Case law Review - Offers of Reinstatement

Case law Review - Offers of Reinstatement

Case law and legislation review: will you be held ransom by the CCMA

What happens when you have dismissed an employee and subsequently realise that you have not followed the correct procedures or that there was no reason for the dismissal? What remedies are available to the employer in these circumstances? From what you may have heard about proceedings in the CCMA, it would seem that you would be held to "ransom" when attending the conciliation meeting trying to protest your innocence.

Recognising at the outset, that ignorance of the requirements for effecting a fair dismissal is no excuse ("ignorance of the law is not an excuse"), the CCMA and Labour Court has in certain instances come to the rescue of an employer.

One remedy adopted by employers (and recommended by labour lawyers and consultants) is to offer the employee "unconditional reinstatement".

Case # 1 IN ARBITRATION PROCEEDINGS AT THE CCMA, GAUTENG CASE

NO: GA 67973b

JULIA VAN DER MERWE And SSH ATTORNEYS

Per RICHARD BYRNE COMMISSIONER CCMA

"Both parties have quoted case law, both prior to and after the new LRA. Particularly insofar as a procedurally unfair dismissal is concerned, an employer should be given a reasonable opportunity to redress the situation.

An employee in these circumstances who unreasonably refuses to be reinstated, and thereby frustrates the employer's bona fide attempts, is not entitled to any compensation in terms of Section 194(1). This proposition is accepted by both parties. What is the position, though, where the dismissal was (also) substantively unfair? Should the employee still give the employer an opportunity to redress the situation? What factor(s) should the arbitrator take into consideration?

It is clearly not the intention of the Act that employees should act in an opportunistic manner and try and claim twelve months compensation due to a few minor procedural defects on the part of the employer, and the arbitration backlog at the CCMA. This would be unfair to employers. Hence, where an employer in good faith offers to reinstate an employee in order to rectify his mistake, the employee is not entitled to any compensation if reinstatement is unreasonably refused. Where the dismissal was also substantively unfair, the arbitrator should also consider the circumstances surrounding the dismissal when assessing whether the refusal to be reinstated was reasonable. In the present case, this would include: whether the offer of reinstatement was genuine; whether the refusal to be reinstated was reasonable; and whether the relationship was irretrievably broken."

The Labour Court has noted that this is not necessarily an absolute remedy and will still exercise its discretion in awarding the employee relief even if the employee has rejected the offer of reinstatement.

Case # 2 IN THE LABOUR APPEAL COURT OF SOUTH AFRICA CASE

NO.: JA61/99

M MKHONTO and B L FORD N.O. t, CCMA, MM DE VILLIERS

CONRADIE JA

"[10] The refusal to accept the reinstatement offers impacts upon the appellant's entitlement to compensation. The law, as it presently stands, is that a court may in respect of a procedurally unfair dismissal award either the full compensation prescribed by s 194(1) of the Act or nothing at all.

(Johnson & Johnson (Pty) Ltd v CWIU (supra) was followed in Whall v Brandadd Marketing (Pty) Ltd (1999) 20 ILJ 1314 at 1323 (LC) and Lorenzen v Sanachem (Pty) Ltd (1999) 20 ILJ 1811 (LC).) The guiding principle is fairness. I should therefore ask myself whether it would be fair to fully compensate an employee to whom an unconditional offer of reinstatement was made before the effective date of her dismissal. If not, I must deny her compensation. I would think that the appellant ignored the offer at her peril. She put herself in a position where ' the employer's ability and willingness to make redress is frustrated by the conduct of the employee.' (Johnson & Johnson (Pty) Ltd v CWIU (supra) at 1220 D.) An employee's refusal to allow an employer to remedy a procedural defect may, depending on what is fair, deprive him or her of compensation which would otherwise have been payable; De Bruin v Sunnyside Locksmith Suppliers (Pty) Ltd (1999) 20 ILJ 1753 (LC) at 1762 B - E''

Case # 3 IN THE LABOUR COURT OF SOUTH AFRICA CASE NUMBER :

J1648 / 99 In the matter between: BASSON, H G S Applicant and CECIL NURSE (PTY) LIMITED Respondent LANDMAN J:

"The issue are very simple: Is Mr Basson entitled to compensation for procedural unfairness given the tender of reinstatement to remedy the defective dismissal? Put differently ought this court to exercise a discretion against awarding him compensation for this in the circumstances where it its incumbent on the court to make no award or order Cecil Nurse to pay compensation in the amount of R 169 200? Secondly what compensation for substantive unfairness should be made (even if in the upshot a single amount is awarded)? Mr Myburgh, on behalf of Cecil Nurse, submitted that in view of his client's bona fide offer of reinstatement to redress the situation, Mr Basson should not be awarded compensation but that the claim should be dismissed with a punitive order for costs.

At first the Industrial Court declined to take cognisance of a tender of reinstatement coupled with the intention of following a proper procedure. See MAWU v Henred Freuhauf Trailers (1988) 9 ILJ 488 (IC), and Van Dyk v Markly Investments (1998) 9 ILJ 918 (LC). In the last mentioned decision Bulbulia M (as he then was) did not approve of such a tender. He said at 921H-I:

"It was probably no more than an attempt to get the applicant to attend a fresh enquiry so as to afford the respondent an opportunity to set right any procedural irregularities which may have occurred during the first enquiry and thereby to strengthen the respondent's hands in the present proceedings.

The court therefore comes to the conclusion that the respondent's purported reinstatement fell far short of a genuine attempt to settle the dispute."

NF (Frans) Rautenbach 1990 "Remedying Procedural Unfairness: An Employer's Dilemma" (1990) 11 ILJ 466, submitted that it is open to an employer to remedy a procedurally unfair dismissal through a bona fide offer of reinstatement. According to the learned writer, this is so as no principle of fairness or equity could ever endorse an approach whereby "an employer who has made a procedural mistake would bear it as an albatross around his neck for ever and a day." Put differently, "procedural non-compliance cannot be a bar to the ability of an employer to rectify mistakes." As pointed out by the writer, the condition, however, is that the offer must have been a genuine one and not a sham. He says it will be "difficult for the employee to establish that the employer was mala fide where he did not put the offer to the test by accepting it" and he himself will be tainted with mala fides where he "is holding out to force the employer to pay him more money and not because he is genuinely interested in a fair resolution of the dispute."

This notwithstanding, "there are circumstances in which the employee could show that he did not accept the offer because the employer had no intention of holding a fair inquiry." The "motives of the employer will [thus] be open to scrutiny."

Mr Myburgh pointed out that Rautenbach's article dealt primarily with the question of whether or not an offer of reinstatement served to extinguish a claim of unfair dismissal. This is not the law applicable to the present case. Here the offer is a factor to be considered in exercising discretion to award or not to award compensation.

A series of cases followed in which the Industrial Court and Labour Appeal Court refused to come to the relief of applicants who had refused offers of reinstatement made by their employers with a view to curing procedural defects. These included O'Reilly v Graaff-Reinetse Ko-operatiewe Winkels Bpk (1991) 12 ILJ 1360 (IC); SA Railway & Harbour Workers' Union & another v BOP Air (Pty) Ltd & another (1994) 3 LCD 74 (IC); Fijen v CSIR (1994) 3 LCD 180 (LAC); Jele & others v Alpha Metal Processors (1994) 4 LCD 230 (IC); and Fletcher v Grayston Preparatory School [1995] 5 BLLR 58 (IC).

During this period, the Industrial Court handed down two judgments in which it came to the relief of the applicant employees notwithstanding their rejection of offers of reinstatement. In the first of these cases, Usher v Linvar (Pty) Ltd (1992) 13 ILJ 233 (IC), the court found that the offer of reinstatement did not resolve the dispute as it was an inadequate and insufficient offer and not equivalent to the best relief the court could provide. In the second, Boshoff v Slit Steel (Pty) Ltd [1996] 1 BLLR 42 (IC), it found that an offer made at the last moment and at a time when the employer knew that the employee had obtained alternative employment was not bona fide and accordingly it did not serve to resolve the matter.

In Grayston Preparatory School the employee's response to an offer of reinstatement was that he would only come back if the employer agreed to guarantee his continued employment until his retirement date. The court found that this condition was "patently unreasonable" and would have placed the employee in a far better position than that pertaining at the time of his dismissal. As he could have fully mitigated his loss by the acceptance of the offer, the court went on to find that the employee could hardly complain that he had suffered any loss that would entitle him to compensation.

In Johnson & Johnson (Pty) Ltd v CWIU [1998] 12 BLLR 1209 (LAC), the Labour Appeal Court held that: "The nature of an employee's right to compensation under section 194 (1) also implies that the discretion not to award that compensation may be exercised in circumstances where the employer has already provided the employee with substantially the same kind of redress . . .or where the employer's ability and willingness to make that redress is frustrated by the conduct of the employee" (at 1220C-E). Applying the principle, the court went on to exercise its discretion against awarding compensation as the employees had, by refusing an offer of reinstatement, "prevented the employer from remedying a defect in form and from giving [them] redress earlier." Moreover, the effect of awarding compensation "would be to reward the union and the employees for their unreasonable obstinacy." (At 1222E-F, I-J).

This judgment has been followed in a number of cases involving refusals by employees to accept offers of reinstatement / settlement made in an endeavour to remedy procedural errors. In each of the following five cases the courts refused to award compensation in circumstances similar to the present matter: Burger v Alert Engine Parts (Pty) Ltd [1999] 1 BLLR 18 (LC) at 25C-H per Pooe AJ; Fletcher v Elna Sewing Machines Centres (Pty) Ltd [2000] 3 BLLR 280 (LC) at 290B-I per Jammy AJ; Mkhonto v Ford NO & others [2000] 7 BLLR 768 (LAC) at 771F-772B per Conradie JA; La Vita v Boymans Clothiers (Pty) Ltd [2000] 10 BLLR 1179 (LC) at 1189E-J per Francis AJ; and Maloba v Minaco Stone Germiston (Pty) Ltd & another [2000] 10 BLLR 1191 (LC) at 1201C-I per Jammy AJ. The principle was also recognised in Scribante v Avgold Ltd (Hartebeesfontein Division) (2000) 21 ILJ 1864 (LC) at 1874I-J per Damant AJ.

In Du Toit v SASKO (Pty) Ltd (1999) 20 ILJ 1253 (LC) Mlambo J granted compensation to an employee who had declined an offer of reinstatement. The initial response by SASKO to the employee's complaints about an unfair retrenchment was intransigent. It never really accepted that it had erred and it only offered reinstatement at a late stage. It was a combination of these factors that led Mlambo J to conclude that the company had not genuinely wished to redress the employee's position and that its actions were "akin to closing the barn door after the horse has been bolted" (at 1256G-1257F).

Conclusion

It is clear from the above that the Courts will look at the conduct of both the employer and employee, and more particularly at the bona fides of the employer in making the offer of reinstatement, and that of the employee is rejecting the offer. It is also clear that the Courts will reject an offer of unconditional re-instatement if it appears that the intention of the employer is merely to have a second chance at dismissing the employee - but now in accordance with the procedural requirements set out in the Labour Relations Act. On the other hand, where a genuine offer is made to an employee as soon as the employer realises its error, and the relationship between the parties has not irretrievably broken down, the courts will refuse the employee relief if the employee's refusal to be reinstated was unreasonable.