Wednesday, February 6, 2008

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