Sidumo v Rustenburg Platinum Mines Ltd [2007] 12 BLLR 1097 (CC) highlights the urgent need to adopt a holistic approach to the resolution of disputes concerning termination of employment, being at present anything but “speedy and inexpensive”.  It still is, and always has been, unlawful for employers to terminate employment contracts summarily or without notice pay, unless there is proof that employees materially breached their contracts of employment.  Prior to the introduction of “labour law” in about 1980 employers simply terminated employment contracts lawfully by paying employees notice pay and thereby avoiding the need to prove any fault or even fairness.

Recently a fresh approach has been adopted concerning the common law in Old Mutual Life Assurance Co SA Ltd v Gumbi [2007] 8 BLLR 699 (SCA) and Boxer Superstores Mthatha v Mbenya [2007] 8 BLLR 693 (SCA).  As stated in Gumbi at para [5]

“it is clear … that coordinate rights are now protected by the common law: to the extent necessary, as developed under the constitutional imperative (section 39(2)) to harmonise the common law into the Bill of Rights (which itself includes the right to fair labour practices (section 23(1))”.

It remains to be seen what effect the very latest Constitutional Court case, Chirwa v Transnet Ltd [2007] ZACC 33, handed down on 28 November 2007, will have on those decisions of the SCA.

Leaving aside the essential need for a fair procedure, common law, labour law and the Bill of Rights now affords all employees the right not to be unlawfully nor unfairly dismissed.Employers must now prove that the termination is both lawful and fair in the sense that there must be a valid reason related to the employee’s conduct, performance, ill health or injury or be based on the employer’s operational requirements.

Misconduct is not a statutory requirement.A termination can still be for a fair reason if the employer’s trust or confidence is destroyed by conduct, provided the employer acts lawfully and pays the employee reasonable notice pay; and arguably also severance benefits.

The true intent of the present system is that, in the absence of serious misconduct or material breach of contract, employees are not deprived of their right to reasonable notice pay and arguably should also not be deprived of any severance benefits.

However, the law, section 41 of the Basic Conditions of Employment Act 75 of 1997, only provides for payment of limited severance pay when the employer’s reason for termination is based on operational requirements.Forfeiture of such benefits is solely dependent on the employer’s reason for termination.The unfortunate result is that employees who have been fairly dismissed for a reason related to performance, ill-health or injury are denied any such claim to severance pay, despite retaining a right to reasonable notice pay.

Seven years ago Rustenburg Platinum Mines (RPM) terminated Mr Sidumo’s employment contract summarily, without any notice pay.RPM regarded the employee’s dereliction of his contractual duties as a type of “criminal” offence and charged him, found him guilty and dismissed him.

Mr Sidumo complained to the Commission for Conciliation, Mediation and Arbitration (CCMA) that he had been unfairly dismissed.He should also have instituted legal proceedings in either the civil courts or the labour court alleging that the termination was unlawful.Inexplicably the CCMA is effectively deprived of the power to deal with the unlawfulness of such dismissals at the same time as any alleged unfairness.

After the obligatory conciliation phase the CCMA arbitrated the matter.The CCMA found that RPM had failed to prove that there was a fair reason to dismiss related to his conduct as required by the Labour Relations Act 66 of 1995.Mr Sidumo was reinstated in his job with 3 months compensation, subject to a written warning valid for 3 months.RPM’s review application to the Labour Court to have the award set aside and its appeal to 3 judges in the Labour Appeal Court (LAC) were both unsuccessful.

However, on a further appeal by RPM to the Supreme Court of Appeal (SCA) it was unanimously decided by 5 judges that the CCMA’s award had to be set aside and the summary dismissal upheld.

COSATU intervened and together with Mr Sidumo appealed to the Constitutional Court (CC) where it was unanimously decided by all the judges that the SCA erred in setting aside the CCMA’s award and Mr Sidumo has been reinstated.

RPM is now obliged to restore him to the position he held about 7 years ago.Reinstatement has recently been held inRepublican Press Pty Ltd v CEPPWAWU & Gumede & others [2007] 11 BLLR 1001 (SCA) to mean that the employment contract is regarded as never having been terminated.Applying that line of reasoning Mr Sidumo will surely argue that apart from resuming his job he must be paid everything he would have earned during the last 7 years, in addition to the 3 months compensation awarded by the CCMA, subject to a written warning valid for 3 months.

Flaws in the entire system are demonstrated by the inability of the CCMA to deal with both lawfulness and fairness.Had the CCMA been able to exercise that power it would have been clear at a very early stage that by summarily terminating Mr Sidumo’s employment in the absence of any material breach of contract by him RPM had itself acted unlawfully and breached the contract and that in itself would have been regarded as an unfair dismissal.

In the result the entire matter proceeded simply on the basis of unfairness and resulted in an “all or nothing” approach throughout all the legal proceedings in 5 levels of superior courts and engaging the attention of 20 judges in all.In other words the approach throughout has been whether or not the termination was fair without any regard to lawfulness.There has never been any attempt to balance the interests and rights of both parties in a situation where RPM clearly believed that Mr Sidumo’s conduct had destroyed the employer’s trust and caused an irretrievable breakdown in the employment relationship.

Ironically in the same week, in Masetlha v President of the RSA [2007] JOL 20763 (CC), a case emanating not from the CCMA but the High Court, it was decided that the President had in effect acted unlawfully and unfairly in purporting to terminate the 3-year fixed-term employment contract of the Director-General of the National Intelligence Agency.

In that case the Court was satisfied there was no misconduct but an irretrievable breakdown in their employment relationship.The President was entitled to deny the Director-General the right to work, but that did not deprive him of his right to full compensation for the balance of that fixed-term employment contract.

What approach would the highest court have adopted if there had not been a fixed-term but an indefinite employment contract, as is usual in the private sector?

South Africa became a founder member of the International Labour Organisation (ILO) in 1919 and is required by section 1(b) of the LRA “to give effect to obligations incurred by the Republic as a member state” of the ILO. The 1982 ILO Convention 158 on Termination of Employment accepts that employers may terminate employment contracts in certain defined circumstances.However, articles 11 and 12 of that Convention only deprives employees of their right to reasonable notice pay and severance benefits if the reason for the termination is related to serious misconduct on the part of the employee concerned.

South Africa needs to adopt such a “win-win” approach in all instances of termination of employment and the CCMA should be allowed to have regard not only to fairness but also lawfulness when arbitrating dismissal disputes.Sachs J in the Sidumo case is reported to have stated in para [158] that in the labour-law setting a speedy resolution of disputes is required with the outcome basically limited to dismissal or re-instatement.This is essentially true because the CCMA lacks the power to balance the interests of both parties and achieve a “win-win” outcome by awarding reasonable notice pay and severance benefits in appropriate circumstances.

A further distressing aspect of the entire matter is the apparent failure to appreciate that the dismissal dispute related to an alleged breach of contract by the employee and not any type of “criminal” offence.In some of the judgments in all the courts words such as guilty, offence, sanction and charges appear without any adverse comment from the judges.

Hopefully it will not be long before it is appreciated by everyone, including the judges, that employers are not obliged to “charge” their employees with various “offences” but rather provide them with details of the conduct that is alleged to have destroyed the trust relationship.Obviously employees must be allowed an opportunity to respond before the employer takes a final decision.There is no need for employees to plead “guilty” or “not guilty” to any “charges”.

If there is clear and convincing evidence of serious misconduct the termination will be lawful and fair.  In the absence of serious misconduct there could still be a fair reason to terminate but it will only be lawful to terminate the contract if such decision is coupled with reasonable notice pay and arguably also appropriate severance benefits.

As Sachs J also pointed out in para [158] in the Sidumo case employees have a constitutional right to have their dignity as human beings respected in an open and democratic society and we look forward to the time when the legislator and the judiciary fully appreciate the need to accord employees that respect.

Graham Giles