Workplace Bullying – Can You Claim Constructive Dismissal?

Workplace Bullying – Can You Claim Constructive Dismissal?

“…it has been suggested that bullying refers to any unfavourable or offensive conduct on the part of a person or persons, which has the effect of creating a hostile workplace environment… In these terms, bullying includes a wide range of insulting, demeaning or intimidating behaviour that lowers their self-esteem or self-confidence of an employee” (quoted in the judgment below)

An employer may be tempted, when an employee resigns, to breathe a sigh of relief and think “great, I got rid of a problem without having to jump through all the hoops of a disciplinary enquiry/retrenchment process”.

Not so fast! One of the protections our law provides to employees is the “constructive dismissal” concept, and every employer and employee should understand what that is, and how it works in practice.

The 3 requirements to establish a constructive dismissal

A recent Labour Court decision sets out the requirements thus –

  1. The employee must have terminated the contract of employment,
  2. The reason for termination must be that continued employment had become intolerable for the employee (to be determined objectively, the employee bearing the onus of proof), and
  3. It was the employer who made continued employment intolerable.
Two special needs teachers resign after workplace bullying
  • Two special needs teachers were employed by an independent school, registered with the department of education and catering for learners affected by autism spectrum disorder.
  • They resigned on a month’s notice but then asked the CCMA (Commission for Conciliation, Mediation and Arbitration) to declare that they had been unfairly dismissed.
  • The CCMA found on the evidence presented to it by the employees (the employer chose not to attend the hearing nor to lead any evidence) that constructive dismissals had taken place, a finding confirmed by the Labour Court on review.
  • The teachers testified to a litany of bullying behaviour by their employer, such as unauthorised/unlawful deductions from their salaries, unreasonable/unlawful demands on them, use of abusive and offensive language when dealing with them, sexual innuendos, sexual harassment, sexual orientation discrimination, the making of disparaging and derogatory remarks, undermining and belittling them, embarrassing and humiliating conduct, and impairment of their constitutional right to dignity – in front of them and/or their work colleagues and/or in public places.
  • “In short”, held the Court, “what the evidence discloses is a workplace operated by a narcissistic personality whose offensive and unwelcome conduct had the effect of creating a toxic working environment in which discrimination, degradation and demeaning behaviour became the norm. I have no hesitation in finding that the nature and extent of the workplace bullying suffered by the [employees] was such that for the purposes of [the Labour Relations Act], their continued employment was rendered intolerable.”
  • The end result is that the employer must pay the two employees compensation amounting to four/six months’ remuneration respectively (the Court indicating that higher awards would have been considered if applied for on review), plus legal costs on the punitive attorney and client scale.

Two other things to bear in mind in a constructive dismissal claim were addressed in this matter…

The need to “exhaust all internal remedies” first

“Generally speaking”, as the Court put it, “an employee is required to exhaust all possible internal remedies prior to resigning and claiming a constructive dismissal.” Only where the available channels for raising a grievance “are ineffective or where on the facts it would be futile for the employee to resort to a grievance procedure, an employee is not necessarily precluded from claiming constructive dismissal.”

In this particular case, although the two teachers did not follow the grievance procedures set out in their contracts of employment, the Court held that this channel had not been open to them as the “immediate manager/director” to whom they were supposed to direct their grievances was the very person they were complaining about.

As an employee however, the general rule is this – follow whatever internal grievance procedures apply in your workplace or you could lose your claim.

Is “working your notice” inconsistent with constructive dismissal?

The employer argued that the teachers’ willingness to work out their month’s notice periods was “incompatible with any notion of intolerability of future employment”. Not so, held the Court, the teachers were acting “out of their sense of duty towards the learners in their care, and the need for a smooth transition so as to minimise any harm that might be caused to them.”

Employees should however be careful here – without such special circumstances a willingness to work out a notice period could well be taken as proof that your working conditions are not as intolerable as you claim.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Cannabis in the Workplace: Can You Dismiss?

Cannabis in the Workplace: Can You Dismiss?

A recent CCMA (Commission for Conciliation, Mediation and Arbitration) ruling, in which an employee’s dismissal for smoking cannabis before work was set aside and he was re-instated, has garnered a lot of media attention.

Unfortunately, some of the resultant articles and headlines may have given the inaccurate impression that employees are now free to report for duty under the influence of the intoxicant. In fact, although the employee in question was indeed re-instated, he was still held to be in the wrong, and sanctioned with denial of back pay and a 12-month final written warning. 

Moreover, a previous (2018) CCMA ruling had confirmed the dismissal of employees in broadly similar circumstances. 

It seems that each case will be treated on its own merits so let’s compare the facts in these two matters –

2018: Dismissal upheld
  • Employees in a particularly dangerous workplace environment (involving heavy machinery, vehicles, and timber and hence a risk of fatality), had a zero-tolerance policy when it came to workplace safety and substance abuse. 
  • All employees were tested for cannabis use and four who tested positive were dismissed after admitting that they had smoked the drug at home. They knew of the zero-tolerance policy and of the dismissal risk for contravening it.
  • Their dismissals were upheld by the CCMA as being an appropriate sanction in the circumstances. 
2020: Dismissal too harsh
  • An employer’s Code of Conduct and Discipline prohibited anyone from working under the influence of alcohol or drugs, a policy strictly enforced as a compliance issue under the Occupational Health and Safety Act. The Code recommended dismissal for even a first offence.
  • An employee (a “picker” in a cosmetics and fragrance business) arrived late for work with red and watery eyes, tested positive for cannabis use and admitted having smoked a “zol” (cannabis cigarette) some two hours before reporting for work.
  • After a disciplinary hearing he was dismissed, but the CCMA re-instated him on the basis that although he had tested positive for cannabis there was no evidence that his ability to perform his work had been affected. Indeed, his employer had allowed him to remain at work that day, albeit in a “safe” environment. “The problem with a charge of being under the influence of drugs” said the Commissioner “is that there has not been any scientific method of determining whether a person is under the influence of the drug such that there is an impairment in their performance.”
  • “In the circumstances dismissal was too harsh and was not an appropriate sanction”. As mentioned above the employee was not let off the hook but his sanction was reduced from dismissal to loss of back pay and a final written warning. This on the basis that he was aware of the policy prohibiting the use of drugs on duty and “It was irresponsible to take a substance that may have the ability to impair his mental or physical abilities.”

Clearly every case will be different, but at the very least employers should have in place workplace policies appropriate to their particular business conditions and requirements.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Our Brave New World: Using Zoom for Retrenchment Consultations

Our Brave New World: Using Zoom for Retrenchment Consultations

“O brave new world” (Shakespeare)

The COVID-19 pandemic will doubtless lead to many new developments on the legal front.

For example, with widespread employee retrenchment now an unfortunate reality in our struggling economy, all employers, employees and trade unions should know of an important new Labour Court decision validating the use of remote conferencing for the retrenchment consultation process. 

The consultation process, rudely interrupted
  • An employer decided in January 2020 that it needed to restructure its business operations, which prompted it to contemplate dismissal of employees based on operational requirements. 
  • The next step in terms of the Labour Relations Act was to enter into a meaningful consultation process with employees and/or their representatives, aimed at discussing and seeking consensus on possible alternatives to retrenchment, minimizing dismissals, severance pay etc. 
  • This being a large scale retrenchment proposal the employer issued a formal notice inviting consultation and requested facilitation of the consultation process. A facilitator was appointed and several physical meetings were held. 
  • Before the final consultation meeting could be held however the process was rudely interrupted by the declaration of a National State of Disaster and the consequent lockdown and restrictions on gatherings. 
  • The Commission for Conciliation, Mediation and Arbitration (CCMA) proposed methods by which the process might continue, including usage of Zoom, but the trade union in question refused to participate via Zoom and the employer proceeded with the meeting in its absence. 
  • When the employer then issued notices of retrenchment, the union applied urgently to the Labour Court to declare the process procedurally unfair.
Our “new normal”

“With the advent of the outbreak of the Covid-19 pandemic, the “new normal” presented itself” (extract from Labour Court judgment)

Commenting on the irony of the union complaining about “the efficacy and reliability” of Zoom whilst using it to make its own urgent application to court, and noting that the facilitator, with “powers to make a final and binding ruling on procedure”, was not averse to using Zoom for the meeting, the Court found that the union had refused to participate in the consultation process through no fault of the employer’s. 

As the Court put it: “With the new normal – lockdown period during Covid-19 pandemic – zoom is the appropriate form in which meetings can take place. What is involved in this period is the health and safety issue … It is a necessary tool to ensure that restrictions like social distancing as a measure to avoid the spread of the virus are observed.”

Accordingly there was no procedural unfairness and the union’s application was dismissed. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Unemployed, Can’t Pay Bond and Credit Instalments? “Credit Life Insurance” May Save You

Unemployed, Can’t Pay Bond and Credit Instalments? “Credit Life Insurance” May Save You

If you are one of the many employees retrenched or put on short pay or unpaid leave as a result of the COVID-19 crisis and lockdown, you will be wondering how to cover the monthly instalments on your mortgage bond and other credit agreements. You have no doubt heard of the “payment holidays” banks are offering, but remember that although these are a lot better than losing your house, car etc, they are no free lunch. Interest and fees will still be building up.

Credit life insurance is not just death cover

That’s why you need to check right now whether or not any of your credit agreements are covered by “credit life insurance”. Many people don’t even realise they have this cover in place, and those that do may look at the “life” part of the name and think “well that’s no good to me or my family, I’m unemployed not dead”. The good news there is that most policies cover a host of other events leaving you unable to pay instalments – see below for more.

Do you have cover?

You may well have this cover in place without even realising it because it is commonly required when you take out any form of credit – think mortgage bonds, vehicle finance, credit cards, retail credit (store cards etc) and so on. 

If you aren’t sure, check your latest bond or credit statement for any sign of an insurance premium deduction (it may be called “balance protection” or the like). Then contact the bank (or whichever credit grantor you are with) and ask them to check. You may not have it for example if at the time you ceded another life policy to the credit grantor.

What are you covered for?

Check what the terms of your particular policy are, but the minimum cover required by National Credit Act Regulations (which only affect credit agreements entered into on or after 9 August 2017) is –

  • Death or permanent disability: The outstanding balance of your total obligations under the credit agreement is covered.
  • Unemployment or inability to earn an income: You are covered until you find employment or are able to earn an income, with a maximum of 12 months’ instalments. 
  • On temporary disability: You are covered until you are no longer disabled, with a maximum of 12 months’ instalments.

Exclusions – the Regulations allow a long list of exclusions to be incorporated in your policy so check which apply to you. Most of them are common sense – for example lawful dismissal, retirement or resignation from employment – but if you are told that a particular exclusion applies to you and you don’t agree ask your professional advisor for advice before conceding anything. Employers may be able to assist in this regard when structuring crisis outcomes with staff, but remember to do so only after taking your own legal advice! 

Self-employed people and pensioners should check what cover they have under their particular policy, and what terms apply to them.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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COVID-19: Small Businesses, Employment Laws, and Survival Support

COVID-19: Small Businesses, Employment Laws, and Survival Support

“The secret of crisis management is not good vs. bad, it’s preventing the bad from getting worse” (Andy Gilman)

We can only guess at how the COVID-19 coronavirus outbreak will end, but let’s all take whatever concrete steps we can right now to lessen its impact on our personal lives, on our businesses, and on our country. 

One of those steps is for businesses to find ways of continuing to operate as normally as possible, given of course the exceptional times we are living through. And as employers, many businesses will find themselves facing some novel challenges, particularly during the National Lockdown…

Small businesses – the new relief programs

A whole raft of support and relief programs has been announced. Some still need to be finalised and the situation is changing daily, so keep an eye on the media and incorporate into your business survival plan all relief channels you think may be open to you. At date of writing, these are the main ones –

  • The DSBD (Department of Small Business Development) will provide relief to businesses in several categories. Call the DSBD on its 0860 663 7867 hotline or email [email protected] to see if you quality. Apply at https://smmesa.gov.za/.
  • The DTI (Department of Trade and Industry) is set to provide relief for large businesses as well as small. Keep an eye on the DTI’s website for developments.
  • The Solidarity Fund has been set up with R150 million from the government to, amongst other things, assist and support those affected (contact details here).
  • Employer and employee relief: Access the “Easy Guide for employers on COVID19” here and read up on the “Temporary Employer/Employee Relief Scheme” and UIF benefits from a special R30bn National Disaster Benefit Fund. Confirmation that employees who fall victim to the virus will be paid through the Compensation Fund – details here.
  • Other funds and relief measures: The Rupert and Oppenheimer families have pledged R1 billion each to help struggling small businesses and employees – the details are not available at date of writing. Read the President’s speech here for more on planned or implemented measures involving tax relief, changes to the Competition Act, a fund to support the tourism sector, and more.
Employers – comply with the law! 

From a legal perspective, employers in particular need to have a solid action plan in place to ensure that they comply with all our many employment laws, which will continue to apply as is, unless and until government announces any new measures to the contrary.

Detailed planning will not be easy. With the situation changing daily, keep informed of developments and keep all your plans flexible.

In any event there is unfortunately no “one size fits all” answer to questions like “Can I dismiss an employee who tests positive for COVID-19?”, “Can my employees insist on working from home?”, “Can I start retrenching?”, “Can I prohibit employees from travelling abroad for personal reasons?”, “What steps must I take to ensure a safe working environment and what rules can I put in place to underpin them?”.

The list is endless and the answers to these questions will depend upon your Lockdown exemption status, your particular employment contracts, business circumstances, operational needs, and so on. 

Your employee action plan

We need to get used to constant change and uncertainty, but there are steps you can take now to plan for as many eventualities as possible – 

  1. As a start, incorporate into your “COVID-19 Business Plan” all the possible scenarios you can think of, both during the National Lockdown and after it ends.
  2. Then brainstorm – with your employees where you can – a list of all the employment-related problems you and they might face. Use that in turn to make a list of questions you will need the answers to under each scenario.
  3. Then, make sure you are fully prepared to deal with whatever may come your way by taking specific legal advice on each and every one of those questions. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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How to Stop an Ex-Director from Competing With You

How to Stop an Ex-Director from Competing With You

“…the default position is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee.  The default position however changes on resignation.” (Extract from judgment below)

What happens if relations between you and your fellow company directors sour to the extent that a director leaves? Can he or she immediately open up a new business in direct competition to you? 

A recent High Court decision both addresses that knotty question, and highlights a quick and easy solution.

Fishing for business: “Big Catch” claims R24m
  • Big Catch Fishing Tackle (Pty) Ltd markets and hosts fishing and fly fishing tours in both local and international waters.
  • The company’s two directors and shareholders fell out, culminating in one director accusing the other of serious breaches of his duties as director. 
  • Although hotly disputing any wrongdoing he resigned his directorship (under, he says, duress and coercion). He remains a shareholder. 
  • Big Catch is now suing the ex-director for some R24m in “past” and “future” damages, relying on disputed claims of improper or unlawful conduct which include the channeling away of business from Big Catch, misappropriating stock, diverting payment of commissions and acting recklessly and without authority. Whether or not these allegations will be proved eventually will only be determined when the main case finally goes to trial. 
  • What is of interest to us at this stage is Big Catch’s interim application to the High Court to interdict the ex-director and his new business (Upstream Fly Fishing) from competing with Big Catch.
Ex-director off the hook 
  • Directors have a range of fiduciary duties towards their companies. They must at all times act in good faith and in the best interests of the company. They must avoid conflicts of interest. They cannot compete with the company nor make secret profits. “The default position”, as the Court in this case put it, “is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee.” 
  • Big Catch had to convince the Court that those duties survive resignation unchanged. But, held the Court, that “default position” changes on resignation and “the director or employee does not commit a breach of his fiduciary duty merely because he takes steps to ensure that, on ceasing to be a director or employee, he can continue to make a living even by setting up a business in competition with his former company or by joining a competitor and then pursuing opportunities similar in nature to those targeted by his former company.”
  • Although a director’s fiduciary duty does indeed survive departure, “the content of that duty does not remain the same … The duty will only be breached after resignation if it involves the use of confidential information or violates an interest of the company that is worthy of protection in some other way” (emphasis supplied). 
  • In other words, a company cannot simply say “our ex-director is breaching an ongoing fiduciary duty towards us”, it must go further and actively prove a right to protection. Big Catch in this case being unable to make out its case, the Court dismissed the application with costs and the ex-director is off the hook, at least for now.
Big Catch’s big mistake – no restraints of trade

Round 1 therefore to the ex-director; a victory made easier by Big Catch’s failure to put restraints of trade in place for all its directors and senior employees. 

As the Court put it “…in the absence of a restraint of trade, the onus shifts to the director’s former company to justify the interdict both in law and in fact” and “…a company that wishes to prevent a director or employee from competing with it after resignation should either do so by way of imposing a reasonable restraint of trade or it will have to persuade a Court that it has an interest worthy of protection, such as confidential information, client lists or connections, that justifies an interdict.”

Bottom line – make protecting your company easy with restraints of trade!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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