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The saga continues – petty theft, shrinkage and Shoprite…

15th July 2009


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"Dismissal is not an expression of moral outrage; much less an act of vengeance. It is, or should be, a sensible operational response to a risk management in the particular enterprise. This is why supermarket shelf packers who steal small items are routinely dismissed. Their dismissal has little to do with society's moral opprobrium of a minor theft; it has everything to do with the operational requirements of the employer's enterprise."

These were the Labour Appeal Court's ("LAC") words less than a decade ago. Shoprite Checkers (Pty) Limited ("Shoprite") clearly took this to heart in an attempt to combat shrinkage, a problem that has plagued them and left their name, at least in recent times, littering our law reports.


In Shoprite Checkers v CCMA and others2 ("Zondo JP's judgment") a deli supervisor was found guilty of eating in an area where the consumption of food was prohibited. The deli supervisor was dismissed at a disciplinary hearing and, two arbitrations and a Labour Court award later, Shoprite found themselves before Zondo JP in the LAC, trying, in his words, "to continue to delay the final reinstatement of the [deli supervisor]". Zondo JP found that "even if one were to test [the Commissioners decision] on the basis of whether it is justifiable in relation to the reasons given for it, it would, without the slightest doubt, survive the test." He continued by adding that, in light of Sidumo v Rustenburg Platinum Mines Limited and Others3 ("Sidumo") that "there is no doubt that [the decision] is reasonable because it cannot be said that a reasonable decision maker could not reach the same decision." The decision to reinstate the employee was upheld as from the date of dismissal, entitling the deli worker to some R33 000 back pay. This decision would be the subject of further appeal, this time to the Supreme Court of Appeal ("SCA"), but not before Shoprite levelled the score.

In Shoprite Checkers v CCMA and Others4 ("Davis JA's judgment") the employee ate "pap" and bread from the delicatessen at the store at which she worked. Davis JA, before finding the dismissal to be fair, quotes a plethora of case law supporting the principle that "theft is theft and does not become less because of the size of the article stolen."5 He goes on to point out that while Zondo JP's judgment "appears to adopt a different approach to the body of jurisprudence as analysed in [his] judgment," it does so because in that case the employee had 30 years of unblemished service, had contended that he was authorised to taste food in the areas he was shown to have stolen from and that, in one instance, he in fact was eating his own food. The employee in Zondo JP's judgment had "not gone so far as to produce manufactured evidence that manifestly was concocted in order to support [the employee's] own mendacious account."


Perhaps of most value to employers is Davis JA's quote at paragraph 25 of the judgment. "In this case the respondent had engaged in a breach of company rules on two separate days and, on these occasions, on one day. On 11 October 2000, he had consumed three bowls of pap. He had thus acted in flagrant violation of the company rules which had been implemented for clear, justifiable operational reasons. Other employees who had been similarly found to have so acted had been dismissed. In unchallenged evidence, Mr van Staden testified about the breakdown in trust between the two parties: "Because he is actually working or he has been trained to work in a speciality department where he is busy preparing food, and because of the incidents that happened which actually caused the shrinkage and with the high shrinkage in the store at the moment, we actually cannot afford to get him back in the store. (Indistinct) broke the trust relationship with the company." It was on this basis that he regarded the facts distinguishable from Zondo JP's judgment, and his decision in keeping with other decisions of the LAC.

On a closer reading of the two judgments it becomes clear that Zondo JP's judgment was more of a value judgment owing to the circumstances of the case. Nowhere does Zondo JP refer to any of the multitude of case law supporting a finding such as the one in Davis JP's judgment, nor does he anywhere expressly attempt to depart from the vast body of precedent already established on the subject.

As stated above, Zondo JP's judgment was taken on appeal to the SCA, solely to determine "the correctness or otherwise of the remedy that was allowed to [the deli supervisor]". In Shoprite Checkers (Pty) Limited v CCMA and Others6 ("the SCA judgment") the SCA concerned itself solely with whether or not the deli supervisor was to be reinstated from the date of his dismissal, entitling him to back pay, some nine years after the fact.

Speaking for a unanimous court Navsa et Ponnan JJA held that "the delays in no way serve to detract from [the Commissioner's] reasoning. Nor do they bring the matter within the terms of s145(2) of the LRA. It remains eminently reasonable. It should be borne in mind that, by the time the matter came before the LAC, further systematic delays had impacted on both employer and employee. The answer is to eliminate systematic failure rather than punish employers or employees unjustifiably. By interfering with the decision of the arbitrator, the LAC was therefore in effect substituting its own discretion for that of the arbitrator. This it was not permitted to do." The order of the LAC was therefore replaced with an order dismissing both the appeal and the cross-appeal (to the LAC) and dismissing the review and cross-review to the Labour Court. In summary, the deli supervisor remained reinstated but with no retrospective effect and the Commissioner's ruling (at the second arbitration) stood.

Vindication perhaps for Shoprite, but the saga didn't end there. In Shoprite Checkers (Pty) Limited v CCMA and Others7 ("the Labour Court judgment"), a decision handed down by Francis J just a week prior to the SCA judgment, a bakery controller was dismissed for passing through a pay point with a bar of soap in his pocket. The CCMA Commissioner found that the sanction of dismissal was too excessive and rejected Shoprite's claims of shrinkage causing loss to the company being a reason for dismissal. No dishonesty was shown and it could accordingly not be said that the trust relationship had broken down.

On review, the Commissioner was accused of not following the vast body of jurisprudence laid down by the LAC when it comes to the issue of theft cases in the retail industry. Francis J could find no substance in such contentions and held that, referring to both Zondo JP and Davis JA's judgments, "it is clear from the aforesaid LAC judgments that the length of service, the clean disciplinary record and whether a person acted in flagrant violation of the company are factors that play a role in the issue of sanction." Worryingly for employers in the retail industry, Francis J went on to add that "[m]ost of the judgments referred to in the Davis JA judgment were before the Sidumo judgment." Warning against the notion that Sidumo has left employers powerless in dealing with discipline, Francis J stated, "[t]here are various prophets of doom about what would be happening to discipline in the workplace. Some employers were able to dismiss employees on the basis of the reasonable employer's test ... The reasonable employer test is no longer part of our law. All attempts, like in the present case to reintroduce the reasonable employer test under different pretexts or guises should be resisted. Sidumo has dealt with that once and for all." The need for this statement is unclear and, in light of the fact the dishonesty was not even at issue, it probably amounts to no more than obiter.

Shoprite were adamant, at both the disciplinary enquiry and CCMA that the bakery controller was not charged with theft. The court held accordingly that the bakery controller's version that the removal of the bar of soap was therefore left uncontested and refused to allow Shoprite to raise the issue of dishonesty on review in an attempt to bolster its case. The review application was dismissed with costs and the usual "it cannot be said that [the Commissioner's] conclusion was one that a reasonable decision maker could not reach" followed. It remains to be seen whether Shoprite will appeal the judgment to the LAC.

The Labour Court judgment saw Shoprite's review fail not because the Labour Court ignored or disagreed with the findings of Davis J (at least not in so many words), but rather because this was not a case involving dishonesty (in fact, for reasons known only to Shoprite, the employee was not even charged with theft or dishonesty). This, when read with Sidumo, could only lead to the conclusion that dismissal was too harsh a sanction.

Whilst on first reading the judgments of both Zondo JP and Francis J appear to raise alarm bells for employers, a closer analysis reveals that this should not be the case. In Zondo's judgment the theft was not clearly shown, a fact pointed out by Davis JA, and in the Francis judgment theft (or dishonesty) could not even form part of the issue since Shoprite took the decision not to charge the employee with either theft or dishonesty. It can therefore be argued that dismissal for dishonest conduct, so prosecuted and proved, would still be upheld following the reasoning of Davis JA.

Employees are therefore encouraged to:

* Lead evidence of a breakdown in the trust relationship, and makes sure that those factors consider/ not considered by the chairperson are clearly set out in the finding. Section 193(2) of the Labour Relations Act makes it clear that the Labour Court or arbitrator must require the employer to reinstate or re-employ the employee unless ... "the circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable."
* Carefully consider the nature of the offence and draft the charges accordingly. The outcome in the Labour Court judgment may well have been different if the employee was in fact charged with, and found to be guilty of, dishonest conduct. Again, in the reasons given (for both dismissal and sanction) the chairperson should clearly out the factors consider/not considered in determining both the outcome and the sanction.

Written by: Brett Abraham of Webber Wentzel





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