REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG JUDGMENT
Not Reportable Case no: JR2419/12
AFRICAN BANK Applicant
MMAPULA NANCY MAGASHIMA First Respondent THEMBA HLATSHWAYO NO Second Respondent COMMISSION FOR CONCILIATION, MEDIATION &
ARBITRATION Third Respondent
Heard: 5 December 2013
Delivered: 5 August 2014
- The Applicant seeks to review and set aside the arbitration award dated 5 September 2012 issued by the Second Respondent (Commissioner) under case number GAJB15917-12. In his award, the Commissioner found that the dismissal of the First Applicant (Magashima) was substantively unfair and ordered that she be reinstated with retrospective effect, and further be paid back-pay. The Applicant seeks an order that the award be substituted with a finding that the dismissal was fair. The application is opposed.
Background to the application:
- Magashima was employed as the Applicant’s Branch Manager at its Pan Africa Branch. In that position, she was the most senior employee at the branch, and was in a position of authority. The Applicant has policies, procedures and controls in place to safeguard the bank, its employees and clients, and to provide procedures for inter alia, the processing of loan applications. These policies are to be found in what is referred to as “Junction”, being the Applicant’s Intranet. Magashima denied having had access to these facilities.
- Magashima was responsible for reviewing loan applications before approving them. The control procedures required and provided for a separation of duties in order to prevent errors or fraud. In this regard, a person responsible for reviewing loan applications could not capture loan applications. Magashima was accordingly prohibited from capturing loan applications.
- The Applicant also had control measures in place including a strict rule relating to the sharing of passwords. This applied to all staff members who had computer access and were issued with passwords. Essentially, no employee was allowed to share his or her password with anyone else. A written policy was also put in place in this regard, and in terms of that policy, there was an obligation on managers, including Magashima to ensure that all employees were aware of it and complied accordingly, and further that she was required to report any incidents of non-compliance with that policy.
- In April 2012, the Applicant’s Regional Manager for Midrand (Naidoo), was contacted by one of the sales consultants at the Pan Africa Branch, Maphiri, and informed him that Magashima was treating him unfairly. Incidentally, Magashima had also called Naidoo to complain about Maphiri. Naidoo attended to the branch to investigate the complaints. During his investigations, one of the complaints raised by Maphiri was that Magashima was using the consultants’ codes and passwords to capture loans.
- When Naidoo confronted Magashima, the latter had confirmed that indeed she had been assisting the consultants to capture loans and that she had also
used their passwords to do so. The Applicant viewed Magashima’s conduct as constituting gross breach of the password protection policy, moreso since she was responsible for reviewing loan applications in the branch, and thus precluded from capturing loan applications. One other incident identified was that Magashima had also instructed another employee, Simelane, to sign off a loan application to make it appear as if he was the one that had captured the loan application. Her explanation to Naidoo was that she was assisting the sales consultants in meeting their targets, which targets were very high and could only be achieved by her assisting them with the capturing of loans. She had nevertheless conceded that she was aware that the sharing of passwords was not acceptable.
- A further complaint raised against Magashima was that the sales consultants paid her part of their commission because she assisted them in capturing loans. Although she had denied the allegation, the Applicant’s contention was that it was in possession of a statement from Simelane in this regard. After Naidoo had completed his investigations, he had referred the matter to a forensic investigator (Nkomo), and the latter had upon further investigations, recommended the suspension of Magashima pending a disciplinary enquiry. She was then suspended on 4 April 2012 and thereafter charged with:
“Unethical conduct, in that it was alleged that during the period between 1 February to 4 April 2012, she had instructed Simelane to disclose his password to her so that she could capture and process loans in his code and further that she had instructed him to sign the loan applications to make it as though he had consulted with a client.”
- A disciplinary enquiry was convened on 26 April 2012. At the enquiry, Magashima conceded having assisted sales consultants with the capturing of loan applications and had also used their passwords to do so. She denied that she was paid any commission by the sales consultants. She was subsequently found guilty of the charges and dismissed. A dispute was referred to the CCMA, and when conciliation failed, the matter was then referred for arbitration, resulting with the arbitration award which is the subject
matter of this application. It was further common cause that Simelane was similarly dismissed.
The arbitration proceedings:
- The material evidence summarised above was what was placed before the Commissioner at the proceedings. A material addition however was that despite Magashima conceding that she had indeed assisted the sales consultants, she was unaware of the rules against the sharing of passwords. Part of the reason of not being aware of the rules was that her branch did not have access to the IT policy. This version was however disputed by Naidoo who had also testified in those proceedings.
- Magashima also testified that she had assisted the consultants in order for them to achieve their targets. She had also assisted them with loan applications, and provided them with leads. She conceded that she had invited them to put their passwords in her computer, but denied that she had asked them for something in return of her assistance. Her contention was further that the Applicant had not lost anything as a result of her actions, and that by sharing passwords, the Applicant had instead gained from her actions as the sales consultants met their high targets.
The arbitration award:
- The Commissioner accepted the concession made by Magashima that indeed she had shared passwords with consultants, and had completed loan applications on their behalf. The crux of the Commissioner’s reasoning in arriving at the conclusion that Magashima’s dismissal was however unfair was follows:
- Another consultant, Eric Maphiri had also admitted being assisted by Magashima but was nevertheless not investigated in the same way as her and Simelane.
- The Applicant had failed to treat Maphiri in the same manner, which amounted to ‘inconsistent application of the rule’. In the
words of the Commissioner; ‘If the Applicant wanted to root out the contravention of the rule, it should have dealt with all involved in the same manner’.
- The Applicant had not lost anything out of what Magashima had done, but had instead gained in terms of the targets being reached by the branch.
- Magashima despite her denials, should have been aware of the rules as a manager. However if the Applicant regarded the rule as ‘sacrosanct’, then Maphiri should have faced the same fate as Magashima and Simelane. On the basis of the inconsistent application of the rule, and further since there was no evidence led in regard to the trust relationship being irreparably broken, the dismissal of Magashima was substantively unfair.
The legal framework pertaining to reviews:
- It is now accepted that a reviewing Court faced with an application in terms of section 145 of the Labour Relations Act, and where a defect in arbitration proceedings is alleged, is required to decide whether the Commissioner committed misconduct, gross irregularity or exceeded his powers within the meaning of section 145 (2) (a) of the LRA.
- The question before a reviewing court in accordance with the Sidumo1 test is whether the decision reached by the arbitrator is one that a reasonable decision-maker could not reach based on the material before him or her. This test found further explication from Cachalia JA in Herholdt v Nedbank Ltd as follows2 :
“In summary, the position regarding the review of CCMA awards is this: A review of a CCMA award is permissible if the defect in the proceedings falls within one of the grounds in s 145(2) (a) of the LRA. For a defect in the conduct of the proceedings to amount to a gross irregularity as contemplated by s 145(2)(a)(ii), the arbitrator must have misconceived the nature of the
1 Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2008 (2) SA 24 (CC) at para 110
2  11 BLLR 1074 (SCA) at para 12
inquiry or arrived at an unreasonable result. A result will only be unreasonable if it is one that a reasonable arbitrator could not reach on all the material that was before the arbitrator. Material errors of fact, as well as the weight and relevance to be attached to particular facts, are not in and of themselves sufficient for an award to be set aside, but are only of any consequence if their effect is to render the outcome unreasonable”3
- The Labour Appeal Court in Goldfields Mining South Africa (Pty) Limited (Kloof Gold Mine v CCMA & Others4 further explained the Sidumo test in the following terms:
“Sidumo does not postulate a test that requires a simple evaluation of the evidence presented to the arbitrator and based on that evaluation, a determination of the reasonableness of the decision arrived at by the arbitrator. The court in Sidumo was at pains to state that arbitration awards made under the Labour Relations Act (LRA) continue to be determined in terms of s145 of the LRA but that the constitutional standard of reasonableness is “suffused” in the application of s145 of the LRA. This implies that an application for review sought on the grounds of misconduct, gross irregularity in the conduct of the arbitration proceedings, and/or excess of powers will not lead automatically to a setting aside of the award if any of the above grounds are found to be present. In other words, in a case such as the present, where a gross irregularity in the proceedings is alleged, the enquiry is not confined to whether the arbitrator misconceived the nature of the proceedings, but extends to whether the result was unreasonable, or put another way, whether the decision that the arbitrator arrived at is one that falls in a band of decisions to which a reasonable decision-maker could come on the available material.”
“In short: A reviewing court must ascertain whether the arbitrator considered the principal issue before him/her; evaluated the facts presented at the hearing and came to a conclusion that is reasonable”5
3 At para 25
4 Case number JA 2/2012 at para 14
5 At para 16
The grounds of review and evaluation:
- The Applicant submitted that the award stood to be reviewed and set aside on the following grounds:
- The Commissioner misapplied the parity principle and failed to properly apply his mind to the fact that Magashima as the branch manager was Maphiri’s superior and in a position of authority over him. Magashima had an onerous duty of trust placed upon her by the Applicant.
- In applying the parity principle incorrectly, the Commissioner failed to properly apply his mind and to consider the issue and the evidence, and thus committed a gross irregularity in the conduct of the proceedings, prevented a fair trial on the issues and came to a conclusion that was manifestly unreasonable.
- In considering the issue of inconsistentcy, the Commissioner failed to apply the correct test, beings whether the Applicant in distinguishing between Magashima, Simelane and Maphiri, acted capriciously, arbitrarily or as a result of improper motives.
- The Commissioner’s expectation that the Applicant had to make explicit averments that the trust relationship had been irreparably damaged constituted a gross irregularity in the conduct of the proceedings and was unreasonable.
- The Commissioner in considering that Magashima’s conduct benefited the Applicant and that her dismissal was therefore unfair, committed a gross irregularity in the conduct of the proceedings.
- The Commissioner ignored evidence led at the proceedings that Simelane had stated that he had paid Magashima part of his commission in return for her assistance in capturing loan applications.
- Magashima opposed the application and contended that the Commissioner’s award and the conclusions arrived at were reasonable. These will be dealt with within the context of evaluation of the material before the court as below.
- The crux of the Commissioner’s findings and reasoning centers around whether the Applicant had applied consistency in regards to its rules and sanction in the light of the misconduct complained of. One of the issues a Commissioner needs to consider in determining whether a dismissal for misconduct is fair is whether ‘the rule or standard has been consistently applied by the employer’ in terms of Item 7 (b) (iii) of the Code of Good Practice: Dismissal. This if further emphasized in items 100 – 103 of the CCMA Guidelines: Misconduct Arbitrations6.
- In Southern Sun Hotel Interests (Pty) Ltd v CCMA & others7, Van Niekerk J, having alluded to the fact that Courts have over the years recognized a distinction between ‘historical’ and ‘contemporaneous’ inconsistency, held that inconsistency claims more particularly within the context of similarity of circumstances will fail, where the employer is able to differentiate between employees who committed similar transgressions on the basis of, inter alia, differences in personal circumstances, the severity of the misconduct or on the basis of other material factors8.
- The point made by Van Niekerk J in Southern Sun had long found support in NUM and another v Amcoal Colliery t/a Arnot Colliery and Another9, where the LAC in determining the fairness of the dismissal of 16 employees who had been dismissed for misconduct related to failure to comply with a reasonable instruction held as follows:
“The parity principle was designed to prevent unjustified selective punishment or dismissal and to ensure that like cases are treated alike. It was not intended to force an employer to mete out the same punishment to
6 Published under GenN in GG34573 of 2 September 2011 (Effective from January 2012)
7  11 BLLR 1128 (LC)
8 At para 10. In reference to Early Bird Farms (Pty) Ltd v Mlambo  5 BLLR 541 (LAC), where the Labour Appeal Court held that at 545 H-I
“like cases should be treated alike. In appropriate cases an Employer may be justified in differentiating between two employees guilty of the same transgression on the basis of their personal circumstances or on merits”.
9  8 BLLR 869(LAC)
employees with different personal circumstances just because they are guilty of the same offence.”10
- Sutherland AJA in National Union of Mineworkers, obo Botsane v Anglo Platinum Mine (Rustenburg Section)11 recently held that:
‘The idea of inconsistency in employee discipline derives from the notion that it is unfair that like are like are not treated alike. The core of this ‘factor’ in the application of employee discipline (it would be a misconception to call it a principle) is the rejection of capricious or arbitrary conduct by an employer.’
‘It has application in two respects. Mainly, it is a recognition of the unfairness of the condemnation of one person for genuine misconduct when another indistinguishable case of misconduct by another person is condoned. The second application is the recognition of the unfairness that results when disparate sanctions are meted out for indistinguishable misconduct to different persons’12.
- In SACCAWU and Others v Irvin & Johnson13, the Labour Appeal Court had further dealt with the issue of consistency in the following terms:
“……..Fairness, of course, is a value judgment, to be determined in the circumstances of the particular case, and for that reason there is necessarily room for flexibility, but where two employees have committed the same wrong, and there is nothing else to distinguish them, I can see no reason why they ought not generally to be dealt with in the same way, and I do not understand the decision in that case to suggest the contrary. Without that, employees will inevitably, and in my view justifiably, consider themselves to be aggrieved in consequence of at least a perception of bias’.
- As can be gleaned from the authorities and principles enunciated therein, it is not sufficient for an employee facing allegations of misconduct to simply shout; ‘Inconsistency!’, and automatically be absolved from the consequences
10 At para 19
11 (JA2013/42)  ZALAC 24 (15 May 2014) at para 25
12 At para 26
13 (1999) 20 ILJ 1957(LAC)
of his or her acts of misconduct. Where an employee claims inconsistency, firstly, the onus is on that employee to demonstrate in what material respects employee X was treated differently from him or her, when both have committed the same or similar form of misconduct, and why that was unfair. Secondly, it is for the employer to justify the differentiation in the treatment of the two employees. In the absence of evidence to demonstrate that the employer had acted capriciously or was motivated by some irrelevant or unfair considerations in instituting disciplinary measures or handing out sanction between the two employees, it should be concluded that the employer’s decision to differentiate between the two is fair.
- As correctly pointed out on behalf of the Applicant, and further in reference to SATAWU & Others v Ikhwezi Bus Service (Pty) Ltd14, an employer is indeed entitled to impose different penalties on different employees who had committed the same misconduct, provided there was a fair and objective basis for doing so.
- It is trite that in determining whether the employer had acted fairly in dismissing an employee, the Commissioners should also consider the factors outlined in Sidumo15. Other than these factors, where an employee claims inconsistency, further factors inclusive of those outlined in Sidumo to be considered include the following:
- The circumstances surrounding the act of misconduct committed by individual employees;
- The personal circumstances of the employees, including their length of service, and the employees’ disciplinary records;
- The positions they occupied at the time of the commission of the misconduct, the nature of the duties they performed and hierarchy within the organisation;
14 (2009) 30 ILJ 205 (LC)
15 2008 (2) SA 24 (CC) At Paras 78 – 79 These include the totality of the circumstances of the matter; whether what the employer did was fair; the importance of the rule that the employee breached; the reason the employer imposed the sanction of dismissal; 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 dismissal on the employee and the long service record of the employee.
- The severity of the misconduct or its impact on the employer and its operations;
- The consequences of the misconduct vis-à-vis the sustainability of the employment relationship between the employer and the employee, and also as between co-employees;
- Whether the employees have shown genuine contrition. Genuine contrition implies that an employee owned up to the misconduct as soon as it took place, and showed remorse from that moment. This should be distinguished from the charade of showing remorse at disciplinary proceedings, purely for the purposes of pleading in mitigation of sanction.
- The factors identified above are not a closed list, and should in all circumstances not be dealt with in isolation. In this case, and in defending the Commissioner’s award, it was submitted on behalf of Magashima that:
- The Applicant had emphasized that contravening the company policy in regards to the sharing of passwords was a dismissible offence regardless of positions they occupied, yet failed to apply it in this case.
- Reference was made to Sappi Fine Papers (Pty) Ltd t/a Adamas Mill v Lallie & others16 for the proposition that the failure of the Applicant to dismiss Maphiri even though he had also shared the password with Magashima in the same way that Simelane had, showed that the trust relationship was not broken, and that the inconsistent treatment showed that the Applicant could still trust the employees who committed the same misconduct.
- The Commissioner took into account Magashima’s unblemished record of thirteen years’ service, and the court should take displeasure in interfering with the Commissioner’s finding, as Magashima could have been put on terms and advised of the consequences of her not abiding by those terms.
16 (P235/98)  ZALC 117 (24 November 2008)
- The Commissioner had conducted the proceedings fairly; had determined the material facts and had taken into account that Magashima had confessed to using the consultants’ passwords. It was contended that the Commissioner had applied the provisions of the LRA in answering whether the dismissal was for a fair reason, and came to a justifiable conclusion.
- In my view, the submissions made on behalf of Magashima are akin to an employee claiming inconsistency and expecting to be automatically absolved from the consequences of her misconduct. It appears that the Commissioner was clearly persuaded by this mere allegation and fell into the trap that Sidumo warned against, i.e. that Commissioners should not approach the matter on the basis of what decision they would have made had they been the employer17. A commissioner’s task as explained in Sidumo is not to ask what the appropriate sanction is but whether the employer’s decision to dismiss was fair. It is apparent that the Commissioner from his reasoning and conclusions reached misconstrued his mandate and failed to take into account essential material facts, and came to a conclusion which a reasonable decision could not have come to on the material before him. In this judgment, these conclusions are based on the following:
- It was common cause that Magashima as the Branch Manager occupied a fairly senior position. She managed the whole branch and as such, had overall authority. To this end, her position can hardly be equated to that of Simelane or Maphiri, who were her subordinates, and who were obliged to take instructions from her. In the face of a claim of inconsistency, it was apparent that given Magashima’s managerial position, her authority over Simelane and Maphiri, and her general role in the branch, there was justification to treat her differently despite the fact that all three of them had breached the rules and policies regarding the sharing of passwords.
17 Sidumo at para 67
- In failing to make the distinction as above, the Commissioner further failed to take into account evidence led in respect of Magashima’s role and responsibilities at the branch, and further that in that position, Magashima was clearly in a position of not only authority but trust. It cannot therefore not be doubted that the Applicant trusted Magashima as the overall authority and custodian of its rules and policies that she would adhere slavishly to those policies and rules, and lead by example. On the contrary she not only contravened those rules and policies but also encouraged her subordinates to do the same.
- The nature of the applicant’s business being a bank, required strict financial controls, and the importance of the policy surrounding the sharing of passwords is self-evident. It is further apparent that the consequences of non-compliance with these strict controls could be far reaching in that it left the Applicant susceptible to fraud and other related misdemeanours.
- The Commissioner’s further conclusion that Magashima’s conduct had instead assisted the Applicant in achieving its targets is clearly unreasonable not supported by facts. This in my view indicates the Commissioner’s failure to appreciate his mandate insofar as identifying the issues and dispute he was required to determine. Once a Commissioner misconstrues the nature of the enquiry before him or her, the result will invariably be unreasonable.
- The issue before the Commissioner was whether the dismissal of Magashima was for a fair reason based on the misconduct in question. Magashima’s motives or reasoning behind committing the misconduct in question was clearly irrelevant for the purposes of answering that question. The Commissioner was satisfied that the Applicant had discharged the onus of proving the misconduct in question, and all that he had to determine was whether the dismissal was fair. By relying on Magashima’s
motives or reasons for committing misconduct in concluding that her dismissal was unfair, the Commissioner committed a reviewable irregularity.
- The above conclusions are also linked to the Applicant’s contentions that the Commissioner committed an irregularity by completely disregarding the evidence surrounding whether Magashima was paid part of the commission generated by the sales consultants. Nowhere in his analysis did the Commissioner deal with this aspect of the evidence, even though it was common cause that such evidence was proffered by way of a statement made by Simelane. Even if the Commissioner was correct in disregarding the evidence, at the very least, it was required of him to state the reasons for doing so. Furthermore, in arriving at his conclusions, the Commissioner appeared to have disregarded the evidence surrounding whether Magashima had instructed Simelane to sign the loan applications to make it as though he had consulted with a client.
- By solely relying on the claim of inconsistency, and also not applying or properly considering the principles surrounding the application of the parity principle, the Commissioner arrived at an unreasonable result. Nowhere in the award was it shown that in not dismissing Maphiri, the Applicant had acted capriciously and arbitrarily, or that the Applicant had other motives. The Commissioner failed to take into account the importance of the rules and policies breached, the operational risk posed as a consequence of Magashima’s conduct; the fact that Magashima had conceded to breaking the rules but also sought to justify it, which in my view did not amount to a show of remorse; and that as a consequence of the misconduct and the position Magashima held, it could not be expected of the Applicant to trust her thereafter. Magashima had thirteen years of service, and for her to have denied knowledge of the rules was clearly improbable as correctly established by the Commissioner. In the light of these irregularities, the Commissioner
arrived at an unreasonable result, rendering his award one which a reasonable decision maker would not have arrived at in the light of the material before him. Consequently, the award stands to be set aside.
- With regard to the issue of costs, I am of the view that considerations of law and fairness militate against any such order. I have further had regard to the record of proceedings and the material properly before the court. Further having had regard to the provisions of section 145 (4) of the LRA, and in the light of the above conclusions, it is my view that little purpose will be served by remitting the matter back for a hearing de novo by the Third Respondent. In the circumstances, the Order below is deemed to be appropriate:
- The arbitration award issued by the Second Respondent dated 5 September 2012 under case number GAJB15917/12 is reviewed and set aside. That award is substituted with an order to the effect that:
‘The dismissal of the First Respondent (Mmapula Nancy Magashima) was substantively fair’.
- There is no order as to costs.
Tlhotlhalemaje, AJ Acting Judge of the Labour Court of South Africa
For the Applicant: Adv. L Malan
Instructed by: Bowman Gilfillan INC
For the First Respondent: Mr. Lebethe of Ditheko Lebethe Attorneys