Canada: When Relying On A Breach Of Contract And Not Fairness, Is Not So Clever

Last Updated: November 10 2017
Article by Ludwig Frahm-Arp

"Finally, I need to add that the appellant's decision, to proceed in terms of the [Basic Conditions of Employment Act] instead of proceeding in terms of the LRA is totally mystifying, but might well have been informed by poor legal advice. If she had proceeded in terms of the [Labour Relations Act] she would not only have been entitled to claim what she sought in these proceedings on the basis of an unfair dismissal, but would have been engaged in a process where the test is that of fairness and where the onus of proving the fairness of the dismissal is on the employer."

This is the final comment made by the Judge President of the Labour Appeal Court in Mhlongo v SARS1 in respect of a case relating to an alleged breach of contract brought by Ms Mhlongo in the Labour Court in terms of section 77 of the Basic Conditions of Employment Act.

In the September 2017 edition of Without Prejudice, I had written an article on the consequences of making the employer's disciplinary code or policy a term and condition. This email note highlights a case where such an argument went horribly wrong for the employee.

Ms Mhlongo was arrested at her workplace on 31 March 2009 on allegations of corruption. It was alleged that she demanded and accepted payments from prospective or fixed-term contract employees to secure them employment with SARS.

At the time of her arrest, the police were accompanied by one of her co-employees, Mr Seshoka. According to Ms Mhlongo, at the time of her arrest, Mr Seshoka "grabbed" her two cell-phones, took possession of her access card and laptop, and informed her that she was suspended with immediate effect.

On 20 April 2009 Ms Mhlongo's attorneys wrote to SARS demanding written confirmation that she was suspended and reasons for such suspension. The letter records that at the time of her arrest, Mr Seshoka had informed Ms Mhlongo that she was suspended and had confiscated her access card. The letter then adds that she has yet to receive written confirmation of her suspension and states that she was innocent of the charges preferred against her by the police. SARS did not respond to this letter. Ms Mhlongo did not report for work.

About two months later, on 15 June 2009, Ms Mhlongo's attorneys addressed a further letter to SARS stating that Ms Mhlongo had not received her salary for the month of June and demanded payment of it. SARS responded stating that Ms Mhlongo's employment has been terminated on 19 May 2009 after she failed to report for duty being been instructed in letters to do so. Ms Mhlongo was then called upon to immediately report for duty or inform SARS of her whereabouts and the reasons for her absence from work.

Ms Mhlongo claimed that she never received the said letters.

Ms Mhlongo then launched an urgent application for an order declaring
1. the decision of SARS to suspend and subsequently dismiss her on the 19th May 2009 unlawful;
2. the failure by SARS to follow its disciplinary code and procedure a breach of the terms of the employment contract;

The basis for the relief sought was that Ms Mhlongo claimed that SARS had breached the Disciplinary Code of Conduct which applied to her and failed to give any prior notice of suspension and dismissal or give her an opportunity to make representations before taking the decision to suspend and later dismiss her.
SARS' Disciplinary Code of Conducted provided that:

"No employee may be dismissed, demoted or suspended without pay for misconduct, without being granted a formal disciplinary hearing as contemplated in this Disciplinary code and procedure unless the holding of a disciplinary hearing is made impossible by the employee by failing to attend the hearing for no valid reason, or the employee indicating clearly and unequivocally that he/she is not prepared to participate in the disciplinary hearing."

Ms Mhlongo's case was that her dismissal was unlawful (as opposed to unfair) because SARS had breach these provision.

The Labour Appeal Court accepted that the Disciplinary Code was a term of Ms Mhlongo's employment contract. But the Court found that the clause was of no assistance because the evidence before the Court was mutually destructive.

All there was in the papers filed at Court was Ms Mhlongo's allegation that on the date and time of her arrest she was told by Mr Seshoka that she was suspended with immediate effect and that he confiscated her mobile phones, laptop and access card. These allegations are denied by SARS.

The Labour Appeal Court found that Ms Mhlongo's argument that no credence should be placed on SARS's evidence because it made no sense for the police to confiscate her access card was without merit. There is no basis, so the Court found, to come to this conclusion without any supporting facts. Her further argument that SARS's failure to respond to her attorney's letter of 20 April 2009 made SARS's version improbable, as SARS sought to avoid dealing with the issues raised in the said letter, was also without any basis. There were no grounds upon which one could draw such an inference. The fact that there is no response to a letter does not make its contents valid, particularly when there is other evidence to show a contrary position.

By contrast, the Court accepted SARS's argument that the fact that if Ms Mhlongo was in fact suspended on 31 March 2009 and not required to report for duty, she would not have provided medical certificates to the effect that she was unfit to report for work until 17 April 2009. Furthermore, the fact that SARS wrote to her threatening her with dismissal if she did not return to work made SARS's version far more probable. The Labour Appeal Court thus found that could not establish that she was indeed suspended.

The Court then dealt with Ms Mhlongo's claim that SARS had breached the Disciplinary Code by dismissing her without giving her an opportunity to state her case. If found that such an argument was also misconceived. The Court simply asked is how an employer to give a notice about a misconduct hearing to an employee who fails to come to work or respond to a letter calling her to return to work, or explain why she is unable to do so? SARS in its correspondence called upon Ms Mhlongo to return to work or to explain why she remains absent under threat that she will be dismissed. Ms Mhlongo failed to respond.

The Labour Appeal Court found that SARS could not be faulted for dismissing Ms Mhlongo, particularly, since one of the terms that regulated their relationship provided:

"If an employee fails to advise the team leader or direct manager of his or her absence, and is absent for three (3) successive work days, the team leader or direct manager shall send a communication via registered mail to the employee's last known address or via other practical means e.g. hand-delivered notification, requesting the employee to return to work, simultaneously notifying the employee that failure to do so will result in dismissal.

Should an employee be absent from work for five (5) consecutive work days without communicating his or her absence and the reasons thereof as described in this policy, the employee will be regarded as having absconded and his or her employment must summarily be terminated."

SARS's dismissal of Ms Mhlongo was thus in compliance with the above clause, but, this did not close the door to Ms Mhlongo. She was entitled to appeal internally against that decision, but failed to do so, arguing that to appeal against the decision was futile as the horse had already bolted. Again, the Labour Appeal Court found that Ms Mhlongo's submission in respect of appealing the decision was misconceived. An internal appeal in those circumstances would inevitably mean that Ms Mhlongo would be required to explain her absence from work which must then be considered by SARS.

The Labour Appeal Court finally found that SARS's actions were in compliance with the agreement that regulated the employment relationship with Ms Mhlongo and as such it could not be said that it had in any way or form breached the agreement that regulated the relationship between them. Ms Mhlongo's claim was thus dismissed.

This takes one back to the quote at the beginning. Why did Ms Mhlongo seek to pursue a far more difficult legal route than simply referring an unfair dismissal dispute the CCMA or the relevant Bargaining Council? She chose a route where she had the onus to prove that SARS had breached the employment contract as opposed to a route where SARS had the onus of proving that her dismissal was fair.


1 [2017] 9 BLLR 859 (LAC)

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