Commencing the Private Disciplinary Arbitration process

Commencing the Private Disciplinary Arbitration process when an employee is being accused of serious misconduct.

You have workplace rules and procedures in place, which require an internal hearing and appeal procedures and need to implement private disciplinary arbitration procedures, in terms of the Arbitration Act 42 of 1965, without this being a unilateral change to these workplace rules, whereby you will be acting consistently when implementing disciplinary procedures.

Investigate the conduct of the employee
Matters relating to serious misconduct where, in terms of existing workplace rules and procedures, dismissal of the employee would be appropriate sanction, which requires that, the matter should be investigated. When the investigation is completed and the evidence indicates that serious misconduct has taken place you will have a choice, either to proceed with an internal disciplinary hearing or to refer the matter to private disciplinary arbitration.

Confront the employee
In order to commence private disciplinary arbitration you will be required to confront the employee with the offending conduct and indicate that in terms of the workplace rules dismissal would be appropriate in the specific case.

Give the employee a choice
Now you will have the opportunity to give the employee a choice, whereby the employee may choose to resign voluntarily or agree to have the matter referred to a private arbitrator, where the private arbitrator will decide the matter and make an award which is final and binding.

Benefits of private disciplinary arbitration to the employee
The benefit to the employee is that an independent, knowledgeable and impartial individual will decide the matter. What can be fairer?

Benefits to yourself
The benefit to yourself and the employee is that the matter can be finalised within a few days and that each party can continue without the emotional stress of having drawn out compliance to statutory referrals and delays in resolving the matter, which can continue for months and years, with associated direct and indirect costs to both.

Conclusion

Private disciplinary arbitration is a cost-efficient disciplinary tool, which is fair to both parties. The decision-maker is independent and impartial, knowledgeable in labour law matters and will make a final and binding decision ending the dispute expeditiously.

Private disciplinary and performance arbitration can also be used to decide matters including the capacity of the employee to perform his duties due to ill health and performance of the employee in general, where his/her performance is having a detrimental effect on your business operation.


The referral to the private arbitrator

The following is a brief outline of an agreement and referral to arbitration:

The parties hereto agree to submit their dispute to the arbitrator in terms of the Arbitration Act 42 of 1965 with the exclusion of statutory procedural requirements of the Labour Relations Act 66 of 1995 and any other such labour acts and reference to any statutory dispute resolution body as prescribed by these acts:


The arbitrator (name of the arbitrator) will be required to give consideration to the facts of the dispute, which relates to the alleged misconduct of the employee, contained in a charge sheet, in terms of the workplace rules and procedures of the employer, where the alleged conduct constitutes a dismissible offence.

The arbitrator will be required to hear evidence and arguments from both parties and to decide:
1. The guilt or innocence of the employee in respect of the alleged misconduct;
2. Decide on a appropriate sanction, which may include the dismissal of the employee;
3. The arbitrator will have a wide discretion in respect of procedures to be followed prior to and during the arbitration hearing and shall in terms of this discretion be able to decide what the relevant circumstances of both parties will be when deciding on the final sanction.
Further to this the parties also agree to the following:
4. The parties agree to the conditions of service of the arbitrator or arbitration administration body, which shall bind them for the duration of the matter and ending upon the date on which the arbitration award has been published to the parties by the arbitrator.
5. Representation will be allowed/not allowed, by a representative (employee, co-worker, union representative, employer association representative or legal practitioner).
6. The arbitrator will be required to make a written award.
7. The employer shall pay the arbitrator’s fee as agreed, prior to the commencement of the arbitration process.
8. The matter will be held in the strictest confidence.

Arbitration relating to the dismissal of an employee

Arbitration is generally a dispute resolution process whereby disputes between parties are resolved through the intervention of an independent third party, based on consensus between the parties to a dispute as to who the third person will be and the process to be followed. The decision of the arbitrator is published as an award, which will be final and binding on both the parties to the arbitration. The award of the arbitrator will only be subjected to review by a court of law.

The inherent benefits of arbitration are that the process can be invoked expeditiously and due to the binding finality of the arbitration process the matter can be disposed of in a cost efficient manner.

Various forms of arbitration can be identified, which find application in labour matters, being:

1. Compulsory conciliation and arbitration in terms of the Labour Relation Act 66 of 1995 (‘LRA’)
2. Pre-dismissal arbitration in terms of section 188A of the LRA
3. Disciplinary and performance arbitration in terms of the Arbitrations Act 42 of 1965

Compulsory Arbitration

In general terms, Chapter VII, sections 112-184 of the Labour Relation Act 66 of 1995 (‘LRA’), provides for statutory conciliation and arbitration dispute resolution procedures, which must be followed where the parties to the employment relationship have not provided for their own private dispute resolution procedures which may include private arbitration.

The process to dismiss the employee is initiated by the employer in the form of an internal disciplinary hearing. The decision of the chair of the disciplinary hearing may be subject to an internal appeal. The decision is then subject to the insistance of the aggrieved employee to refer the matter to the CCMA or council in terms of the unfair labour practice jurisdiction, where the statutory body will decide whether the employer’s decision was procedurally and substantively fair.

In the recent Constitutional Court case Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (CCT 85/06) [2007] ZACC 22 (5 October 2007 (‘Sidumo case’), the court indicated that the employer is entitled to decide the workplace rules and procedures and decide to dismiss the employee. However, the CCMA commissioner or council arbitrator will decide the fairness of the procedure and sanction.

In terms of the statutory unfair labour practice jurisdiction the referral of the matter in terms of section 191 of the LRA takes place on the insistance of the aggrieved employee.

The statutory conciliation and arbitration under the jurisdiction of the CCMA or accredited private agency, including a council, becomes onerous when it is considered that the commissioner or statutory arbitrator is now sanctioned by th Constitutional Court to decide in his/her ‘own opinion’ whether the sanction of dismissal is justified or fair, after considering all the relevant circumstance and making a valued moral judgement.

Value and moral judgements are usually left to the courts to decide, where generally speaking judges have been in legal practice for many years as Senior Council and have developed a keen sense for making such moral and value decisions.

Pre-Dismissal Arbitration (‘Statutory Arbitration’) in terms of section 188A Labour Relations Act 66 of 1995 (‘LRA’)

Section 188A (Pre-dismissal arbitration) was included into the LRA as an amendment contained in the Labour Relations Amendment Bill of 2000, whereby dismissal procedures may be conducted by a CCMA commissioner or accredited private agency arbitrator on the insistance of the employer and agreement by the employee.

The amendment gives an indication that there is a need for a procedure, at the time of the dismissal of the employee, whereby a final and binding decision is made, which would be subject only to review by a court in terms of a limited number of reasons as stated in section 145 of the LRA, relating to the conduct of the arbitrator, in order to settle the matter of dismissal of an employee in a expeditious and cost effective manner without using the onerous statutory conciliation and arbitration procedures of LRA.

There is a distinct disadvantage to pre-dismissal arbitration, which relates to the choice of arbitrator, where the process excludes the choice of the arbitrator or the processes to be followed. The cost of pre-dismissal arbitration is ‘capped’ at a fixed rate per day, which may be lower than the fee charged by a private arbitrator.

From statistics it would appear that employers have not accepted pre-dismissal arbitration as a preferred method of resolving dismissal disputes. The main reason may be the fact that employer view the CCMA and councils as being ‘employee-friendly’ institutions, where due to case-load pressure the matter referred to the CCMA or council may not receive the consideration it deserves, especially a balanced weighing of the interests of both the employer and employee.

Disciplinary and Performance Arbitration in terms of the Arbitration Act 42 of 1965 (‘Arbitration Act’)

Private disciplinary and performance arbitration is in essence the same process as pre-dismissal arbitration as contained in section 188A of the LRA and has been referred to as ‘private’ pre-dismissal arbitration.

Private disciplinary and performance arbitration (‘private arbitration’) is an arbitration process conducted in terms of the Arbitration Act, where the employer and employee agree to use private arbitration where the conduct or capacity (ill-health or unsatisfactory performance) of the employee may indicate that the dismissal of the employee would be an appropriate sanction.

The award by the private arbitrator will be final and binding on the parties and only subject to review by a court in terms of the limited grounds as stated section 33 of the Arbitration Act, which relates to the conduct of the private arbitrator.

The private arbitrator will be required to give due consideration to the procedural and substantive fairness requirements, which have developed within the field of labour law in South Africa including the Code of Good Practice: Dismissal (‘code’) or other applicable code, which serves as a guide when deciding the matters relating to the dismissal of employees.

The private arbitrator is usually an extremely independent individual with a good knowledge of labour law, but more importantly the arbitrator should not have any bias toward either the employer or employee’s interests. The arbitrator will be required to decide the matter based on the facts as presented to him/her and then make a decision, without reference to the preferences of any institution, including the organisation of the employer.

The greatest benefit of disciplinary and performance arbitration is the fact that costs will be ‘capped’ and the matter can be dealt with expeditiously with a reasonable expectation of fairness to both the employer and employee.

Conclusion

The employer has a choice to arrange workplace disciplinary actions, especially with reference to the dismissal of the employee.

Dismissal of the employees is certain to trigger a negative reaction from an aggrieved employee who may feel that the dismissal is unfair.

In order to settle a dispute there will always be some form of intervention by an external party. The above-mentioned procedures indicate that the employer will have a choice:

1. The Compulsory statutory process will require the intervention of a commissioner and arbitrator, who is appointed by the relevant statutory body, the CCMA or council. The employer has no say in the matter of who the person will be. The process is free.

2. Pre-Dismissal Arbitration is also a process where the statutory body will appoint the arbitrator without allowing the employee any choice in the matter. There is a fixed fee as determined by the statutory body.

3. Discipline and performance arbitration is the process where the employer will have a choice. The choice of the arbitrator, participation in deciding the procedures to be followed and finally a choice as to what the process will cost.

Disciplinary and performance arbitration is the process of choice for both the employer and employee.

George Smith

Why can’t employers just learn?

‘Disciplinary procedures and labour legislation is certainly not a DIY matter’ Derek Jackson - Labour Guide

Employers are reluctant to pay external expert practitioners to help them with labour matters and the solving such matters usually ends up costing more than the practitioner’s fees would have been.

Derek gives compelling reasons why employers should make use of external labour practitioners.

q The practitioner will know the correct procedures and how to apply them.

q Practitioners know how to weigh evidence and how to consider circumstances to be taken into consideration when deciding the appropriate sanction, especially dismissal.

q Rules and procedures adopted by employers are in many instances inappropriate because the employer may have used a ‘generic’ set of rules and procedures, without giving proper consideration to his own workplace requirements.

q The chair of the disciplinary hearing may serve as a ‘rubber stamp’ for a prior decision taken by management. The practitioner can achieve the same result and ensure that the matter is handled correctly.

q Labour legislation is 100% in favour of employees.

Editor’s Comment

Labour Guide sends out regular emails. The content is usually of value to employers.

Why do employees challenge the employer’s decision at the CCMA?

In the case Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (CCT 85/06) [2007] ZACC 22 (5 October 2007 at par 76, the Constitutional Court indicates that unions and employees should be encouraged to refer their cases concerning dismissal to the CCMA.

Employers can mitigate the risk of having dismissal cases referred to the CCMA by firstly understanding the reasons why dismissal decisions are easily challenged by employees and, secondly, by taking steps to reduce these risks.

Interesting insights into the risks associated with dismissals are reported, by Hanneli Bendeman in a research report, ‘An Analysis of the Problems of the Labour Dispute Resolution System in South Africa'.

Bendeman identified five categories of reasons why employees easily challenge employers’ decisions at the CCMA.

· The ease of access to the CMA and the perceived ‘user-friendly’ environment, which promote ease of referral, at no cost to the employee. Added to this is the fact that unions encourage referral in all cases, without giving consideration to the merits of the specific case.

· The expectations of the employees that they will always get some form of compensation, irrespective of the merits of their case. The writer indicates that the employees perceive the CCMA as ‘a one armed bandit, lottery or an ATM machine’.

· The lack of knowledge of employees that leads unrealistic expectations that are created when employees receive poor advice from unions and consultants.

· Economic conditions, high unemployment and poverty drive the now-unemployed employees to the CCMA in the hope that some compensation will be received. There is also the perception that the employer will pay in order to dispose of the dispute, in the form of ‘nuisance money’.

· Employers are lacking in knowledge of labour legislation and do not fully understand the underlying principles of ‘fairness’ correctly, resulting in the fact that the employer will dismiss employees easily, because they can easily be replaced.

Conclusion

The employer can take a number of steps to mitigate risk, without having to resort to paying ‘nuisance money’, which can increase instances of misconduct to get money out of the employer.

These steps may include improving key staff’s knowledge of labour relations, using an external chairman for the disciplinary hearing, Pre-Dismissal Arbitration by the CCMA or accredited council or Private Disciplinary and Performance Arbitration.

Editor

Dismissal for misrepresentation of qualifications or job related attributes

In the case Hoch v Mustek Electronics (Pty) Ltd (2000) 21 ILJ 365 (LC) at 372, the employee dishonestly misrepresented her qualifications when she applied for a position. In evidence before the court the employer indicated that he would not have employed the applicant had he known about the dishonesty in order to boost her curriculum vitae.

The court found that the dishonesty goes to the heart of the employer-employee relationship, specifically the relationship of trust. The employee’s insistance that she had the specific qualification irreparably damaged the relationship through the repeated insistance. Dismissal would be an appropriate sanction.

The case Mlotshwa / SABC (2) [2002] 12 BALR 1296 (CCMA), applied the principle that misrepresentation relating to qualifications or job specific attributes will damage the employer-employee relationship irreparably and dismissal will be an appropriate sanction.

In the article Don't lie in desperation to get your dream job
Natalie Fraser, The Star, 25 January 2008, gives advice to employees not to lie when applying for a position.

Editor

The CCMA is positively not a 'court of law'

Tony Healy, in his regular article in The Star,'CCMA is not a court of Law' got me thinking about the findings of the Constitutional Court which confirms that the CCMA is not a court of law:

'However, there are significant differences. The CCMA is not a court of law. A commissioner is empowered in terms of section 138(1) to conduct the arbitration in a manner he or she considerers appropriate in order to determine the dispute fairly and quickly, but with the minimum of legal formalities. There is no blanket right to legal representation. The CCMA does not follow a system of binding precedents. Commissioners do not have the same security of tenure as judicial officers'.Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (CCT 85/06) [2007] ZACC 22 (5 October 2007) , Navsa, AJ at par 85. Paragraphs 82-88 of the case are of relevance.

Tony can be contacted on 011-476-1620 or e-mail healy@global.co.za, he will be conducting a workshop "Essential Disciplinary Hearings" on 7 February 2008.


Editor

Dismissal - A sensible risk management tool

‘Dismissal is not an expression of moral outrage; much less is it an act of vengeance. It is, or should be, a sensible operational response to risk management in the particular enterprise.’ Conradie, JA at par 22 in De Beers Consolidated Mines v Commission for Conciliation Mediation and Arbitration and Others (JA68/99) [2000] ZALAC 10 (3 March 2000)(Own emphasis)

Identifying operational risks

Each business has a set of inherent risk factors, which have to be identified, analysed and through various interventions negated or at least reduced in order to ensure the viability of the enterprise to the stakeholders, including owners (shareholders) and employees.

Identifying risk in the workplace

The employer is always best placed to determine areas of risk in the workplace and also the risk profile of each employee.

In most instances there is a notion relating to the level of trust, which you place in any employee. Although this is based on a ‘gut-feeling’, your intuitive notions are usually right, unless you are blinded by emotional factors.

Rating risk areas in the workplace may prove to be less onerous and it is suggested that the appropriate way to do this is to consider various areas of risk in the enterprise and to give some form of weight to these risks, being high, medium, or low.

For instance in retail the areas of higher risk may be cash handling and also managing trading stock. In the manufacturing environment delivery and cash collecting can be at risk.

In all operations abuse of equipment can be identified as areas of risk, where employees could damage equipment wilfully.

Risk mapping

Through a process of ‘risk mapping’, certain categories (classes) of employees can be specifically linked to certain risk factors.

The examples could be given of stock shrinkage, damage to equipment, gross negligence, conduct impacting negatively on customer relations, assault and intoxication. These are examples where the conduct of employees would increase risk and impact adversely on the viability of the enterprise.

Approaching workplace rules and procedures as ‘risk management’ tools

When drafting workplace rules and procedures, risk factors should always be considered.

Drafting workplace rules and procedures within the risk-management framework

Rating areas of risk and risk profile of employees

Employing people in any enterprise involves elements of risk. The risk profile of the employee only becomes apparent after the appointment and over time. The interaction of the employee in the enterprise and specifically ‘high risk’ areas can increase or decrease the risk profile in that specific area of activity. However, there have to be ‘risk-stops’ in place to ensure that effective action can be taken to reduce the risk.


Planning and drafting of workplace rules

The workplace rules and procedures are usually decided before they are used in disciplinary action against the employee. The Code of Good Practice: Dismissal in item 3(1) encourages employers to have rules, which will give an indication of the standard of conduct required of employees.

Steps for drafting or review of workplace rules and procedures within the risk-management framework

1. Identify the risk areas in the enterprise and link them to inappropriate conduct by employees, which will increase the risk.
2. Identify which groups or categories of employees are likely to impact on the identified risk, either to increase or decrease the risk factor.
3. Analyse what type of conduct should be discouraged and which methods can be used such as counselling, training, warnings and dismissal.


Implementing the rule during disciplinary action

When giving consideration to the rule, which, has been breached, and dismissal is contemplated, the importance of the rule will need to be established. Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (CCT 85/06) [2007] ZACC 22 (5 October 2007) at par 78


When considering or drafting a rule it is important to bear in mind that someone outside the organisation may need to evaluate the specific rule with regard to the following:

1. The importance of the rule.
2. The purpose of the rule.
3. The sanction associated with the rule.
4. The consistence whereby the rule has been applied in the past.
5. Fairness of the rule.


Conclusion

Risk analysis (formal or informal) is an important business management tool, which can be effectively used in the arena of workplace discipline. In this context, it is used to identify risk and the risk associated with negative conduct by employees and it can provide guidance when determining the importance of a workplace rule and the associated sanction, when dismissing employees.

The process need not be formal, especially where small and medium enterprises are involved. It should be seen as an exercise in applying your mind to discipline in the workplace, which will ensure that the entrepreneur does not overreact in a high-tension and emotionally charged environment of disciplinary action.

The process can help to give a balanced perspective on misconduct by employees and highlight important rules for which dismissal would be procedurally and substantively fair.

Additional reference
Risk Management - Wikipedia

The CCMA may overturn the employers decission to dismiss

'The CCMA is entitled to overturn the sanction of dismissal imposed by an employer even if the dismissal sanction could be seen by reasonable people to be fair' - Ivan Israelstam

The above quote refers to the sentiment expressed by the Constitutional Court in, Sidumo and Another v Rustenburg Platinum Mines Ltd and Others (CCT 85/06) [2007] ZACC 22 (5 October 2007), where the court indicates that the CCMA commissioner, may overturn the employers decision to dismiss, where in his ‘own opinion' , the commissioner finds the dismissal substantively unfair (for a unfair reason). The commissioner will need to take the totality of circumstances into consideration, when making a moral and value decision as to the fairness of the dismissal. The Constitutional Court decision was as a result of an appeal from the decision of the Supreme Court of Appeal, where the SCA indicated that the commissioner should 'defer to' (accept) the decision of the employer to dismiss an employee for conduct or capacity ('Reasonable employer test').

The court gives an indication of a very limited list of relevant ‘(totality of) circumstances’, at par 78

‘The importance of the rule that has been breached;

The reason the employer imposed the sanction;
The basis of the employee's challenge to the dismissal;
The harm caused by the employee's conduct;
Whether additional training and instruction may result in the employee
not repeating the misconduct;
The effect of the dismissal on the employee; and
The employee's long-service record.’ (Ed – listed for convenience of discussion)

The court wished to set a flexible rule as opposed to a set of ridged rules when deciding "fairness". The employer retains the right to decide on the workplace rules and procedures and whether to dismiss the employee for misconduct or (in)capacity, however the commissioner or court will decide whether the disciplinary action by the employer was fair (procedurally and substantively)

This list can obviously be expanded substantially and when the employer who makes the decision to dismiss should give consideration to the all the circumstances, creating a quagmire of legal uncertainty for the employer.

In future articles we will look at all the (totality) of circumstances which the employer decision-maker will need to consider before making the decision to dismiss in order not to fall foul of an adverse decision by the commissioner.

Ed - George Smith

Developing a new strategy in the Workplace

'Employers need a strategy to protect against slackers who utilise labour laws.Be safe from those who will take advantage.' Ivan Israelstam The South African Labour Guide

Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted on 011-888-7944 or labourlaw@absamail.co.za