Enforcing lawful contractual terms can be unfair

labour-guideBy Neil Coetzer, Senior Associate, Employment Law, Benefits & Industrial Relations, Cowan-Harper Attorneys

South Africa’s labour laws and practices have increasingly become entrenched in fairness and equity, as opposed to contractual and legalistic constructions. This was clearly evident in the recent case of Gemalto South Africa (Pty) Ltd v CEPPWAWU obo Louw & Others (Case no. JA54/14, 27 August 2015).

The dispute arose as an unfair dismissal dispute which was referred by the Union (CEPPWAWU) on behalf of 21 of its members. Their members had been dismissed for insubordination after they refused to submit to polygraph tests.

During December 2010 Gemalto received a letter from Standard Bank, one of its clients, advising it that some cards and data which was stored at Gemalto had been removed from its premises and as a result Standard Bank had allegedly suffered a loss amounting to R50 million.

Gemalto immediately conducted an investigation into the claim and as part of that exercise required all employees who had access to the relevant data, including senior management, to undergo polygraph tests.

The Company addressed several letters to and consulted extensively with CEPPWAWU and its shop stewards on the issue, particularly as CEPPWAWU had indicated the unwillingness of its members to participate after the polygraph testing was first announced. Gemalto explained to CEPPWAWU that the claim from Standard Bank was substantial and that if it were to succeed, it would negatively affect the continued viability of Gemalto’s business.

CEPPWAWU nevertheless insisted that polygraph testing was voluntary and that other investigative tools should be considered. Gemalto responded by saying that it had considered other methods but that polygraph testing was the most suitable and that, in any event, the contracts of employment of certain employees contained clauses requiring those employees to submit to polygraph testing if necessary.

In terms of the clause, a refusal to submit to the polygraph test could result in disciplinary action and also amounted to a breach of their contracts of employment. After further meetings with the CEPPWAWU, the Gemalto also arranged ‘information sessions’ with external polygraph specialists to allay any fears or uncertainty which may exist in regard to the polygraph testing.

On 27 June 2011 Gemalto issued a letter to 23 of its employees advising them that despite its attempts to consult with CEPPWAWU on the polygraph tests, they had failed to undergo the polygraph tests.

The letter gave those employees 48 hours to submit themselves to a polygraph test, as required by their contracts of employment. None of the employees did so and accordingly Gemalto charged all 23 employees with ‘gross insubordination’ for refusing to obey a lawful and reasonable instruction.

All of the employees who were charged were dismissed.

At the CCMA, 21 of those employees challenged the fairness of their dismissal. It emerged during evidence that some employees were bound to undergo polygraph tests as their contracts of employment contained annexures obliging them to undergo such tests whenever Gemalto required them to.

However, some of those annexures could not be found and for that reason Gemalto had only charged those employees whose annexures to their contracts of employment could be found.

The Commissioner found, inter alia, that there was no evidence to show why the employees in question had been treated differently from those whose annexures could not be found.

The fact that some of the annexures went missing was not a justification for not disciplining the remaining employees for failing to obey a lawful and reasonable instruction.

The Commissioner accordingly found that Gemalto had engaged in selective dismissals and therefore found the dismissal to be substantively unfair. The employees were awarded compensation. Gemalto unsuccessfully attempted to review the decision and then approached the Labour Appeal Court.

The Labour Appeal Court found that the refusal to submit to a polygraph test was ‘per se an act of insubordination’.

However, the question which needed to be answered was whether the dismissal was fair in the circumstances and this required a consideration of the circumstances and the events which led to the dismissal.

The Court found that Gemalto had chosen to institute disciplinary action only against 23 employees because the annexures to their contracts of employment had not been lost.

If they had, they would not have been dismissed. Accordingly, the Court found that even though the employees had breached a term of their contracts of employment, the enforcement of that term was unfair in the circumstances.

Gemalto had tried to adopt a blanket approach and when that failed, it sought to test only those who were vulnerable to disciplinary action.

Accordingly it saw no reason to interfere with the Commissioner’s award and dismissed Gemalto’s appeal.

For more information please contact Neil Coetzer at ncoetzer@chlegal.co.za or (011)  783 8711 /(011) 048 3000

Article published with the kind courtesy of Cowan-Harper Attorneys http://www.cowanharper.co.za/

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