significance of the employee’s long service and the seriousness of the offence committed by the employee. While long service may have a significant influence in the consideration of the fairness of the dismissal it cannot on its own however provide a basis for rendering dismissal unfair. In my view long service is no more than material from which an inference can be drawn regarding the employee’s probable future reliability, it does not affect or reduce the gravity of the misconduct. Thus the seriousness of the offence is a factor which the Commissioner ought to have considered. The fact that the issue concerning the seriousness of the offence was not raised by the parties did not relief the Commissioner of his responsibility.

46. In light of the above analysis, it is my view that the arbitration award of the Commissioner stand to be reviewed. It would not be fair in the circumstances o this case to order costs.

47. In the premises the following order is made:

    1. The arbitration award issued by the First Respondent under case number NW1107-06 dated 10^th October 2006 is reviewed and set aside.

    2. The matter is remitted back to the Second Respondent for arbitration afresh and to be considered by a Commissioner other than the First Respondent

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Molahlehi J

Date of Hearing : 25^th June 2008

Date of Judgment : 30^th January 2009

Appearances

For the Applicant : Riki Anderson of Riki Anderson Attorneys

For the Respondent: Mr S Silent of Waks Silent Attorneys

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