Review: Grievance Unfair Labour Practice Unfair Demotion Constructive Dismissal

Case Law & Legislation Review:

By Gary Watkins

Steven Raymond Van Wyk v Albany Bakeries (Pty) Ltd & 2 others

Case No. JR1658/01

Award Date 26 Sept 03

Jurisdiction Labour Court Jhbg

Judge Judge Ndlovu

Subject Review: Grievance Unfair Labour Practice Unfair Demotion Constructive Dismissal

Issue: practice and procedure - review of arbitration award - commissioner erroneously finding that employee who resigned after unfair demotion had not proved constructive dismissal - award set aside

grievance/(residual) unfair labour practices - unfair and unilateral demotion of employee sufficient to render employment relationship intolerable - employee entitled either to refer dispute concerning unfair labour practice or accept employer’s repudiation and sue for compensation.

Summary of Facts: The employee was employed as a regional manager for the Gauteng region of the employer’s operations. He was later temporarily transferred to the Pretoria branch to act as a branch manager. He submitted that whilst in Pretoria acting as branch manager, he still retained his position as, and performed the functions of, the Gauteng regional manager. Thereafter, the employer appointed someone else as the Pretoria branch manager. Subsequently, the employer informed the employee of a restructuring exercise that was underway and that his position of regional manager would be made redundant. As a result, the employer decided to appoint him in the position of manager of the Pretoria branch without a salary cut.

The employee argued that because of the related changes, the employer had made his continued employment intolerable which resulted in him resigning. He referred a constructive dismissal dispute to the CCMA. The matter remained unresolved at conciliation and was referred to arbitration. The commissioner, at arbitration held that the employee had failed to prove that a constructive dismissal had taken place. The employee, thereafter, referred the matter to the Labour Court to have the award reviewed and set aside.

Summary of Finding: The counsel for the employee argued that the lowering of his position should been regarded as a demotion and a material breach of his employment contract. The employee, therefore, contended that the finding by the commissioner that there was no demotion was misdirected. The employer, alternatively, argued that the employee was not dismissed and the transfer of the employee was not considered to be demotion. A constructive dismissal occurs when "an employee terminates a contract of employment with or without notice because the employer made continued employment intolerable for the employee" - s186 (1)(e).

The Court found that it is implied in an employment contract that neither the employer nor the employee should do anything to make continued employment intolerable between the parties. Such conduct would result in repudiation of the contract. The Court supported the following: "It is clearly established that there is implied in a contract of employment, a term that employers will not without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee".

In this case, the employer contended that the transfer of the employee to another branch in a different position was not seen as a demotion as the employee was still employed at the same salary. However, the Court considered the dictionary meaning of the word "demote" being: "to reduce to a lower rank or class" (The New Shorter Oxford English Dictionary, 1993 edition: 631) The Court also supported the view that "where a servant is employed to perform a particular class of work and contracts to perform work of a particular character and is thereafter, instructed to perform work of a more menial nature, he may be said to have been degraded in his status, and … such act by his employer may in certain circumstances be regarded as tantamount to a dismissal".

The Judge held that the decision to transfer the employee had amounted to a unilateral change to his employment conditions. The changes were unilateral, as the employer had failed to consult with the employee.

The demotion of the employee was found to be both intolerable and unbearable. As such, his reason to resign was found to be reasonable. The award was reviewed and set aside. It was substituted with the order that the employee’s resignation constituted a constructive dismissal which was unfair. The employer was ordered to pay six month’s salary as compensation.