South Africa: Can Misconduct Be Used To Dismiss Employees In Terms Of Section 189?

Last Updated: 22 July 2012
Article by Sushila Dherver

FAWU obo Kapesi & others / Premier Foods t/a Blue Ribbon Salt River

Introduction

Can an employer use its operational requirements to dismiss employees for misconduct?

This was the question that Basson J had to answer in the matter of FAWU obo Kapesi & others / Premier Foods t/a Blue Ribbon Salt River1. In this matter the respondent had dismissed the individual applicants based on its operational requirements after a two month long protected strike characterised by acts of misconduct. These acts included the intimidation of non-striking employees, petrol-bombing of their homes and even an attempted assassination.

After the strike the respondent suspended the individual applicants pending a disciplinary hearing into the acts of misconduct that took place during the strike. Many of the witnesses that had come forward with information regarding the misconduct were too scared to testify at the disciplinary hearings and the respondent's key witness had disappeared. The respondent then changed its strategy and issued a notice to the union, representing the individual applicants, of the possible dismissal of the applicants based on its operational requirements. Following facilitations with the CCMA the respondent dismissed the individual applicants due to its operational requirements.

The applicant referred a dispute to the Labour Court pleading that the individual applicants' dismissal was unfair as the reason for the dismissal was misconduct, not the respondent's operational requirements and that the respondent was not entitled to resort to section 189 of the LRA to dismiss the individual applicants for misconduct.

The respondent pleaded that "section 189 was a legitimate vehicle for terminating the employment of employees under circumstances where incidents of serious criminal conduct, which had a profound impact on the business of an employer, occurrence and where it was impossible to take disciplinary action against such employees".

The Labour Court held that the dismissal of the individual applicants was substantially and procedurally unfair, but ordered the respondent to pay each of the individual applicants compensation equal to 12 months' remuneration.

Previous cases where dismissals for operational requirements have been used in cases involving misconduct

In terms of section 213 of the LRA:

'"operational requirements" means requirements based on the economic, technological, structural or similar needs of an employer'.

The Code of Good Practice: Dismissal based on Operational Requirements states that:

"...economic reasons are those that relate to the financial management of the enterprise. Technological reasons refer to the introduction of new technology... Structural reasons relate to the redundancy of posts consequent to restructuring of the employer's enterprise."

How then could an employer dismiss employees based on any of the above reasons where there had been acts of misconduct? In answering this question the Labour Court looked at previous cases where the courts had found that employers had a legitimate reason to dismiss employee based on operational requirements where there had been acts of misconduct.

In SA Commercial Catering & Allied Workers Union & others v Pep Stores (1998) ILJ 1226 (LC) the Labour Court "accepted as a valid operational requirement warranting retrenchment the fact that a retail store was suffering massive stock losses due to pilferage and that the employees appeared unable to protect the goods in their custody... The court accepted that the company had shown good cause to shut down two branches because they were not profitable and that the reason for that was the unexplained stock losses (shrinkage). The court accepted that was a sufficient reason to close the branches for operational requirements."2

And in Tiger Food Brands Limited t/a Albany Bakeries v Levy N.O. & others (2007) 28 ILJ 395 (LC) the Labour Court held that an employer was entitled to use the facilitation process in terms of section 189A of the LRA where that employer sought to dismiss employees suspected of misconduct in the form of knowledge of an assassination attempt.

The facts of this case, as Basson J stated, were very similar to those in the Premier Foods matter in that the matter related to a strike marred by violence and intimidation of non-striking employees. It was also not possible to identify those involved in the violence and therefore impossible to have disciplinary hearings. The employer needed to start its business back up and the incidents of violence were preventing this from happening. The employer then decided that it was no longer possible to manage the business due to the incidents of violence and that its operational requirements required that it terminate its employment relationship with the group of employees suspected of being involved in the violence. The Labour Court, in setting aside the commissioner's ruling that the employer could not use the s189A facilitation process, held that it was not only in circumstances where an employer was required to downsize that an employer could use section 189A and that an employer needed to be able to manage its business and could not do so when managers were being assassinated and threats were made against them.

What distinguished Premier Foods from the other two cases?

If the courts have permitted employers to dismiss their employees based on their operational requirements where misconduct was involved, what then made the Premier Foods case different?

Basson J distinguished the Premier Foods case from the Tiger Brands case by showing that, although both cases involved serious acts of violence during a strike and the inability to hold disciplinary hearings due to the perpetrators of the violence not being identified, the rationale behind the employer's decision to follow the s189A route in the Tiger Brands case was because the misconduct prevented the employer from turning its company around.

In distinguishing the Pep Stores case from the Premier Foods case, Basson J found that the "dominant purpose" of the consultation process in the Pep Stores case was to find a solution to the problem of the stock loss and the purpose was to save the business from financial failure. It was also noted by the applicants' representative, in the Pep Stores case, that the fact that cause of the financial loss was misconduct did not detract from the fact that the reason for the retrenchment was to prevent the closure of the business.

In the Premier Foods case although the misconduct did have an impact on the employer's business it was not the true reason for following the section 189A process, the true reason was the fact that the employer decided that it could not hold disciplinary hearings not because it feared for the safety of the witnesses but that it feared failing in its case against the individual applicants, the Court held. The Court was also not convinced that the respondent had shown that the incidents of violence had threatened or affected the economic viability of the company to such an extent in any case that the respondent had an economic rationale to implement a s189A procedure.

Where to from here?

While the courts have accepted that employers may dismiss employees based on their operational requirements where misconduct is involved, employers may not simply resort to dismissals for operational requirements in circumstances where those who commit serious forms of misconduct cannot be identified or the employer does not think it has a strong case against such employees.

It is clear from the Premier Foods decision that an employer may only resort to dismissing employees based on its operational requirements in cases of misconduct where the true reason for the dismissal is the employer's operational requirements and not to in order to circumvent the normal disciplinary process.

Footnotes

1. FAWU obo Kapesi & others / Premier Foods t/a Blue Ribbon Salt River [2010] 9 BLLR 903 (LC

2. Supra at paragraph 57

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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