The abrasive, confrontational employee – you’re fired?

An employment relationship is inherently unequal. The employer dishes out instructions, and the employee is duty-bound to follow those instructions (if they are lawful and reasonable), and in general to be respectful of the employer and her authority.

For that reason, our law recognises insolence and insubordination by an employee as misconduct that, if wilful and sufficiently serious, could justify dismissal after a single offence.

An employee can be both insolent and insubordinate, or merely insolent.

Insolence refers to rudeness and disrespect. An employee might make a snide, sarcastic comment, slam a door, or ignore you when speaking. The insolence can be directed towards a senior, equal or junior in the workplace.

Insubordination goes further, and refers to a deliberate, persistent and serious challenge to, or defiance of, an employer’s authority, whether through words or conduct. Insubordinate conduct may include refusal to carry out a lawful and reasonable instruction from an employer, but could also include such actions as a verbal or physical altercation with the employer that clearly challenges the employer’s authority. The insubordination can only be directed upward, to a senior in the workplace.

A couple of weeks back, a prospective client telephoned and related an alarming incident at her office: a member of staff had screamed and shouted at her, stormed out of the office, slamming the door, stormed back in, grabbed her handbag, and announced that she was leaving and would be back in the morning. The employer concerned implored: “I need to dismiss her, I cannot accept her back in the office. This is unacceptable – other employees witnessed this incident.”

On the face of it, the employee’s conduct was certainly insolent and possibly insubordinate. But would it be grounds for dismissal?

A similar case came before the Labour Appeal Court. That employee had an acknowledged abrasive style, loud voice, and sense of justice that compelled her to speak up when she felt her rights were being infringed upon. The relationship with the employer was deteriorating, as they were unhappy with her performance and with her abrasive manner with colleagues. The employer was concerned that she had allowed staff to use a work phone and run up a sizeable bill. The employer threatened to deduct the cost from her salary, and in fact did so.

The employee was aggrieved, and approached the employer to challenge the deduction, which had in fact been unlawful. The employer refused to discuss the matter with her, and turned his back on her when she tried to talk to him. The employee than raised her voice at him, telling him not to turn his back on her. The employer claimed in evidence that she had screamed and shouted at him, calling him unprofessional and “not an MD”, but this was disputed by the evidence of witnesses to the incident.

The employer charged the employee with insubordination and dismissed her.

At the CCMA, the commissioner agreed that the employee had been guilty of insubordination, and upheld her dismissal.

The employee took the matter on review to the Labour Court, who agreed with her that the CCMA award could not stand. The Labour Court’s decision is problematic, as it wrongly held that insubordination required a prior instruction. It ruled that the employee’s conduct was not insubordination but gross insolence, and that dismissal was too harsh a penalty. The employee did not want to be reinstated and was awarded 10 months’ salary as compensation.

On appeal by the employer to the Labour Appeal Court, the court rubbished the Labour Court’s finding that insubordination only arose from non-compliance with an instruction. But it agreed that the award was unreasonable and could not stand. Significantly, the employer’s conduct in unlawfully deducting money from the employee’s salary and then condescendingly refusing to discuss the matter with her, was found to have been serious provocation. In the circumstances, the seriousness of the employee’s conduct was reduced. It was found that she had been insolent but not insubordinate, as she had not persistently, wilfully and seriously challenged the employer’s authority – she had reacted in a knee jerk manner to provocation in the heat of the moment.

In the case of mere insolence or mere insubordination, not of a particularly gross nature, a prior warning was required before dismissal. The warning had to be given after the employee had enjoyed a full opportunity to be heard on the matter. There had been no prior warning in this case, although there had been allegations of past rude conduct, and so dismissal had been inappropriate. The finding of unfair dismissal and award of compensation were upheld.

And so, could the prospective client fire the employee who had shouted at her and stormed out of their meeting? The answer is more complex than it might first appear, and what preceded the incident is important. If the employee was responding to an intolerable provocation by the employer, then the seriousness of the offence may be mitigated, and a hearing may result in a warning.

 

 

The enforcability of restraints of trade

Employing a key staff member can feel like risky business. They will get to know your clients, your systems, your “tricks of the trade”. All well and good: you want your staff to be well-liked by your customers, and knowledgeable and effective in their work. But what if, having accepted your training and support to become a true asset to your organisation, your employee leaves and goes to work for your competition? Can you include clauses in your employment contract to prevent this?

A well-known labour law consultancy certainly hoped so when they employed Mr DJ in 2014. His employment contract included extensive confidentiality and restraint of trade clauses, which the Labour Appeal Court adjudicated upon last week.

After about 15 months’ employment, DJ resigned to take up employment with an employer’s organisation who competed with the consultancy to offer similar services to similar clients. His employment contract restrained him in perpetuity from disclosing any client lists, trade secrets of other company information received from the consultancy during his employment. It went on to restrain him from having any interest in any other entity providing similar services to the consultancy, engaging in any similar transactions with any of the consultancy’s clients, or in any way poaching the consultancy’s staff, for a period of 3 years after his resignation, throughout two provinces of South Africa.

The consultancy immediately drew DJ’s attention to the above restraints, and alerted him to their view that he was about to breach his obligations by taking up employment with the employers’ organisation. DJ disagreed that the two organisations were in competition with one another, but nevertheless undertook not to contact any of the consultancy’s clients to attempt to lure their business away.

The consultancy was not satisfied, and launched urgent proceedings  to interdict DJ and the employers’ organisation concerned, from entering into an employment relationship. The consultancy expressed the fear that DJ would take unfair advantage of his knowledge of its clients, pricing and business strategies, and abuse the strong relationships he built up with its clients to lure them away. DJ denied having any special access to the consultancy’s business strategies, saying that he had learned these before starting work for it and that the information was in any event readily available on the internet. He aso denied having any special bond with any of the consultancy’s clients.

The Labour Court was not satisfied that there was special, confidential information in DJ’s possession which could be abused to the detriment of the consultancy. Neither was it satisfied that DJ had been shown to enjoy especially close relationships with the consultancy’s clients. The consultancy had not proven that it had any protectable interest, and to enforce the restraint would be unreasonable as against DJ and only have the effect of stifling competition.

The consultancy approached the Labour Appeal Court with an appeal against this decision. It complained that DJ had entered employment with it as a blank slate, and had only become a valuable asset worthy of being head-hunted by its competitors, as a result of the training and resources it had invested in him. It argued that it was unfair to allow such an employee, who had signed a restraint when accepting employment, to go over to a competitor who would reap the benefits of this investment.

The Appeal Court noted that restraints of trade are enforceable unless they are proven to be unreasonable. Their reasonableness is determined by balancing the need for parties to comply with their contractual promises and the right to freely exercise one’s trade or occupation. A restraint would only be reasonable if it protected an interest worthy of protection, such as confidential information and trade secrets, or customer and trade connections. For information to be confidential it had to be useful, restricted to a small number of people, and have economic value to the employer. Customer or trade connections could be protectable if they were of such a nature that the employee could induce such connections to follow him or her to a new employer. An interest in preventing competition was not in itself protectable.

The employer’s protectable interest had to outweigh the employee’s interest in being economically productive. It stated that an employee cannot be restrained from taking away and using his or her skills, experience and knowledge, even if these were acquired chiefly through the employer’s training of the employee. These skills were not the property of the employer.

The Appeal Court found that DJ had been a relatively junior employee and had lacked access to truly confidential information. The forms he used for his work were freely available on the internet. He had no access to sensitive financial information or business strategies.  DJ’s evidence was that he only handled the simplest of tasks for clients and that he had no ongoing relationships with any clients such that they felt an attachment to him. He had no role in recruiting clients at either organisation.

As no protectable interest had been proven, the Appeal Court noted that it was unnecessary to weigh up the interests of the parties. DJ was entitled to pursue his career unfettered by the clear language of the restraint he had concluded with the consultancy.

Restraints of trade remain contested territory, with the enforceability of restraints coming down to the circumstances of individual cases. In general, they are of most use in the case of absolutely key personnel only, and should not be concluded with employees simply to fetter their career path and keep them from joining the competition.

Exiting the exit agreement: a departing employee’s claims of coercion and duress

It happens with some regularity that an employee refers a dismissal dispute to the CCMA, and the employer arrives at the hearing bearing a termination agreement with the employee’s signature. In it, the employee agrees to resign from employment, often in return for some benefit such as an extra month or two’s pay, or the privilege of leaving honourably rather than being dismissed and incurring a disciplinary record for serious misconduct. The employee will usually concede that they signed the agreement, but argue that they were bullied into it. The CCMA commissioner will advise them that the agreement is binding until set aside by the Labour Court on solid grounds, such as duress, and close their file.

In the recent matter of Gbenga-Oluwatoye versus Reckitt Benckiser SA, an employee went as far as approaching the Labour Court and, thereafter, the Labour Appeal Court, in his quest to get out of a termination agreement he admitted signing with the employer.

The employee was approached by a headhunter while employed in a lucrative position with a large multinational. He later left his lucrative position, but actively concealed this from the headhunter, negotiating a generous sign-on bonus on the false basis that he was losing a handsome shareholding by leaving the large multinational to join the employer. In short, he deceived and defrauded the new employer.

Some months into his employment with the new employer, the employee’s misconduct came to light. He was suspended pending a disciplinary hearing,  and then summarily dismissed. On receipt of his termination letter, the employee approached the employer requesting a “softer exit”. He offered to repay the money over time, in exchange for the employer delaying action to revoke his work permit and housing allowance. The employer agreed, and the employer expressed his gratitude for the humanity shown him.

A termination agreement was then drawn up in draft form. The employee was unwilling to sign the first draft, but agreed to sign a second draft. The agreement recorded that it was in full and final settlement of any claims between the parties, and that it was entered into voluntarily without any coercion or pressure. The employee agreed, in the agreement, that he waived any right to approach the CCMA and Labour Court arising in any way from his employment and the termination agreement.

A week later, however, the employee brought an urgent application to the Labour Court, for an order setting aside the termination agreement and reinstating him into his employment. He argued that the agreement was against public policy and that he had been coerced into signing it through fear of losing his work permit and housing and other allowances.

The Labour Court was unsympathetic. It had regard to the fact that the employer had a legal entitlement to dismiss the employee summarily on account of his serious misconduct, and also the fact that the agreement had been further negotiated after the employee had been dissatisfied with the first draft. There were no facts to indicate that he signed the agreement only as a result of duress by the employer.

The employee was unrelenting, and took the matter further to the Labour Appeal Court, on appeal.

The Labour Appeal Court pointed out that, in order to get out of an agreement on the basis of duress, intimidation or improper pressure had to be proven of such magnitude that the purported consent of the signatory was no true consent. There had to be actual violence or a fear caused by the threat of a considerable evil. The threat had to be unlawful or against the morals of the community.

Although the Court did not point this out, it goes without saying that the loss of a work permit and of allowances due to termination of employment by resignation or by summary dismissal for gross misconduct, are lawful and reasonable consequences. They cannot be construed to be unlawful or against the morals of the community.

The Court did point out that, while everyone has the constitutional right to seek redress through the courts, this right could be limited in reasonable circumstances. Parties were free to limit this right in their free contractual dealings. The Court found that the employee was an experienced, senior managerial employee, who would understand the import of what he was agreeing to. Clauses limiting the right of redress were standard in termination agreements, and of practical value.

Finally, the Court point out that it had no power to set aside agreements simply because they appeared to be unfair.

The Court accordingly upheld the termination agreement, and dismissed the employee’s application with costs.

Caveat subscriptor – “signer, beware!” – is a well-worn legal maxim for good reason. All parties should be slow to sign any agreement unless they are completely satisfied with the terms, and should be aware that by signing an agreement they trigger important legal consequences which cannot be easily evaded. In the absence of compelling evidence of significant unlawful pressure, a party who foolishly signs an unfair or prejudicial agreement, will be held to its terms.

 

 

 

Key changes to the labour laws in 2015 – part 8: PART-TIME EMPLOYMENT

As this blog series comes to a close, we have yet to consider the recent changes to the law on part-time employment.

Again, the new law applies only to employees who earn below the currently prescribed threshold of R205 433,30 per year. It does not apply to employees who ordinarily work fewer than 24 hours a month for the employer, nor does it apply in the first three months of employment.

Employers with fewer than 10 employees, and those with less than 50 but in the initial two year start-up phase, are exempt.

The part-time employee is entitled to be treated on the whole not less favourably than a comparable full-time employee doing the same or similar work, unless there is a justifiable reason for different treatment. She is further entitled to access to training and skills development which is on the whole not less favourable than the access applicable to a comparable full-time employee. She is entitled to the same access to opportunities to apply for vacancies at the employer.

A justifiable reason may include seniority, experience or length of service; merit; the quality or quantity of work performed; or any other criterion of a similar nature.

A comparable employee is one who is identified as full-time in terms of the employer’s custom and practice, but not an employee on agreed temporary short time. One should compare with a full-time employee with the same type of employment relationship and performing the same or similar work at the same workplace, and only at another workplace of the employer if no such employee exists at the same workplace.

As with the new law governing fixed term contracts, greater equity between those enjoying standard (permanent, full-time) employment and those subject to non-standard (fixed term, part-time) employment is the objective. In the event of an infraction, the aggrieved employee may refer a dispute to the CCMA within six months. If not resolved at conciliation (that is, mediation) then the dispute may be referred for arbitration.

Key changes to the labour laws in 2015 – part 4: ARBITRATIONS IN LIEU OF DISCIPLINARY HEARINGS

The Labour Relations Act has long provided for the possibility of what was called (to the dread of many an employee) a “pre-dismissal hearing”. This had the effect of a CCMA arbitration, but replaced an in-house disciplinary process by the employer. In the latter, an employer would make allegations about an employee’s conduct or capacity which could result in the employee’s dismissal, and hold a hearing and, possibly, an appeal – and perhaps then end up defending the process at the CCMA at an arbitration preceded by a conciliation. In the former, the CCMA would take over the process, enquire into the allegations, and make a decision having the effect of an arbitration award – a greatly streamlined process.

In the past this could only be done by the employer with the consent of the employee.

The new law enables industry- or workplace-wide collective agreements to provide for inquiries by arbitrators (formerly “pre-dismissal arbitrations”), instead of requiring consent by individual employees in each case.

In addition, under the new law this process may be triggered by either the employee or the employer, when an employee complains that the holding of a hearing into her conduct or incapacity contravenes the Protected Disclosures Act. That Act aims to protect whistleblowers in the workplace. This new provision is directed at maximising fairness, while minimising the protracted litigation arising in disputes under the Protected Disclosures Act.

Key changes to the labour laws in 2015 – part 3: ARBITRATION, THE LABOUR COURT AND REVIEW

PRIVATE ARBITRATION

Where an employer and employee have made no other agreement about resolution of disputes between them, their disputes are generally conciliated and, if not required to go to the Labour Court, arbitrated by the CCMA or a bargaining council, in terms of the Labour Relations Act, in what is known as “compulsory arbitration”. However some employers and employees agree up-front in employment contracts to bypass the system of compulsory arbitration, and rather have disputes resolved by way of private arbitration. Private arbitration services are provided by private companies, as opposed to compulsory arbitration which is provided by the CCMA, set up by statute, or bargaining councils, set up by industry-wide agreements.

In the past, if the CCMA accepted a dispute referral but then realised that the parties had agreed to private arbitration, the CCMA would generally decline to hear the matter, and insist that it be referred instead to the relevant private arbitrator as per the parties’ agreement.

The legislature identified abuse of the scope for private arbitration, however, and has amended the Labour Relations Act this year to require the CCMA to hear disputes, even where they ordinarily would not have the power to do so owing to a private arbitration clause in an agreement. This amendment applies (1) when an employee who earns less than R205 000* per year (*subject to change)  is required by the agreement to pay any part of the costs of the private arbitration, and (2) when the private arbitrator nominated in the agreement is not independent of the employer.

THE LABOUR COURT AND ARBITRATION

Where the Labour Court receives a referral of a dispute which ought to have been referred to arbitration, the court may either refer the dispute to arbitration or continue with the proceedings and make only an order which an arbitrator would have been empowered to make. In the past, the Labour Court could only continue with the proceedings with the consent of all the parties. As of 2015, the parties’ consent is no longer necessary, and instead the court can determine that it is expedient to continue and do so regardless of any objection by either party.

MORE RESTRICTIONS ON REVIEW APPLICATIONS

While the majority of review applications are no doubt brought in good faith, as mentioned in a previous post, they have also been much abused as delaying tactics and for employers in particular to evade compliance with awards despite there being no real prospect of overturning the awards. Some review applications have languished in court files for years, and employees have lacked the knowledge or means to force matters along effectively.

In a further attempt to tighten the reins on abuse of review applications, and resultant unnecessary delays and cost increases in proceedings, the legislature has determined that, as of 2015, no review may be brought of any decision or ruling made during conciliation or arbitration until the issue in dispute has been finally determined. The exception shall be when the court is of the view that it is just and equitable to hear the review at an earlier stage. This will prevent many a party from abandoning arbitration hearings on the first day, and holding the process hostage by filing reviews of minor determinations made by an arbitrator before even hearing evidence on the main issue.

Employee or independent contractor?

The question whether someone is an employee or an independent contractor is one which the courts and CCMA have had to consider time and again over many years.

The issue continues to crop up in legal disputes, because an independent contractor does not have the rights and protections of an employee.

The point is usually raised as a “jurisdictional” issue, which means that a decision-maker handling a dispute must decide the issue before they are entitled to consider the main dispute. This can be decisive in an unfair dismissal or similar dispute. If a person who claims unfair dismissal is not an employee but an independent contractor, then there is no question of unfair dismissal, and the legal dispute will not be considered further in that form. An independent contractor must instead rely upon the terms of the contract, in much the same way that businesses enforce contracts between them.

The Labour Court examined the question again recently, when a radio DJ approached the CCMA with an unfair dismissal dispute. The CCMA found that he had not shown that he was an employee, and refused to consider his claim of unfair dismissal. He approached the Labour Court and argued that the CCMA’s ruling was wrong, asking the Court to compel the CCMA to consider his unfair dismissal claim.

The Labour Court ultimately agreed with the CCMA that the facts showed that the DJ was not an employee.

Various aspects of the matter did suggest that the DJ might possibly have been an employee. His contract referred to a monthly salary, and salary reviews, for example.

However, the radio station for which the DJ had presented a show, had referred to him in all documentation as an independent contractor rather than an employee, and he had failed to challenge this. This suggested that he had been under no illusion that he was an employee.

He furthermore delivered invoices to the radio station for his “salary”, via a close corporation, which had other employees whom he paid to assist him with his radio show.

The Court indicated that the most important decisive factors to consider were whether the DJ was economically dependent on the radio station, whether he was subject to the radio station’s supervision and control, and whether he formed an integrated part of the radio station’s organisation.

The Court found that, although the DJ did not pursue other commercial activities outside of his work for the radio station, this was because he chose not to, and he was not truly economically dependent on the radio station. He was contractually entitled to pursue other work for non-competitors of the radio station, although he did not pursue it.

The Court found further that the DJ enjoyed extensive control over the number of hours he spent preparing his radio show, and also over show content, and was not truly under the supervision and control of the radio station as an employee would be.

Finally, although the DJ was issued with business cards and branded clothing by the radio station, this was not indicative that he was an employee, but was merely to facilitate marketing of the radio show.

Anyone approaching the CCMA should be prepared to lead evidence to show that they are an employee, in case this point is challenged. Employees should be alive to the impact that decisions about the wording of contracts and arrangements for payment may have on their status and rights. Someone who is truly an employee should not lightly agree to a scheme whereby they invoice for fees via a company, for tax or other reasons, as they may unwittingly affect the nature of their relationship and the protections they enjoy. The courts seldom assist persons in “having their cake and eating it too”.

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High earners to lose legal protections?

Another major change to our employment law is on the way via a new section 188B to be added to the Labour Relations Act.

At present, all employees have recourse to the CCMA (or a bargaining council or private arbitration) and the Labour Court if they are dismissed and feel that the reason behind it or the procedure followed was not fair.

New section 188B will effectively strip employees earning above a certain amount – still to be determined by the Minister of Labour – of the right to challenge the fairness of their dismissals in the vast majority of cases. Provided the employer gives the employee three months’ written notice of his or her dismissal (or longer if required by their employment contract) or pays out the equivalent salary instead of notice, and the dismissal is not for an automatically unfair reason, the dismissal will be regarded by the law as fair (regardless of what the actual circumstances might be).

A dismissal is automatically unfair if it is motivated by reasons such as:

  • Retaliation for exercising a legal right from the LRA, including participation in a lawful strike, or for whistle-blowing;
  • Arbitrary grounds such as the employee’s race, gender, religion, age, ethnicity, sexual orientation or identity, pregnancy and so on;

unless it can be justified due to an essential requirement of the employee’s job or a normal or agreed retirement age.

Once the amendment has been signed into law, the exclusion will apply to all new employment contracts entered into (where the earnings exceed the threshold). Two years later it will also apply to all pre-existing employment contracts.

Employees who lose their rights of recourse due to this amendment will still have the option of enforcing any contractual obligations of the employer through the civil courts. They will have to show that the employer has acted unlawfully with reference to their agreement, rather than unfairly. Affected employees will be well-advised to participate actively in the negotiation and drafting of their employment contracts, in order to retain their rights to the greatest extent possible.

It remains to be seen where the threshold will be set. Until there is clarity in this regard, it is a matter of grave concern that many employees may be stripped of protections which they have come to regard as their basic right. When setting the threshold, the Minister will be required to consult NEDLAC and to consider the extent to which those employees “by reason of their earnings level, level of skill or position” have the bargaining power to ensure that their contracts of employment protect them adequately against unfair dismissal.