CAN THE HIGH COURT REVIEW DISMISSALS FROM EMPLOYMENT?

Friday, August 14, 2009
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1. On dismissal, employees must follow the procedures and remedies set out in the Labour Relation Act, 1995 (“LRA”). They cannot seek to review their dismissals in the High Court.

2. The question of the jurisdiction of the High Court was recently considered by the Supreme Court of Appeal (“SCA”) in Transman v Graham Dick & another (147/2008) ZASCA 38 (“Transman”). Transman applied the decision of the Constitutional Court in Chirwa v Transnet Ltd & others [2008] 2 BLLR 97 (CC) (“Chirwa”), which held that the High Court does not have jurisdiction to adjudicate dismissal disputes, and that such disputes are not administratively reviewable under the common law and the Constitution. 

Transman

3. Prior to being dismissed, the employee was a director and chairman of the board of Transman (the employer).  During 2005, allegations of misconduct were made against the employee. On 15 August 2005, he was suspended, pending the outcome of an investigation into the allegations.  He was later charged with 13 counts of misconduct and appeared before a disciplinary enquiry chaired by the second respondent (the chairperson). 

4. On 10 March 2006, he was found guilty of misconduct on some of the charges. His employment was terminated. 
The High Court Application
5. The employee approached the High Court seeking to review and set aside Transman’s decision to dismiss him on the basis that  the Chairperson: had acted unreasonably, since she could not reasonably have reached the outcome she arrived at on the basis of the evidence before her; had displayed a biased attitude; and was aware that the enquiry had been initiated for an ulterior motive and unlawful purpose, which indicated that she had not applied her mind in a judicial manner to the disciplinary proceedings. 

6. Transman objected to the court’s jurisdiction on the basis that, the Labour Court, in terms of section 157(1) of the LRA, was vested with exclusive jurisdiction over such disputes.  Transman contended that the verdict and the termination of the employment were not susceptible to review, as those decisions did not constitute administrative action.

7. However, the court found that it did  have jurisdiction to adjudicate the dispute and that the employee’s cause of action was administrative in nature.  The court based its finding on the entitlement of courts to review the proceedings of domestic tribunals, reasoning that the decision of the chairperson could be reviewed and set aside in the same way as administrative action.  The court set aside the verdict of guilty and replaced it with a verdict of not guilty.  Strangely, it did not set aside the dismissal.

8. The court held further that its power to review the chairperson’s decision derived from an assumption that there was an implied term in the employee’s employment contract that he be afforded a pre-dismissal hearing.  This right to be heard could be sourced in the common law or a statute regulating the employment relationship between the parties. The court relied on Old Mutual Life Assurance Company SA Ltd v Gumbi 2007 (5) SA 552 (SCA) (“Gumbi”), which developed the common law (in accordance with section 39(2) of the Constitution) to include an implied right to a pre-dismissal hearing. 
9. Although categorising the claim as contractual, the court did not confine the relief to the alleged unlawful breach of the employment contract – it decided the matter as if it were administrative action and set aside the chairperson’s verdict as grossly unreasonable in terms of the common law review standards.
The Supreme Court of Appeal (SCA) judgment
10. In the SCA, Transman raised three issues:
10.1 whether the court had jurisdiction to adjudicate the matter;
10.2 whether the review sought by the employee was competent in the light of the nature of the internal disciplinary decision; and
10.3 whether the employee made our a case for a pre-dismissal hearing based on the employment contract.

Jurisdiction

11. The SCA pointed out that administrative action disputes are justiciable by the High Court. Chirwa settled the controversial question of whether it could ever be said that an unfair dismissal could give rise to a violation of administrative justice rights.  The effect of Chirwa was that civil servants in dismissal disputes do not have two causes of action, where they contend that the second cause of action is based on section 33 of the Constitution or section 6 of the Promotion of Administrative Justice Act, 2000. Chirwa prohibits the use of review process in challenging the validity of a dismissal from employment (though a cause of action based on a contractual breach is still permissible). 

12. Although the employee’s claim was incompetent, the SCA held that this was immaterial in determining jurisdiction.  In review proceedings, the High Court unquestionably has jurisdiction.  The categorisation of the cause of action should therefore not be conflated with jurisdiction.  In this regard, the SCA confirms the principle in Fraser v ABSA Bank 2007 (3) SA 484 (CC) that the merits of a claim cannot determine whether a court has jurisdiction to hear it. 

Relief

13. The SCA held that the competence of the review depended on whether the verdict and termination of employment were administratively reviewable. Chirwa made clear that the decision could not be reviewed in terms of section 33 of the Constitution or PAJA. It had to be determined whether the relief claimed was competent in terms of the common law.  The High Court assumed that it was, and invoked the common law standard of gross unreasonableness in setting aside the chairperson’s verdict. 

14. The SCA, applying the decision of the Constitutional Court in Pharmaceutical Manufacturers Association of SA & another: In re ex part President of the Republic of South Africa & others 2000 (2) SA 674 (CC), held that the review procedure in terms of the common law did not exist side-by-side with the system entrenched in the Constitution: and all law, including the common law, derives its force from the Constitution and is subject to its control. 
15. Therefore, the SCA found that Chirwa effectively barred the employee from seeking to review his dismissal in the High Court, and it would be equally incompetent to grant this relief at common law.  The SCA pointed out, at paragraph 23, that: that “our common law has always drawn a clear line of distinction between the branches of law which govern employment matters on the one had, and administrative action on the other”.
16. However, parties can still incorporate administrative law requirements into their employment agreements.  The SCA held that the failure to comply with these requirements would be a breach of contract and ordinary contractual claims would be available. This would not convert a contractual claim into an entitlement to judicial review on any of the grounds recognised in law.  This means that a dismissal can still not be reviewed as if it were administrative action.  The SCA concluded that there was no need to permit a challenge based on judicial review in employment dismissals.

Pre-dismissal hearing

17. The SCA held that the High Court’s reliance on Gumbi was misplaced, as that decision was delivered after the cause of action in the present matter arose. The employee argued that his entitled to a second hearing before his employment was terminated arose from an implied term of the employment agreement. However, the SCA held that he failed in his duty to plead a contractual claim and to provide facts from which to infer the contended tacit term. There was no basis to import such term into his contract.

18. The appeal was upheld with costs. 

Conclusion

19. Transman held that, although the High Court has jurisdiction to entertain administrative reviews, dismissals from employment cannot be challenged by means of review. 

20. However, in terms of section 157(2) of the LRA, the High Court still enjoys concurrent jurisdiction with the Labour Court to exercise jurisdiction over a review application where the litigant alleges a violation of a constitutional right.  This was reiterated in a recent unreported judgment of the Cape Provincial Division (Mortimer, NL v Municipality of Stellenbosch & another, case no 18243/2008). In this matter, Gauntlett AJ held, at page 15, that, when there is a dispute whether a case properly falls within section 157(1) or 157(2), a court must establish whether the dispute referred and the relief sought are matters regulated by the LRA, and whether they fall within the exclusive jurisdiction of the Labour Court.  “(T)he Court will have to put substance over form, bear in mind the danger of tactical contrivance in the presentation of cases, and apply, if necessary, the criterion of substantiality to matters where certain facts may point in one direction and others in another”. 

21. There is also jurisdiction for both the High Court and Labour Court where the cause of action is a breach of contract, provided that the dispute is not characterised as a matter falling within the exclusive jurisdiction of the Labour Court.