Case  CCT270/20
[2021] ZACC 14

Judgement Date: 17 June 2021

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Thursday, 17 June 2021 at 10h00, the Constitutional Court handed down judgment in in an application for leave to appeal against the judgment and order of the Labour Appeal Court, Cape Town (hearing an appeal from the Labour Court, Cape Town). The matter concerned a dismissal dispute and an award of compensation in respect of an unfair dismissal within the context of sexual harassment. The crisp questions before the Constitutional Court were whether the Labour Court and Labour Appeal Court erred in not reviewing the compensation; whether it could interfere with the award of compensation; and whether the award of six months’ compensation was appropriate in the circumstances.

The applicant in the main application, Dr McGregor, was employed as Head of Anaesthesiology at George Hospital, Department of Health, Western Cape (Department), the third respondent, until he was dismissed following an internal disciplinary inquiry which found him guilty of four charges of sexual harassment. Each of the incidents on which the four charges were based involved a newly qualified medical practitioner, thirty years Dr McGregor’s junior, who was completing an internship under his supervision.

Dr McGregor lodged an internal appeal against the dismissal, which was dismissed. Aggrieved, he referred an unfair dismissal dispute to the Public Health and Social Development Sectoral Bargaining Council (the first respondent), challenging both the substantive and procedural fairness of the dismissal. The arbitrator (the second respondent) found him guilty of three of the four charges. However, the arbitrator concluded that the dismissal was substantively unfair, because he had not been treated the same as another employee facing similar charges, and that it was procedurally unfair because certain evidence had been excluded during the disciplinary hearing. The arbitrator, exercising his discretion in terms section 193(1)(c) of the Labour Relations Act, awarded Dr McGregor compensation amounting to R924 679.92, equivalent to six months’ remuneration.

Dr McGregor applied to the Labour Court seeking reinstatement. The Department brought a counter-review application in which it sought the review and setting aside of the findings of procedural and substantive unfairness and the award of compensation. The Court found that the procedure adopted at the disciplinary inquiry was unfair. Nevertheless, it found the dismissal to have been substantively fair. Although it varied the arbitration award, from which the compensation flowed, the Court dismissed the Department’s cross-review application and declined to set aside or modify the compensation.

Dr McGregor approached the Labour Appeal Court, seeking an order that his dismissal was substantively unfair and again, seeking reinstatement. The Department raised a cross-appeal in which it averred that the Labour Court had erred in not revisiting the compensation. The Labour Appeal Court, like the Labour Court, found the dismissal to have been procedurally unfair but substantively fair. However, notwithstanding that counsel addressed the Court in terms of the Department’s cross-appeal, the Labour Appeal Court said that “the Department has not cross-appealed against the finding of procedural unfairness or the award of compensation”. On this basis, it refused to revisit the award of compensation.

Dr McGregor finally approached the Constitutional Court to have it confirm that the dismissal was substantively and procedurally unfair, and to order his reinstatement. He submitted that he was falsely accused of sexual harassment and his dismissal was littered with procedural irregularities. Accordingly, he submitted that his dismissal implicated his rights to fair labour practices under section 23 of the Constitution and to a fair and impartial hearing in terms of section 34.

The Department lodged a cross-appeal on the basis that the Labour Court erred in failing to review the compensation award where it should have, and the Labour Appeal Court erred in failing to address the cross-appeal, where it had been addressed on the question of compensation. The Department submitted that the matter raised an arguable point of law of general public importance which ought to be considered by the Constitutional Court, thus engaging its jurisdiction in terms of section 167(3)(b)(ii) of the Constitution. The thrust of the Department’s case was that the arbitrator had awarded the particular amount of compensation on the findings of procedural, as well as substantive, unfairness. Thus, it ought to follow that the compensation should have been revisited, and reduced, when the Labour Court overturned the finding of substantive unfairness. In response to this, Dr McGregor averred that because the procedural irregularities were, in his view, egregious, he remained entitled to the compensation awarded.

The matter was determined on the papers without an oral hearing.

The Constitutional Court, in a unanimous judgment penned by Khampepe J (Mogoeng CJ, Jafta J, Madlanga J, Majiedt J, Mhlantla J, Pillay AJ, Theron J, Tlaletsi AJ and Tshiqi J concurring) dismissed Dr McGregor’s application for leave to appeal on the basis that, whilst it engaged the Court’s jurisdiction, it was not in the interests of justice to grant leave. His application constituted a factual dispute and lacked reasonable prospects of success. The Department’s applications for leave to cross-appeal and condonation were, however, granted as the inexplicable failure of the Labour Appeal Court to adjudicate upon the cross-appeal gave rise to constitutional issues that struck at the heart of legality and the rule of law. It was therefore, in the interests of justice to grant leave.

Whilst the Constitutional Court recognised the importance of protecting employees from unfair dismissals and upholding the constitutional right to fair labour practices, the Court emphasised that compensation in respect of unfair dismissals is always discretionary. And, although the Labour Relations Act, through the operation of sections 193(1)(c) and 194(1), provide for the award of compensation in the event of an unfair dismissal in view of the fact that what is at stake is a person’s livelihood, compensation is never guaranteed.

The Constitutional Court noted that a court of appeal will not easily interfere with another court’s exercise of discretion exercised in terms of section 193(1)(c). However, where a court has materially misdirected itself, intervention by an appeal court may be warranted. In these circumstances, the Constitutional Court was satisfied that the required grounds existed to enable it to interfere with the quantum of compensation awarded by the arbitrator in terms of section 194(1). The Constitutional Court found that the Labour Court had failed to exercise its discretion to review the compensation in circumstances where it should have, having overturned the finding of substantive unfairness. It had misconstrued the Department’s case. And it had not applied itself to the relevant facts and legal principles. Similarly, the Labour Appeal Court had ignored the Department’s cross-review in circumstances where it was legally required to consider it.

Finding that it was competent to interfere with the award of compensation, the Constitutional Court set out certain factors which inform the determination of what amount of compensation would be appropriate in the circumstances. The Court noted that it was materially relevant that the dismissal was only procedurally unfair; the nature and extent of the Department’s deviation from procedural fairness was of no major consequence; and, Dr McGregor was guilty of three charges of serious sexual misconduct.

Importantly, the Constitutional Court found that the appropriateness of compensation must always be understood within the context of the dismissal, in this case, sexual harassment. This is important because the Constitution not only seeks to protect employees’ rights to fair labour practices. It envisages a constitutional democracy founded on the explicit values of human dignity, integrity and the achievement of equality in a non-sexist society. The Court emphasised that sexual harassment, like in this case, strips away at the core of a person’s dignity and is the antithesis of substantive equality in the workplace. The Court also recognised that sexual harassment promotes a culture of gender-based violence and reflects insidious power relations that prevail across South African society. Thus, the Court found that this case called for an unequivocal message to be sent, which is that employees who perpetrate sexual harassment in the workplace do so at their peril and should expect to face the harshest penalty. Accordingly, the Constitutional Court reduced the award of compensation to an equivalent of two months’ remuneration.

The Full judgment  here [Judgment Recording(via Court Youtube Channel)]