REPUBLIC OF SOUTH AFRICA
	
	Of interest to other judges
	
the labour court of South Africa,
in cape town
judgment
	Case no:  C566/2011

In the matter between:
pick ‘n pay retailers (pty) ltd		Applicant	
and			
commission for conciliation, mediation and arbitration		First Respondent	
Mr yusuf smith n.o.		Second Respondent	
jamafo obo  willem gelant		Third Respondent	

Heard:	16 April 2014
Delivered:	18 September 2014
Summary:	(Review – misdirection preventing arbitrator from determining correct disciplinary charge – misdirection affecting finding of guilt necessitating review – substitution of finding of guilt and of sanction – dismissal nonetheless substantively unfair). 
judgment
LAGRANGE, J
Introduction 
[1]	In this matter, the third respondent, Mr W Gelant (‘Gelant’), was employed as a fruit and vegetable manager at the applicant’s store in Gardens, Cape Town. He had held this position for the previous five years and had been working for the applicant for 27 years.
[2]	He was dismissed for consuming company property without authorisation on 11 June 2010. His dismissal took place on 3 February 2011. The second respondent, the arbitrator, found that Gelant’s dismissal was substantively unfair but procedurally fair and reinstated him with retrospective effect to 14 July 2011. The applicant has applied to review the award and to stay the enforcement of the award pending judgement in the review.	
Background
[3]	Before considering the arbitrator’s reasoning and the grounds of review, it is useful to highlight some of the evidence before the arbitrator.
[4]	Video footage of the incident which led to Gelant’s dismissal, which was not disputed, was shown at the arbitration hearing. The footage was taken from a camera covering the fruit and vegetable preparation area which is off the shop floor, sometimes referred to as the backup area. The description of the incident in the CCTV analysis report records the following occurrences on 11 June 2010:
“11:44:17
A couple of fruit platters are standing on the table and a male employee and a female employee is talking. The male employee takes a piece of fruit and eats it. The male walks out of camera view and the female employee follows him.
12:14:15
A female employee and a male employee walk into camera view and the female employee places a fruit platter on the table and walks out of camera view. The male employee stands the table and he takes a piece of fruit from the platter and eats it. He takes a plastic cup and pours some orange juice and drinks it and walks out of camera view.”
It is common cause that the male employee described in the report is Gelant. 
[5]	The assistant store manager at the time, Mr G Sterrenboom (‘Sterrenboom’), gave evidence for the applicant and Gelant gave evidence on his own behalf.
[6]	Sterrenboom testified that it was company policy that company property could not be consumed because it would result in a loss to the employer. This rule was explained to each and every staff member during the induction process. He agreed that he could not comment on what was the practice when Gelant had been employed, as he had only been employed 13 years previously whereas Gelant had been employed at least 13 years before that. However, he did claim that when a staff member moved from to a management post there was a re-induction process, which he did about five and a half years ago and which was common practice.
[7]	In the Western Cape region losses of this kind amounted to R 32 million during the six-month period from February to August 2010, and the shrinkage at the garden centre store was R 1.8 million amounting to 4% of turnover. Although he was talking about an authorised consumption, he agreed that this figure would also include things like till shortages and could not give a breakdown of the specific causes of shrinkage. In terms of the disciplinary code it was regarded as a serious offence and was treated as a dismissible offence if a person was found guilty of it.
[8]	The procedure for tasting products does not take place in the backup area but on the shop floor and the quantity of produce set aside for a promotion, which would be written off as wastage, would be cut up, peeled and tasted by all the personnel in the relevant department, not by one person. When he had asked Gelant in the disciplinary enquiry if he had obtained permission to do a tasting he had confirmed he had not. According to Sterrenboom the procedure Gelant should have followed if he wanted to sample something on the platter because he suspected it might be off was that he should have approached the store manager or Assistant Manager and requested to do a tasting on the product. The same practice would have applied to the orange juice.
[9]	Under cross-examination he elaborated that the preparation of platters was done for customers on order and they were not supposed to stand in the backup area. As far as he could recall Gelant had never stated what the platter was intended for. He conceded that, part of Gelant’s work was to do quality checks on the products, which included looking to see if fresh produce was bruised or overripe. 
[10]	He also agreed that at the enquiry Gelant had stated:
“It was World Cup. We prepared platters for tasters. We normally use the waste at the back. I asked them if they used the waste that was there. They used the pawpaws. Pawpaws did not look so good and therefore I tasted the pawpaw.”
Under heavy prompting from the applicant’s representative, Ms Venter, who herself at times could not resist giving evidence, Sterrenboom commented that it was not a common practice to make platters from wasted fruit.
[11]	On being asked if the sanction of dismissal was too harsh, Sterrenboom simply reiterated that “case law” at the firm showed that when someone was found guilty of unauthorised consumption of company property it lead to dismissal. Under cross-examination he confirmed that this happened irrespective of the circumstances of the consumption. 
[12]	Sterrenboom also commented that it was not hygienic for Gelant to eat off a platter that was for sale to a customer. Under cross-examination there was a major dispute as to whether Gelant had lifted the fruit with a toothpick or his bare hands, but under fairly obvious leading by the applicant’s representative, Ms Venter, in re-examination Sterrenboom insisted that even if the applicant had used a toothpick and not his bare hands it did not constitute a controlled tasting in compliance with the applicant’s policies. Similarly, also under prompting from Venter, Sterrenboom confirmed that it didn’t make any difference whether the platter was being prepared for sampling by customers or whether it was being prepared for an order by customer.
[13]	Under further questioning from the arbitrator Sterrenboom confirmed that any tasting or sampling exercise would involve the person handling the food wearing protective gloves as well. Customers would be given food to taste in little containers. Sterrenboom testified that all of this was set out in legislation governing the handling of foodstuffs but could not point to any written document issued by the applicant itself setting out the policy, which he claimed was simply the common practice at the company.
[14]	The applicant explained that the platters were supposed to be prepared as tasters for customers and it was his idea to attract customers into his department as the managers had been encouraged to think of ways of doing this. In the morning a quality check would be done and the sound part of the produce would be used for making tasters, while the rest would be discarded. The pawpaw on the platter didn’t look the right colour, which is why he tasted it. The second fruit he had sampled was a slice of a Pink Lady apple, a variety which deteriorated very quickly. A customer had said that it tasted floury. If fruit was bruised it would be cut up and used if possible for example to make salads. As manager of his department who knew that some of the produce would be discarded as waste and to minimise wastage he tried to use what he could. He accepted that he was supposed to ask the store manager or assistant store manager to remove products from the shelf, but as a specialist in that department he knew what could be used and what could not. He felt that he had the authority to do that, even though it had to be recorded that the stock had been used to make salads or platters.
[15]	Under cross-examination, he elaborated on the procedure of checking the quality of stock before the store opened and on an ongoing basis throughout the day. Products which were inferior, bruised or had passed the expiry date were removed and taken to the back. Before it was removed as waste and the store manager would have to authorise it or determine if some of it could still be used. He agreed that he had not specifically obtained authority to use the produce in question for platters, but clearly believed that because he had been instructed to take some initiative to attract customers to the department that could include the preparation of platters from produce which might otherwise be consigned to waste.
[16]	He was questioned assiduously on why he had not attempted to produce documentation to support his claim that he was using waste product. He tried to explain that it would have been difficult to do that given that the enquiry was only convened more than six months after the event. He conceded that it had not been declared waste product by the store manager or his assistant at the time, but he had recorded it as waste because that was the common practice and he could not run to the store manager every time produce had to be removed from the shelves. The store manager only signed the document at night after produce had already been discarded. It is fairly obvious from his answers that the produce he had used to prepare the platters had been declared waste produce at the end of the day. The tenor of the question concerning his authority to do so put to him by Ms Venter under cross-examination was that he needed the authority beforehand.
[17]	It was then put to him that only fruit that had reached its sell by date was used in salads or platters and not fruit that was damaged or bruised. He explained that the common practice is that it never happened that the store manager came and said what must be used for the salad bar and what could be thrown out. Common practice was that he knew what was used for waste and what could be used for shop use, and the store manager or assistant manager would abide by his decision, but would reprimand him if he did something wrong. For all the 16 years he had worked in the fruit and vegetable section what could be used would be used in the salad bar and excessive waste was discouraged. That was the standard practice if fruit was bruised but had not reached a sell by date.
[18]	It was then suggested to him that he was no different from any other employee and had no special privileges which non-managerial employees did not have. He denied that this was what he was trying to say but that it was not for staff members to decide to taste produce without asking him as the manager. He claimed that in meetings with the coordinators the question had been posed what they should do as a manager if they saw something was wrong and it’s not right and they were told that they could taste the product because they were the specialist in charge of that department. Moreover, he saw it as his duty as manager of the fruit and vegetable department to make sure that he was not selling substandard produce. He agreed that in the case of a new product that the tasting procedure as outlined by Sterrenboom would be followed. He could not be selling produce to customers that he knew was not right.
[19]	He was also tested on why he only tasted the pawpaw once the platter had been prepared and he explained that he only saw it when it was in the backup area. He noticed that it did not look as orange as it should have been. Also it was not always possible to see from the colouring of the skin what the colour of the flesh would be like.
[20]	The juices were prepared at the back and they were being promoted with the platters on a table. He had gone to the back to taste the juice after a customer had complained that it was sour. He had tasted it in a tasting cup which held a small quantity of juice. Under cross-examination he explained that a customer had complained that the juice was sour and he had gone to the back where the juice container was to test it. Even though that juice was not the same batch which the customer had sampled he was able to report to the customer that a new batch had been prepared and was sweeter.
[21]	If there was a complaint there appeared to be a problem with a product, he would taste it and the product would be removed and the buyer would be phoned about the quality of that product. He accepted that in the case of new produce which came in, it would be tasted together with staff so they would be able to advise customers how it tasted.
[22]	Gelant did not interpret what he had done as amounting to consuming company product, because it was not as if he was eating to fill his stomach: he was merely tasting the produce. He agreed under cross-examination that he had tasted food in the past, but he denied that this meant he had “got away with it” for 20 years. Even if his manager had been standing next to him he would have tasted the food. Moreover the area in which he had done so was an open area in which there was a lot of movement, so it was not as if he had been acting secretively. In his view it simply didn’t make sense for him to take the food out to the shop floor and taste it there. 
[23]	It was put to Gelant that he should have reported any complaint to the store manager. His view was that he only had to report it if he could not resolve it as the department manager.
[24]	When he joined the company there was no induction process. Employees were simply told where they would have to go and work. He began work as a porter. He did concede that when he was appointed to the position of manager of the fruit and vegetable department 5 ½ years earlier he had been given some guidelines and training including IR training.
[25]	At the end of his cross-examination it was put to Gelant that the employer’s records did not reflect the items in question recorded as wastage. His response was that what was used in the preparation of customer samplers would have been recorded as produce consigned for shop use and the rest as wastage. The applicant’s representative then sought to re-open the company’s case, against the objections of the union representative, to lead further evidence of the company records of wastage. The commissioner ruled that the company could file the documents with their written submissions and the union could respond with the company having a right of reply.
The arbitrator’s findings
[26]	The arbitrator accepted that the evidence showed that Gelant had consumed company products on 11 June 2010 and noted that he did not dispute that but disputed the reason he was doing so. He was not persuaded that the applicant had disproved Gelant’s explanation for doing so. He found nothing inherently improbable about his version when weighing of the probabilities.
[27]	The arbitrator also found that the applicant had refused to even consider the possibility that Gelant had a legitimate reason for consuming the produce. He considered that this was odd given Gelant’s service of more than 20 years with a clean disciplinary record. Even if he had not complied strictly with the procedures relating to tasting or testing of the product it did not imply that he had acted dishonestly. He further accepted that providing customer satisfaction was part of his responsibilities of a manager and that encompassed testing a product when a question arose about its quality. Tasting produce in response to a customer complaint not to have attracted the sanction of dismissal.
[28]	The arbitrator noted that the company had not produced any written version of the testing policy, but did not regard this as decisive because in any event Gelant had not been charged for failing to follow the policy but for dishonest conduct, by which I understand the arbitrator to mean that his consumption of the product was tantamount to an act of theft.
[29]	On a balance of probabilities the arbitrator found that he could not say with any degree of certainty that the applicant’s version was more probable than that of Gelant. If anything, the latter’s version was more probable than the applicant’s version.
[30]	There had been a complaint that the delay in taking disciplinary action had resulted in procedural unfairness. However, the arbitrator accepted that the applicant had only become aware of the incident on 18 December 2010 and had notified the applicant of the charges two days later followed by the first date of a hearing on 28 December. As such, he was satisfied that Gelant had sufficient time to prepare and present his case. Consequently his dismissal was procedurally fair.
[31]	When considering the appropriate remedy the arbitrator followed the normal approach, as mandated by section 193 (2) of the Labour Relations Act, 66 of 1995 (‘the LRA’), that the reinstatement is the preferred remedy unless the employee does not seek that relief or if a continued employment relationship would be intolerable. Consequently he ordered the retrospective reinstatement of Gelant on the same terms and conditions governing his termination of employment on 3 February 2011, without loss of service continuity and benefits.
Grounds of review
[32]	The applicant’s first complaint is that the arbitrator missed the point in finding that there was no proof that he was guilty of dishonest conduct, because he was charged with unauthorised consumption of company products and his state of mind was irrelevant to whether or not he was guilty of the charge. It contended that this amounted to an act of process-related unreasonableness. The applicant further claimed as a second ground of review that the arbitrator had also made a material error of law by “insisting that the applicant was required to prove dishonest conduct as an element of the misconduct” that Gelant was charged with. In truth there is little distinction between this and the first ground of review. In any event, the applicant contends that if the Commissioner had not reasoned as he did the result might well have been different.
[33]	The applicant further contended that the arbitrator committed further acts of process-related unreasonableness by failing to consider a number of material facts and had he done so the result might have been different. The factors highlighted by the applicant in this regard are:
33.1	the undisputed evidence of financial losses owing to shrinkage regionally and at the Garden store;
33.2	the ramifications of tolerating such an authorised consumption in the workforce of 38,000 employees as set out in the applicant’s written heads of argument;
33.3	the submissions made in closing argument about the employer’s expectation of employees to protect its assets; 
33.4	the consistent approach of the applicant in dealing with breaches of the rule and the seriousness with which the offence was treated;
33.5	the evidence that employee is found guilty of the offence were dismissed;
33.6	submissions made by the applicant in argument that managers who contravened the rule had been dismissed;
33.7	the existence of a tasting policy of the applicant, even if this was not one that was reduced to writing;
33.8	the copies of the house rules and regulations applicable in the Western Cape apparently submitted with the applicant’s closing argument.
[34]	In the applicant’ s supplementary affidavit, the issues set out in the previous paragraph are augmented with more detailed reference to the evidence, but no additional grounds of review were advanced.
Evaluation
[35]	I accept that the arbitrator plainly misstated the nature of the misconduct in saying that Gelant had been charged with dishonest conduct and not with breaching the tasting policy. The charge was that he had consumed company produce without authorisation. At least as far as the first part of the enquiry was concerned, the arbitrator was required to determine if Gelant had indeed done so. In his reasoning the arbitrator collapsed consideration of the issue of guilt, with the existence of a justification which diminished the seriousness of the infraction, or completely excused it. In the end he arrived at a conclusion about the fairness of the dismissal, without clearly identifying his subsidiary conclusions along the way.
[36]	Consequently, he concluded that Gelant was not guilty of dishonest conduct. It must be said in fairness to the arbitrator, that he might have been influenced by the applicant itself in making a finding on the misconduct on the basis of dishonesty, rather than on the charge itself. 
[37]	Thus, in its written submissions to the arbitrator, the applicant dwelled at some length on jurisprudence relating to consumption of company products being treated as tantamount to theft. Further, in its replying heads to Gelant’s answering heads of argument at the CCMA, it then sought to de-emphasise the association of the offence with theft and focused instead on the question of dishonesty. Just to give one example, at paragraph 4.3 of the applicant’s replying heads it submitted to the arbitrator, the applicant stated: 
“The [third respondent] now places emphasis on the issue of theft. It is however important to highlight that this is not so much the issue of theft, as it is the larger concept of dishonesty and the issue of trust which in the end justifies dismissal.”
	(Original emphasis)
[38]	Not only did the applicant make much of the issue of dishonesty in its submissions to the CCMA, but it reiterated its view that the sanction of dismissal was appropriate in its submission to court because inter alia :
“Although it was not a specific charge put to him, the misconduct entailed an unsavoury element of dishonesty. Gelant was prepared to consume produce that did not belong to him, but was property of his employer.”
[39]	Nonetheless it seems that the arbitrator confused submissions relevant to the issue of sanction with the finding of guilt on the misconduct. Consequently, he failed to determine whether Gelant was guilty of the charge for which he was dismissed. For the reasons set out below, his finding on the charge itself would in all probability would have been different and that must be set aside. Whether the ultimate decision concerning the fairness of the dismissal itself will be different as a result of a re-consideration of the finding on misconduct will be discussed below, but in the light of his misdirection fundamentally affecting the outcome of a primary issue he had to decide, that conclusion also has to be considered afresh in the light of any change in the finding of misconduct.
Re-evaluation
[40]	Setting aside the arbitrator’s findings on guilt and sanction based on a finding that Gelant was not guilty of dishonest conduct, does not mean that there is nothing of relevance in the arbitrator’s reasoning which in many respects was not unreasonable on a number of issues.
[41]	The applicant was supposed to have provided evidence of the written policies it relied on when it filed its original heads of argument with the CCMA. However, it appears from Gelant’s answering affidavit that it only did so on 6 July 2011 after the union had filed heads on 23 June 2011. The union applied for a directive about what should be done in the circumstances but this elicited no response from the arbitrator and the award was faxed to the respondent on 12 July 2011.
[42]	Strictly speaking the arbitrator was entitled to have disregarded these documents which were received after the union’s submissions, contrary to his own directive. 
[43]	On the evidence, it was undisputed that Gelant consumed two small portions of fruit and a small cup of orange juice in two incidents about half an hour apart. What was in dispute was his authority and justification for doing so.
[44]	On the question of whether it was authorised, it seems that Gelant conceded that in terms of the formal policy, the use of shop produce for the preparation of tasting platters or for fruit salad required the approval of the store manager or assistant manager and that he had not actually obtained it in advance of consuming the items in question.
[45]	His defence was fourfold. Firstly, he had not been consuming the product for his personal satisfaction, but to test it because there was a question mark about its quality. Secondly, as a manager in charge of the section he had to take the initiative to taste produce if it appeared of doubtful quality or if a customer complained. As the manager of the department he had a responsibility to address that without running to the store manager as a first resort on every occasion. Thirdly, the question had been raised in a meeting with co-ordinators and it had been confirmed that they could taste a product if there was a concern about its quality as the specialist manager in their respective sections. Fourthly, the authorisation of writing off produce was usually done retrospectively by the senior manager at the end of the day and if he made an error of judgment in discarding good produce he would be reprimanded. 
[46]	It is difficult to conclude that the applicant had not breached the rule against consuming company property without authority. As such he was guilty of the charge. One may also accept that such rules are necessary to preserve the applicant’s stock and the casual consumption thereof to satisfy employees’ personal needs does not have to be tolerated and an employer is entitled to treat it as a serious matter.
[47]	The seriousness of the particular infraction of the rule should also be considered. In this instance the arbitrator was of the view that Gelant had some justification for what he had done and that it was not for his personal satisfaction. I cannot say that was a conclusion no reasonable arbitrator could have reached even if it might not have been most probable explanation of his conduct. Having accepted his explanation it does not seem unreasonable for someone in his position as the head of a department to have genuinely believed he was expected to take some remedial action himself to address potential problems with the quality of produce in his department despite the formal policy of authorisation tasting. In this regard, it is interesting to note that when the applicant’s representative cross-examined him, Venter was indifferent to the issue whether as a manager he might be expected to be more proactive in dealing with quality issues than a non-managerial employee and whether it was reasonable as a speciality manager to exercise some discretion and initiative in such circumstances. 
[48]	These considerations, in my view justify a more nuanced view of the severity of Gelant’s infraction.
[49]	Then there is the question of his unblemished and lengthy service. It is readily apparent from Sterrenboom’s testimony that this counted for nothing in the applicant’s view. He reiterated the oft heard adage that the consequence of being found guilty of the offence was that dismissal was the sanction in all cases. After nearly two decades since the LRA was enacted and six years after the Constitutional Court judgment in  Sidumo & another v Rustenburg Platinum Mines Ltd & others, one might think that the precepts of Items 3(4) and 3(5) of the Code of Good Practice on Dismissal read with s 188(2) of the LRA and the emphatic weight given by the Constitutional Court to the importance of having regard to a number of factors in deciding whether it is fair to dismiss an employee for misconduct would have dispelled the notion that a finding of guilt determines the sanction automatically. Regrettably, this case illustrates that this thinking is still prevalent and tenaciously adhered to.
[50]	A related fallacy is that the only way in which a workplace rule can be meaningfully enforced is to dismiss the guilty party in every instance, without ever considering if a less serious sanction might be sufficient and justified by the circumstances of the case.
[51]	In this instance Gelant’s otherwise unblemished record counted for nought. Further it was argued, though not even put to Gelant in cross-examination that he could not be trusted. There was no evidence to suggest that a written warning or final written warning might be sufficient to rectify the problem without appearing to be lax on the handling of company produce. 
[52]	Having regard to:
52.1	Gelant’s responsibility as a manager in charge of the fruit and vegetable section of the store and the tension between that responsibility and the applicant’s formal policy of denying him any autonomy to make his own assessment of quality as and when such an issue arises;
52.2	Gelant’s extensive length of service of 27 years including more than 5 years as manager of his section;
52.3	the importance of preventing shrinkage;
52.4	the need to emphasise the seriousness of the rule;
52.5	the absence of other suggesting Gelant could no longer be trusted if given a sufficiently serious warning, and
52.6	Gelant’s justification for what he did,
I do not think that dismissal was an appropriate sanction for his breach of the rule and consequently his dismissal was substantively unfair. A final written warning ought to have more than sufficed in the particular circumstances of this case. The mere fact that there was general evidence that the applicant consistently dismissed any employee for the misconduct is not sufficient reason to outweigh other relevant factors.
[53]	The arbitrator’s finding on procedural fairness remains unaffected.
Order
[54]	In consequence, it is ordered that:
54.1	The second respondent’s finding in the arbitration award dated 15 June 2011 issued under case number WECT 4137-11 that the third respondent was not guilty of dishonest conduct is reviewed and set aside and substituted with a finding that he was guilty of the unauthorised consumption of company property.
54.2	The second respondent’s finding in the said award that his dismissal was substantively unfair is confirmed after reconsideration thereof in the light of the revised finding of guilt.
54.3	The relief granted in the said award is reviewed and set aside and substituted with the following:
54.3.1	The third respondent is reinstated with retrospective effect to the date of his dismissal on 3 February 2011, on the same terms and conditions and without loss of service and service related benefits
54.3.2	The third respondent is issued with a final written warning valid for 12 months from the date of his return to work for the unauthorised consumption of company products.
54.3.3	The third respondent must tender his services to the applicant within 14 calendar days of this judgment.
[55]	The applicant must pay the third respondent’s costs.

_______________________
R LAGRANGE, J 
Judge of the Labour Court of South Africa

APPEARANCES
APPLICANT: 	G A Leslie instructed by Bowman Gilfillan Inc
 
FIRST RESPONDENT:	T J Moquechane of JAMAFO