The Labour Court held that there was no merit to the company’s main grounds for review. It did, however, find that in calculating the compensation awarded, the arbitrator committed an error of law in that he failed to take into account the employee’s remuneration at the time of her dismissal, as outlined in section 194(1) of the Labour Relations Act, 1995 (LRA).
On 29 April 2021, the company issued a letter to the employee announcing that ‘short-time will be imposed for [her] position as accountant from 3rd May’. This entailed a reduction in the number of days she worked (from five to three) and her salary would be reduced by 40%. Notwithstanding this change in circumstances, the CEO sent the employee various emails enquiring about work-related matters on days she was not meant to work, including a Sunday.
On that following Monday, upon arriving at work, the employee entered the CEO’s office where an altercation ensued. The employee was alleged to have told the CEO that she (the CEO):
The employee also refused to lower her voice when speaking to the CEO.
A day later, the company charged the employee with gross misconduct in the form of gross disrespect and issuing threats to the CEO. A week later, and following a disciplinary hearing, the company dismissed the employee. At the time of her dismissal, she had been employed for over 13 years.
Aggrieved by her dismissal, the employee referred an unfair dismissal dispute to the CCMA. The arbitrator found her dismissal to be substantively unfair and ordered the company to pay the employee eight months’ compensation calculated at the rate of remuneration she received prior to the reduction in salary.
The company disagreed with this outcome and brought an application to review and set aside the award.
In concluding that the grounds for review lacked merit in relation to the reasons for the dismissal, Makhura J confirmed that the test for review is whether the decision is one that a reasonable decision-maker could not reach.
In determining the matter, the arbitrator considered the context that led to the altercation and whether the statements made by the employee were true. Based on the evidence at arbitration, the Court accepted the following as fact:
Therefore, what was said by the employee during the altercation was largely factual and the CEO was equally guilty insofar as the altercation was concerned. As such, the arbitrator’s decision was not unreasonable, and the Labour Court dismissed these grounds of review.
On the compensation to be awarded, the Court had regard to the fact that section 194(1) of the LRA provides that the amount of compensation to be awarded to an employee whose dismissal is found to be substantively unfair may not exceed the equivalent of 12 months’ compensation and must be calculated at the remuneration rate of the employee at the time of dismissal.
In awarding the employee eight months’ compensation at the rate before her salary reduction, the arbitrator committed an error of law. The Labour Court accordingly set aside the compensatory aspect of the award and substituted it for compensation at the remuneration earned at the time of the employee’s dismissal (ie. the reduced rate).
The judgment highlights the importance of arbitrators abiding by the limits of compensation as provided for in section 194 of the LRA. Any award of compensation should be based on the employee’s remuneration at the time of their dismissal.
It is significant in this case that the employee did not challenge the unilateral decision of the company to reduce her salary. Had she done so, or had she instituted a cross review to claim the maximum compensation at the reduced salary rate, the outcome may have been different.
