Member Article

A recent Constitutional Court judgment is an important reminder to employers that employees must be granted a fair opportunity to ventilate their case at a disciplinary hearing. Failure to do so could result in an award for compensation against the employer, even when the misconduct was of a very serious nature and the employer was justified in dismissing the employee.

In misconduct cases, employers are generally required to grant employees an opportunity to be heard prior to dismissing them. It is only in exceptional circumstances, if the employer cannot reasonably be expected to comply with pre-dismissal procedures, that an employer may dispense with these procedures.

The Code of Good Practice: Dismissal sets out the basic guidelines that employers must follow prior to dismiss an employee. The code requires an employer to conduct an investigation to determine whether there are grounds for dismissal, to notify the employee of the allegations of misconduct, and to allow the employee an opportunity to state their case in response to the allegations. This need not be a formal enquiry. However, if an employer’s disciplinary code, agreement or a collective agreement, prescribes a more formal procedure to be followed, the employer will usually be required to follow that procedure.

The Constitutional Court’s decision in McGregor v Public Health and Social Development Sectoral Bargaining Council and Others is a reminder of the importance of adhering to a fair process in dismissing an employee, despite the seriousness of the allegations of misconduct. In this case, the applicant, Dr McGregor, was employed by the Department of Health. He was charged with the disciplinary offence of sexual harassment and was dismissed following an internal disciplinary inquiry. He lodged an internal appeal against his dismissal, which was dismissed.

Dr McGregor referred an unfair dismissal dispute to the Public Health and Social Development Sectoral Bargaining Council, challenging both the substantive and procedural fairness of the dismissal. The arbitrator found Dr McGregor guilty of three of the four charges of sexual misconduct. However, he concluded that the dismissal was substantively unfair because of inconsistent treatment and procedurally unfair because Dr McGregor was denied the opportunity to present relevant evidence (photographs) during the disciplinary hearing.

The arbitrator decided that reinstatement was not appropriate in the circumstances of this case and awarded Dr McGregor compensation equivalent to six months of his remuneration. In determining the compensation, the arbitrator took into account that he had found the dismissal to be both procedurally and substantively unfair.

Dr McGregor applied to the Labour Court to have the arbitration award reviewed and set aside. He argued that he should have been reinstated. The Department brought a counter-review application, challenging the arbitrator’s findings on both substantive and procedural fairness.

The Labour Court reviewed and set aside the arbitrator’s findings on substantive fairness and found that the dismissal had been substantively fair. However, it agreed with the arbitrator that the dismissal had been procedurally unfair. Despite reviewing and setting aside the arbitrator’s finding on substantive fairness, the Labour Court did not reduce the compensation awarded by the arbitrator despite the fact that the dismissal had only been found to be procedurally unfair.

Dr McGregor approached the Labour Appeal Court (“LAC”), seeking an order that his dismissal was substantively unfair and that he be reinstated. The Department launched a cross-appeal in which it asserted that the Labour Court had erred in not revisiting the compensation award after finding that the dismissal was substantively fair. The LAC agreed with the Labour Court that the dismissal had been substantively fair but procedurally unfair. However, the LAC inadvertently failed to consider the issue of the compensation that had been awarded to Dr McGregor.

Dr McGregor applied for leave to appeal to the Constitutional Court and challenged the findings of the Labour Court and the LAC. The Department lodged a cross-appeal on the basis that the Labour Court erred in failing to review the compensation award, and that the LAC had also erred in failing to address the Department’s cross-appeal.

The Constitutional Court refused Dr McGregor’s application for leave to appeal. However, it did give leave to appeal on the issue of what compensation should have been awarded to Dr McGregor in the light of the fact that his dismissal had only been found to be procedurally unfair.

The Constitutional Court held that procedural unfairness in a dismissal is significant and invites compensation to ensure that dismissals take place with the “sensitivity and care properly required when the fate of people’s livelihoods are at stake”. The court further held that an award of compensation aims “to give meaning to the right not to be unfairly dismissed; to discourage a ‘shotgun approach’ to dismissals”; and, “to recognise the right of an employee to be heard before action is taken against them. It is an acknowledgement of an employee’s worth as a person”.

The court also stated that the more minor the employer’s deviation from what was procedurally required, the greater the chances are that the court or arbitrator may justifiably refuse to award compensation.

The court distinguished between the exercise of discretion by an arbitrator in deciding to award compensation, in terms of the Labour Relations Act, 1995 (“LRA”), and in deciding on the amount of compensation to be paid. It held that the decision to award compensation in terms of the LRA is reviewable as it is not an exercise of a narrow discretion. However, the decision on the amount of compensation in terms of the LRA is an exercise of a narrow discretion and requires the court to ascertain whether the limited grounds for interference exist before it can vary the amount.

The court considered the nature of the misconduct and the fact that the substantive unfairness ruling had been overturned by the Labour Court, and held that the compensation amount could be interfered with.

The court considered the possibility of not awarding Dr McGregor any compensation at all due to the seriousness of his misconduct, but it took into account that all employees are entitled to fairness of procedure, despite the seriousness of their misconduct. Instead, it decided to reduce the compensation award from six months to two months, on the basis that six months’ compensation for “minor procedural hiccups in respect of gross misconduct, is entirely too generous and exorbitantly high”.

Reviewed by Peter le Roux, and Executive Consultant in ENSafrica’s Employment department.

Prencess Mohlahlo

Senior Associate employment

[email protected]

+27 63 688 7808

Naledi Raseote

Associate employment

[email protected]

+27 60 969 6899