The Labour Appeal Court (LAC) recently handed down a judgment confirming the validity of competent verdicts flowing from acts of misconduct by an employee. In the case of Machi v Chep SA (Pty) Ltd and Others, the LAC makes a significant distinction between cases where competent verdicts are evident and where there are new allegations of misconduct. In this, the LAC clarified what a competent verdict is, and what it is not.

The dismissal

On 6 July 2017, Chep SA hosted its Achievers Awards in Cape Town. On the morning of the event, Ms Machi, then employed as the senior human resources business partner, requested to be excused from the event, explaining that she was unwell and in shock following the suspension of a colleague. However, it transpired that when she returned to Durban, she did not go home, nor to Chep SA’s offices. Ms Machi attended the premises of a company called Zala Corporates, where she chaired a disciplinary hearing. In her disciplinary finding, she described herself as the ‘HR Director’ of Zala Corporates. Zala Corporates is not an entity related to Chep SA.

Following an investigation, Ms Machi was called to a disciplinary hearing to respond to allegations of misconduct, including dishonesty regarding her sudden departure from Cape Town and her gross misconduct in not disclosing that she was acting as a director of Zala Corporates. She was found guilty and dismissed.

Aggrieved by the outcome, she referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). The CCMA found her not guilty of the formal allegations levelled against her. Nevertheless, based on what the Commissioner termed an ‘unexpressed fourth allegation’, she found Ms Machi guilty of misconduct that had destroyed the employment relationship. The misconduct in question was that Ms Machi had chaired a disciplinary hearing during normal business hours for another entity, describing herself as its director, after being permitted to miss Chep SA’s event under the guise of being unwell. To this end, her dismissal was held to be substantively fair, but procedurally unfair, and she was awarded two months’ compensation.

Ms Machi then launched a review application with the Labour Court, alleging that the Commissioner had committed a gross irregularity by, of her own accord, creating a new charge and finding her guilty of it, and then dismissing her. The Labour Court disagreed with Ms Machi, finding that the ‘unexpressed’ charge was a derivative of the allegations levelled against her. Further, the Labour Court found dismissal to be a fair sanction as the conduct involved serious dishonesty.

What a competent verdict is and what it is not

Following her unsuccessful bid to overturn the arbitration award, Ms Machi appealed the Labour Court’s judgment. She purported to support her argument by citing case law emphasising that an arbitrator cannot formulate new charges to salvage a dismissal.

In defending the appeal, Chep SA relied on the principle in EOH Abantu (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2019) 40 ILJ 2477 (LAC), discouraging an overly formalistic or technical approach in the categorisation and/ or characterisation of alleged misconduct. Where the employee in question has received adequate notice and information to ascertain what is being alleged, and is not prejudiced in mounting a defence, that is sufficient, and there is no requirement to expressly mention ‘competent verdicts’ on a disciplinary charge sheet. Chep SA argued that the Commissioner had simply correctly identified the true, core misconduct as informed by the evidence presented. Further, Chep SA argued that trust and integrity were paramount in Ms Machi’s role, and her conduct made continued employment intolerable.

The LAC was then called to determine whether the Commissioner committed a reviewable irregularity in finding Ms Machi guilty of, and dismissing her for, the ‘unexpressed fourth allegation’ that was not explicitly set out in the charge sheet.

The LAC found that the legal principles in EOH Abantu were dispositive of the matter as the focus is on the employee’s knowledge of the substance of the allegation, not how it is labelled. The cases Ms Machi relied on were distinguishable, as the arbitrators had based their decisions on distinct and unrelated acts of misconduct that were never part of the employer’s case.

To this end, the LAC confirmed that the ‘unexpressed’ allegation was a succinct and accurate characterisation of the conduct that formed the heart of Chep SA’s narrative from the outset. The allegations in the charge sheet formed part of a single narrative relating to the events of 6 July 2017 where Ms Machi chaired a hearing for Zala Corporation after being released on grounds of illness. The evidence related to the events was ventilated throughout the disciplinary hearing and the arbitration proceedings, with Ms Machi having had the opportunity to rebut it.

Furthermore, the LAC found the sanction of dismissal to be appropriate, since Ms Machi, in holding a senior and sensitive position in the HR department, was the custodian of the company’s policies, ethics and trust and her conduct had irreparably damaged the trust relationship.

While Chep SA’s disciplinary code listed ‘private work during office hours’ as an offence typically warranting a final warning, the Court confirmed that disciplinary codes are guidelines and not straightjackets. The seriousness of the misconduct had to be assessed in context.
Ultimately, the Commissioner’s award was one that a reasonable decision-maker could reach, and the Labour Court was correct not to interfere with the award.

Key takeaways

This case illustrates that when relying on a competent verdict, there is a distinction between relying on the factual matrix from which the expressed allegations arise and conjuring new allegations from distinct and unrelated acts of misconduct to sustain an outcome. The former will be sustainable, provided that the employee was sufficiently aware of the substance of the allegations and was not prejudiced in mounting a defence.

In requesting representations from employees as part of a disciplinary process, it is best practice for employers to clearly describe the circumstances in which the alleged misconduct arose, and the full extent of the allegations that employees would be called to respond to.
The case is also a reminder that where allegations of misconduct are sustained, an employer may well impose a harsher sanction than that which may be expressed in its disciplinary code, based on the seriousness of the misconduct, with reference to the employee’s role and seniority.

Written by AmandlakaThixo Magubane, Senior Associate at Bowmans Law