CASE LAW UPDATE

Facts: The Public Finance Management Act 1 of 1999 (PFMA) is the enabling legislative framework that regulates financial management in the national government and provincial governments. The appellant, Dr Theys, an acting Head of the Department of Health (HOD) and its accounting officer from 2009 to 2012, was entrusted with the statutory responsibilities under the Act. The appellant concluded three lease agreements on behalf of the Department of Health, Northern Cape, with JP Hugo Residence t/a Hoffe Park, for the accommodation of nursing college students. It is set out in the charge sheet that the appellant did not follow any procurement process prior to concluding the leases with Hoffe Park and had failed to record reasons for his deviation from inviting competitive bids. It was contended that he unlawfully, wilfully or alternatively in a grossly negligent manner, failed to comply with the specified provisions of the PFMA.

Appeal: With leave of the Special Commercial Crimes Court against appellant’s conviction on three counts of contravening section 86(1) read with sections 1, 38(1)(a)(iii); 38(1)(c)(ii); 38(1)(n); 39(1)(b; 40(4); 40(5); 44(2)(d); 64 and 76(4)(c) of the PFMA, further read with section 217(1) of the Constitution. He was sentenced to a fine of R150,000 or three-years imprisonment, of which R100,000 or two-years imprisonment was suspended for a period of five years on certain conditions.

Discussion: The appellant testified that he secured Hoffe Park because it catered for everything that the department needed. There had been issues with disparities in the meals that the students received and the students were mostly young women and he had received concerns about their safety. He contended that the rental was value for money because the students received three meals per day, had access to wi-fi, received laundry services and were provided with security. The appellant, however, did not impress the trial court as a credible witness. The court held that the application of the normal procurement process ought to have been first explored to test the market prior to the deviation being employed as this would have fortified transparency with the resultant value for money. The trial court was displeased with the process the appellant embarked upon and labelled it unfair to other potential bidders.

Findings: The trial court found no fault in the wording of the charge and held that section 86(1) of the PFMA is a crime-creating provision. It rejected the argument that the NPA was statutorily barred from prosecuting the appellant for the offences he allegedly committed. The fact that there was a need to accommodate the students did not warrant that the procurement processes be flouted. The deviation the appellant embarked upon smacks of impropriety and illegality. There had been no proper service level agreement which described the quality of additional services such as catering, cleaning, laundry, and security in detail and the price. There was no proper control on how the service provider invoiced the department and the provider did so at his whim. Where there is a deviation from inviting competitive bids, the involvement of the Supply Chain Management Unit (SCM) in the procurement process is unavoidable. The lack of involvement of the SCM signalled ostensible irregularity and must have alerted a conscientious and vigilant accounting officer to the inappropriateness of the transactions. The appellant was grossly negligent.

Order: The appeal is dismissed.

PHATSHOANE DJP (STANTON J concurring)

Facts: PM Manufacturing (respondent) is in the plastic injection and blow moulding industry. It manufactures products such as car battery cases, cables, cable connectors for mines, street lights, agricultural bottles, children scooters and water meters. It runs a continuous 24-hour operation per day arising from the necessity to ensure the continuous running of moulding machines, failing which a disruption may cause extensive losses in production. Some of the employees went on an unprotected strike in 2019 after being told that the payment of full bonuses was not going to be possible due to the respondent’s dire financial situation. The respondent issued three written ultimatums and verbal ultimatums during the day. The individual applicants (16 of them) later refused to sign final written warnings and were dismissed.

Application: The individual applicants as represented by NUMSA, seek an order that their dismissals by the respondent on account of their participation in the unprotected strike action be declared procedurally and substantively unfair.

Discussion: The business had not been doing well and the respondent had introduced short-time some years previously. The notice to employees that bonuses would not be paid at the end of the year was what triggered the strike. An undertaking was made to pay bonuses or at least 50% thereof should orders and revenue improve. One of the shop stewards adopted an aggressive stance, stating that the employees “wanted all or nothing’” and in the process threatened strike action if the employees did not receive full bonuses. Against the facts and background leading to the respondent’s decision not to pay the bonuses, it cannot be said that there was any provocative conduct on the part of the respondent. The individual applicants chose to embark on an unprotected strike action even after the financial director had on various occasions reiterated why the bonuses could not be paid.

Findings: The seriousness of the misconduct ought to be assessed against the fact that once they had reported for duty, excluding those that were not meant to be on the morning shift, they had then abandoned the machines which were left running unattended at great financial expense to the respondent. They were further aware at the time that there were urgent orders that needed to be loaded into trucks and delivered to clients, and yet abandoned their duties which were then carried out by other personnel. The applicants can also not seriously contend that the decision to dismiss them was made hastily and with mala fides. Three ultimatums were issued to them which they had ignored, together with verbal pleas from the financial director that they should go back to work whilst attempts were to be made to ensure that some form of bonus was paid. Rather than accepting the final written warnings and going back to work, the individual applicants adopted a posture that they had done nothing wrong to deserve that sanction. Effectively, the individual applicants elected to be dismissed.

Order: The dismissal of the individual applicants was procedurally and substantively fair. There is no order as to costs.

TLHOTLHALEMAJE J

Facts: The applicant’s entire cause of complaint arose from what can only be described as an extremely rocky relationship between Kellerman, who was employed as a farm manager by the Department, and one of his subordinates, being Engelbrecht. Kellerman was a white person, whilst Engelbrecht was a coloured person. The documentary evidence shows a strained relationship between them, with each of them lodging several grievances against the other. The applicant has pleaded that the conduct of the Department is tantamount to unfair discrimination in terms of sections 6(1) and 6(3) of the Employment Equity Act 55 of 1998. The harassment alleged by the applicant to constitute the basis for the unfair discrimination relates to Kellerman falsely being accused by a subordinate as being a racist, and the Department having failed to reasonably deal with a complaint raised by Kellerman and Solidarity in this regard. Further, according to the applicant, the conduct meted out to Kellerman by the particular subordinate constituted harassment in general, was arbitrary conduct, and as such constituted discrimination.

Application: The applicant has instituted a claim against the respondents, alleging that the individual applicant has been discriminated against by the respondents, based on harassment, as contemplated by section 6(3) of the Employment Equity Act (EEA). The ground of discrimination was, in essence, that false accusations of being racist were levelled against Kellerman by one of his subordinates, and despite the Department being requested to intervene and decisively deal with the subordinate, the Department failed in its duty in this regard.

Discussion: Save for the single contention that Engelbrecht falsely accused Kellerman of being a racist, there is nothing pleaded to indicate that what happened between Engelbrecht and Kellerman was based on race or because of race. There was no case pleaded and made out that Engelbrecht behaved towards Kellerman as he did, because he was coloured and Kellerman was white. Also, no such case was made out in Kellerman’s own testimony in court. Because the conduct of Engelbrecht is inexplicable and undoubtedly irrational, it was considered by Solidarity and Kellerman to be arbitrary, and thus someone needed to be blamed. That may well be, but this does not make it arbitrary as contemplated by "arbitrary conduct" under the EEA for the purposes of establishing discrimination. There is no pleaded case, nor is there any case made out in Kellerman’s evidence in court, that Engelbrecht’s behaviour towards Kellerman was somehow connected to Kellerman as a person or was due to his personal attributes, beliefs, characteristics or persuasions. Thus, whilst the behaviour of Engelbrecht may be arbitrary, it does not meet the requirements of arbitrary conduct necessary to establish discrimination.

Findings: The applicant was simply equating arbitrariness to discrimination. Not everything bad, inexplicable or irrational that may happen to an employee is always discrimination. It is essential that to succeed with a discrimination claim, a claimant such as Kellerman must establish a direct and proper nexus between that which is bad, and either the listed grounds in section 6(1) of the EEA or the person of the claimant (meaning personal attributes or characteristics). Bald assumptions are not sufficient. It can hardly be said that the Department was somehow shielding or advantaging Engelbrecht, to the detriment of Kellerman. As Kellerman himself had to concede in evidence, whenever he raised a grievance about Engelbrecht, it was dealt with. As opposed to this, Kellerman was never disciplined, nor was any kind of action taken against him, because of the grievances raised by Engelbrecht. This situation is inconsistent with the notion that the Department was not attending to the complaints by Kellerman, and somehow favouring Engelbrecht. The applicant has failed to discharge the onus to provide sufficient evidence to even establish a prima facie case that Kellerman had been discriminated against in the form of harassment on an arbitrary ground. In this respect, the applicant has failed to make out a prima facie case that the harassment in this case, even if accepted to exist, was based on discrimination.

Order: The respondents’ application for absolution from the instance is granted. Absolution from the instance is granted in respect of all of the claims as contained in the statement of claim.

SNYMAN AJ

Facts: The applicant is in the business of logistics and related activities. The employees are all employed by the applicant in various capacities, and are all members of a registered trade union, DETRUSA. The relationship between the applicant and DETRUSA is a rocky one. The real problem is the dissatisfaction on the part of DETRUSA and the employees with the applicant’s Chief People Officer, Mathebula. In this regard, a document called a "mass grievance" was sent to the applicant. In this grievance document, it was stated that employees not in management were being disciplined for what was negligible infractions, whilst those employees in management positions were never disciplined for even serious transgressions. The applicant disputed that there was any misconduct by Mathebula deserving of action. DETRUSA sent a second mass grievance to the applicant. In this grievance document, specific demands were articulated. It was demanded that Mathebula be suspended and investigated, failing which a dispute will be pursued to the NBCRFLI. The applicant, again, found that the allegations levelled against Mathebula to be unfounded and without merit.

Application: DETRUSA referred a dispute the NBCRFLI. The only finding of importance in the arbitrator’s ruling is her finding on the issue of the demands by DETRUSA and the employees being unlawful. According to the arbitrator, only the Labour Court could decide whether the demands are lawful or unlawful. Having received the certificate of failure to settle, DETRUSA issued the applicant with a notice of its and the employees’ intention to commence with strike action at all the premises of the applicant. Two issued were identified therein. First, it was stated that the applicant’s management had unreasonably refused to comply with the applicant’s disciplinary code in that it failed to suspend and investigate Mathebula because of Mathebula’s "serious disciplinary infractions", as they demanded. The second issue was the applicant’s alleged selective disciplining of employees. The applicant brought an application to interdict the strike action by the respondents.

Discussion: The applicant has based its case on two contentions. First, it contends that the issue in dispute concerning the demand to suspend and investigate Mathebula was an unlawful demand, and thus strike action was unlawful. Second, it contends that the demand pertaining to selective application of discipline was a rights issue, subject to arbitration or adjudication, and thus strike action was prohibited by virtue of section 65(1)(c) of the Labour Relations Act 66 of 1995. The substantive limitations to the right to strike in section 65 of the LRA are defined by way of specific reference to what is called the "issue in dispute" forming the subject matter of the strike, which includes a demand. Importantly, this includes that strike action is not permitted where the person is bound by a collective agreement that prohibits a strike in respect of the issue in dispute or requires the issue in dispute to be referred to arbitration, or the issue in dispute is one that a party has the right to refer to arbitration or to the Labour Court. Although not specifically said in section 65, the issue in dispute must not concern a demand that is unlawful. For a trade union or employees to demand that an employee be dismissed, and this demand then forms the basis of contemplated strike action, it would principally not be a lawful demand, as it would require the employer to contravene the provisions of the LRA.

Findings: There is a consistent and repeated demand by DETRUSA and the employees that Mathebula must be suspended, without more. This demand does not include that he must be suspended fairly. The demand is that he must simply be suspended, without any pending disciplinary proceedings. And to make it worse, other than some bald contentions of Mathebula allegedly intimidating employees, acting dishonestly and making hurtful statements, no evidence whatsoever is provided to support these contentions. In the absence of a proper substantive cause for the suspension of Mathebula being shown by DETRUSA and the employees to exist, the court must accept that to simply suspend him would be unfair, rendering the demand that he must be suspended unlawful, and strike action in support of the same is prohibited. DETRUSA has failed to make out any case of the existence of inconsistency. The whole case of inconsistency is again founded on making bald, unsubstituted and general allegations.

Order: A rule nisi is issued calling upon the respondents to appear and show cause why a final order should not be granted. Pending the return date, the demands made by the respondents are unlawful, rendering the strike unprotected. The respondents are interdicted and restrained from participating in any unprotected strike.

SNYMAN AJ