By Johann Scheepers
The rationale for the writing of this article stemmed from a number of sources albeit articles, authoritative publications as well as experience as a labour arbitrator presiding in matters where the employee was dismissed for misconduct.
In the first instance, a newspaper article published in LinkedIn by M Tully entitled “Employing people in SA is a minefield for smaller businesses” May 11, 2016, was found to be of interest.
The author, Tully is referred to in the article ‘as the owner of a medium-sized business in SA.’ He opens with the remark “I WOULD like to offer some insight, as the owner of a medium-sized business, into the financial difficulty employing staff in SA.”
The reader is taken through a process that may be referred to or equated with “A Classical Concerto in Three Movements.”
Allegro – The First Movement: The rigours and soul destroying the process of the pre-employment phase are explained, for example, “copious amounts of time going through CVs and interviewing candidates sent by recruitment agencies that have seldom actually seen the candidates. You employ this person on the basis that he or she has the skills to fulfil the function and you simply need to train them on your product.”
Then follows the employment of the successful candidate [a ‘salesperson’ is used as an example]. The time and costs of in-service training of the employee by a mentor [a minimum of 3 months in service training] are stated as the standard period for training.
Andante – The Second Movement: The employee is “sent out into the field bearing your reputation. You start to see this may not work… After three months in the field with little to no success, you begin performance discussions…Keep in mind the time it’s taking you to go through this process…”
“You counsel the employee…to achieve the goal…inform that after another three months that with no improvement you will need to begin disciplinary action based on agreed targets.”
“After the third warning, you hold a disciplinary hearing — a formal event requiring you to pay a presiding officer to hear the matter. One needs to be sure the presiding officer issues the notification to attend the hearing correctly, and that it states all the rights available to the employee.”
“You then hold your mini court case, where you present the evidence you have collected over the past 12 months, and after much deliberation, the employee is dismissed once the verdict is issued.”
Scherzo – The Third Movement: The dismissal is referred to the Commission for Conciliation, Mediation & Arbitration (CCMA) as a dispute, to wit an unfair dismissal.
The author then provides the reader as stated in the article ‘his understanding’ of the statutory dispute resolution processes followed at the CCMA. After perusal of the author’s understanding of dispute resolution then the reader will conclude that the ‘dice is loaded’ so to speak against the employer insofar as dispute resolution and the costs thereof are concerned.
One is left with the impression that regardless of the ‘guilt’ or blameworthiness of the employee the CCMA Commissioner has little if any discretion but to award “damages” or rather compensation to the maximum amount of 12 months’ salary to the employee.
It is alluded to in the article that notwithstanding meticulous compliance with SA labour laws insofar as substance and procedural fairness are concerned, the CCMA Commissioner will award maximum compensation to the employee.
Finite: Costs will be for the employer’s account and so be it. In conclusion, the author makes the observation that “This is truly a disincentive for me to have employed someone.”
The sentiments expressed in the article, especially the formalistic pre-dismissal processes and the author’s experience with SA labour dispute resolution are not isolated or confined to opinions of an insignificant number of SA employers.
However, the purpose of this article is not to address unnecessary formalism in pre-dismissal procedure per se, as it is entitled “The need to ‘plead’ when ‘guilt’ is a given – ‘When it is time to come clean?’”
See an article recently published on this website, “The Deformalisation of Disciplinary Proceedings – Demise of the Criminal Justice Model.”
Also see “The Deformalisation of Disciplinary Proceedings – Demise of the Criminal Justice Model.” – Scheepers J,ILJ Vol 33, July 2012 Juta, 1539 – 1760, wherein the issue of the formalistic nature of SA pre-dismissal processes was ventilated.
Readers are advised to peruse an article that contains an in-depth analysis of international perspectives on SA unfair dismissal law by BPS van Eck & P Smit “International perspectives on South Africa’s unfair dismissal law” XLIII CILSA 2010:
The right not to be unfairly dismissed is well-recognised in South African labour law. Anecdotal evidence suggests that South Africa may be overregulated in this regard. ILO Convention C158 provides standard-setting guidelines in respect of the termination of any worker’s employment. In this contribution, ILO standards are considered and the respective positions in the Netherlands, the United Kingdom, the United States of America and South Africa are compared to ILO Convention C158. The authors seek to establish whether unfair dismissal law in South Africa is out of step with international standards and the position in a selection of foreign jurisdictions.”
Suffice it to record that the learned authors inter alia concluded and submitted that South Africa’s unfair dismissal law (in particular the Code of Good Practice) does not require more in respect of pre-dismissal procedures than the norms established by the ILO and those to be found in the UK.
Van Eck et al furthermore concluded that should South African employers and trade unions agree to more formalistic and court-like procedures in their disciplinary codes (such as the ones prescribed during the era of the Industrial Court) than those required by law, it is something of their own doing.
They will have to adhere to such requirements. Such a practice does, however, not have the consequence that South African labour law is more prescriptive than the standards set by the ILO and introduced in countries like the UK. [Emphasis added].
As regards the subject matter of this article is concerned an issue of contention has been the perceived unwillingness by Commissioners of the CCMA and Bargaining Councils to hand down orders as to costs against Applicants in the event of frivolous and vexatious dispute referrals.
The issue has been the subject matter of heated debate and discontent, especially amongst employers.
Section 138 (10) of the South African Labour Relations Act, 66 of 1995 (as amended) (the LRA) provides that “the commissioner may make an order for the payment of costs according to the requirements of law and fairness in accordance with rules made by the CCMA in terms of section 115 (2A) (j) and have regard to (a) any relevant Code of Good Practice issued by NEDLAC in terms of section 203; and (b) any relevant guideline issued by the Commission.
The Commission has now made rules in terms of section 115(2A) (j) of the LRA. Rule 39 confirms that the basis on which an order for costs should be made is “law and fairness”.
In terms of Rule 39 “Order of Costs in Arbitration” as stipulated in terms of the recent amended Rules of the Commission and more specifically Rule 39(3) and (4) were considered and quoted in full infra:
“(3) A commissioner may make an award of costs in respect of the legal fees of a party that is represented in arbitration by a legal practitioner, only if the other parties to the arbitration were represented by a legal practitioner.
(4) An award of costs for costs in terms of sub-rule (3) must be in the amount of –
(a) in respect of the first day of an arbitration (including any arbitration concluded in a single hearing) – R6 000-00 (VAT inclusive);
(b) in respect of each additional day of an arbitration – R4 000-00 (VAT inclusive).”
If a commissioner awards legal fees he or she has no discretion as far as the amount is concerned. Legal fees are awarded at a flat rate in accordance Rule 39(4):
- R6000 for the first day and R4000 for each additional day of the arbitration hearing.
- When legal fees are awarded, no disbursements can be awarded”. [Emphasis added].
Where the requirement is law and fairness the “general rule” is that cost follows the event. This means that the successful party should be awarded his or her costs, but this is not a hard and fast rule – each case must be decided on its own merits.
The courts made it clear that the general rule is tempered by what is called the “basic rule”.
This means that the courts have the discretion to award costs. This discretion must be exercised judicially, which means not arbitrary, unbiased and not acting capriciously.
The overriding factor is to do justice between the parties – fairness to both parties.
Of importance is that Commissioners must address these factors in the award. It must be clear from the award that the commissioner has applied his or her mind and the commissioner must give reasons why costs are awarded.
A commissioner may also make an award of costs in favour of a party who is represented in arbitration by a person contemplated by rule 25(1)(a)* in respect of reasonable disbursements actually incurred in the conduct of its case in the arbitration.
A commissioner who makes an award in terms of this provision must specify clearly the items and amounts in respect of which costs are ordered.
*i) if the party is an employer, a director or employee of that party and, in addition, if it is a close corporation, a member of that close corporation;
- ii) any office bearer, official or member of that party’s registered trade union or registered employers’ organisation;
iii) if the party is a registered trade union, any office bearer, official or member of that trade union authorised to represent that party; or
- iv) if the party is a registered employers’ organisation, any office-bearer or official of that party or a director or employee of an employer that is a member of that employers’ organisation authorised to represent that party.
Rule 39 c) – d) stipulates the commissioner may make an order for the payment of costs according to the requirements of law and fairness and when doing so should have regard to – :
- c) any with prejudice offers that were made with a view to settling the dispute;
- d) whether a party or the person who represented that party in the arbitration proceedings acted in a frivolous and vexatious manner –
- i) by proceeding with or defending the dispute in the arbitration proceedings, or
- ii) in its conduct during the arbitration proceedings;
- e) – h).
Therefore it is submitted that the amended rules clarify any uncertainty as to the grounds upon which a Commissioner should exercise discretion in making an order as to costs.
Furthermore, the importance of due consideration of the merits of a matter, having regard to issues such as the prospects of success, the participation in good faith during the conciliation proceedings as well as the conduct of the arbitration of the dispute in the event of non-resolution at conciliation.
It is envisaged that in exercising discretion when considering an application for an order as to costs Commissioners will also take consideration of the conduct of the parties as from the commencement of the disciplinary proceedings, for example a timeous and bona fide “plea of guilty” by the Applicant/employee at the commencement of the disciplinary proceedings, that is before the decision to dismiss has been taken.