Unfair dismissal of employees that refused to work overtime

For many years I have personally cautioned employers attending our training to be mindful of section 10 (5) of the Basic Conditions of Employment Act. This section requires that an agreement to work overtime, concluded during the first three months of employment (typically in a contract of employment), must be renewed after the first 12 months of employment. Failure to do so will render the initial agreement to work overtime to be of no effect. The subsequent dismissal of an employee for refusing to work overtime will therefore be unfair in the absence of a binding agreement.

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Summary of judgement prepared by Jan du Toit, Director at Labour Guide.

2023/03

In AMCU obo Mkhonto and Others v Commission For Conciliation, Mediation And Arbitration and Others (JR 2266/17) [2023] ZALCJHB 23 (13 February 2023), the applicant employees were charged and dismissed for gross insubordination in that they refused to obey the instruction from their Site Manager to work overtime on 29 May 2017. This was to meet production targets and it was contended that the refusal of the employees resulted in a loss of production.

Disgruntled with the dismissal of the applicant employees, AMCU referred a dispute to the CCMA which remained unresolved at conciliation and proceeded to arbitration. At the commencement of the arbitration proceedings, the commissioner summarised the issues in dispute as follows:

‘The applicant is disputing that there was a meeting. You must prove that there was a meeting. No agreement. You must prove that there was agreement. And what else? The Sanction.’ (Labour Court emphasis)

The evidence of ANDRU in this regard was that the applicant employees were bound by their respective contracts of employment to work overtime. The employer conceded that there was no agreement entered into on 25 May 2017 when he issued the instruction to work overtime on 29 May 2017; save for the fact that there was no one who objected.

AMCU’s evidence, on the other hand, was that the applicant employees did not agree to work overtime because of safety issues in terms of section 23 of the Mine Health and Safety Act (MHSA) as the water cart and grader were not working on the day in question.

The commission held that the dismissal of the applicants was substantively fair, stating:

‘… the Applicants did not disagree to work overtime when they were informed about the need and instruction to work overtime. This entails an implied or tacit agreement. Besides, the absence of explicit agreement, the Applicants have already agreed in their employment agreements that they would work overtime as and when required.’

On review, the crisp issue that was to be determined by the Labour Court was whether the employer proved the charge of insubordination and if so, whether dismissal was appropriate.

AMCU contends that the applicant employees could not have been guilty of insubordination because the instruction to work overtime was unlawful. To the extent that the employer relied on the overtime clause in the applicant employees’ contracts of employment, it was further contended that the said clause had lapsed a year after the conclusion of those contracts and thus was not enforceable.

Section 10 of the Basic Conditions of Employment Act states as follows:

‘(1) Subject to this Chapter, an employer may not require or permit an employee to work –

(a) overtime except in accordance with an agreement;

(b) more than ten hours’ overtime a week.

(1A) An agreement in terms of subsection (1) may not require or permit an employee to work more than 12 hours on any day.

(2) An employer must pay an employee at least one and one-half times the employee’s wage for overtime worked.

(3) Despite subsection (2), an agreement may provide for an employer to –

(a) pay an employee not less than the employee’s ordinary wage for overtime worked and grant the employee at least 30 minutes’ time off on full pay for every hour of overtime worked; or

(b) grant an employee at least 90 minutes’ paid time off for each hour of overtime worked.

(4) (a)An employer must grant paid time off in terms of subsection (3) within one month of the employee becoming entitled to it.

(b) An agreement in writing may increase the period contemplated by paragraph (a) to 12 months.

(5) An agreement concluded in terms of subsection (1) with an employee when the employee commences employment, or during the first three months of employment, lapses after one year.’

The Court held that the commissioner misdirected himself by concluding that three of the four applicant employees had impliedly agreed to work overtime; alternatively, that they were bound by their contracts of employment. One of the applicants did not agree to work overtime in his contract of employment as the other two applicants. As such, there was no binding contractual obligation to work overtime.

The employment contracts of two of the other applicants contained an overtime clause in terms of which they consented to work overtime. Nonetheless, they commenced their employment with ANDRU in July 2008 and January 2011, respectively. Evidently, when the instruction was issued on 25 May 2017, the overtime clause in their contracts of employment had already lapsed as contemplated in section 10(5) of the BCEA. It stands to reason that, absent an agreement to work overtime on 29 May 2017, the employer’s instruction was unlawful as it offended section 10(1)(a) of the BCEA as correctly contended by AMCU. The aforementioned was expounded by the Labour Appeal Court (LAC) in Maripane v Glencore Operations South Africa (Pty) Ltd (Lion Ferrochrome), where it was stated:

‘Whether the refusal to obey an instruction amounts to insubordination also depends on various factors, including the employee’s conduct before the alleged insubordination, the wilfulness of the employee’s refusal to obey, and the reasonableness of the instruction. The reasonableness of any instruction also depends on its lawfulness and enforceability. It seems axiomatic, that any instruction to do what is unlawful, or in breach of a contractual term is not reasonable.’ (Labour Court emphasis)

For three of the four applicants, it was held that there was no evidence supporting the commissioner’s finding that there was an implied or tacit agreement to work overtime. It was inconceivable that the employer would threaten the disobedient employees with disciplinary action when they had agreed to work overtime as contended. Judge Nkutha-Nkontwana held as follows:

“Therefore, it cannot be inferred from the conduct of the parties that it was their unexpressed common intention that the applicant employees would work overtime per Mr Veere’s instruction. In my view, an agreement that is contemplated in section 10(1)(a) of the BCEA could be inferred only when an employee had actually worked overtime without prior consent. Otherwise, without a prior consent, an employee would be under no obligation to work overtime.”

The fourth applicant’s contract of employment contained an agreement to work overtime and he was employed less than a year. Thus, the instruction was lawful. Also, it does not seem as if the applicant employee took issue with the reasonableness of the notice to work overtime.

In considering the fairness of the sanction imposed by the employer, the Court considered Palluci Home Depot (Pty) Ltd v Herskowitz and Others (Palluci). The LAC, dealing with the appropriateness of a sanction of dismissal in cases of insubordination, observed that:

‘[22] … acts of mere insolence and insubordination do not justify dismissal unless they are serious and wilful. A failure of an employee to comply with a reasonable and lawful instruction of an employer or an employee’s challenge to, or defiance of the authority of the employer may justify a dismissal, provided that it is wilful (deliberate) and serious. Likewise, insolent or disrespectful conduct towards an employer will only justify dismissal if it is wilful and serious. The sanction of dismissal should be reserved for instances of gross insolence and gross insubordination as respect and obedience are implied duties of an employee under contract law, and any repudiation thereof will constitute a fundamental and calculated breach by the employee to obey and respect the employer’s lawful authority over him or her. Thus, unless the insolence or insubordination is of a particularly gross nature, an employer must issue a prior warning before having recourse to the final act of dismissal.’ (Labour Court emphasis)

It was further stated that:

‘[39] The sanction of dismissal was, regardless of whether the conduct constituted insubordination or insolence, manifestly incongruent and unfair. The appellant’s own code of conduct recommends a written warning for the first offence of impertinence/insolence, and a final written warning for the second. Dismissal is only recommended for the third offence of insolence. Similarly, item 3(4) of the Code of Good Practice for Dismissals in Schedule 8 to the LRA (the Code of Good Practice) deems it inappropriate for an employer to dismiss an employee for a first offence, except if the misconduct is serious and of such gravity that it makes a continued employment relationship intolerable. Gross dishonesty or wilful damage to the employer’s property, wilful endangering of the safety of others, physical assault on the employer, a fellow employee, client or customer and gross insubordination are listed as examples of serious misconduct, subject to the rule that each case must be judged on its own merits.’ (Labour Court emphasis)

It is trite that the enquiry on the appropriateness of the sanction entails a consideration of the totality of circumstances which, inter alia, include the importance of the rule breached; the reason the employer imposed the sanction of dismissal; the basis of the employee’s challenge to the dismissal; the harm caused by the employee’s conduct; whether additional training and instruction may result in the employee not repeating the misconduct; the effect of dismissal on the employee; and his or her long-service record.

According to the Labour Court, the commissioner failed to apply his mind to the fact that the insubordination was the first offence and was not accompanied by insolence. There was no evidence that the fourth applicant acted wilfully and repeatedly. Even though the employer tried to use the loss of production to justify the sanction of dismissal, it failed to give the details of the production that was lost and the cost thereof. Progressive disciplinary sanction in a form of a warning or final written warning could have availed.

It was on 13 February 2023 held that the dismissal of the applicants was unfair. The employer was ordered to reinstate the applicant employees retrospectively with full back pay since 2017.

This article does not constitute legal advice. For an informed opinion and/or assistance with a labour-related matter, you are encouraged to arrange a formal consultation with the author.

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