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PROCEDURAL v SUBSTANTIVE FAIRNESS: Which is more important when assessing compensation?

LABOUR LAW in a NUTSHELL – MAY 2022

PROCEDURAL v SUBSTANTIVE FAIRNESS: Which is more important when assessing compensation?

The substantive reason for a dismissal is more important. There’s unlikely to be compensation for substantive unfairness if there was a strong reason for the dismissal. But there could still be some compensation for procedural unfairness. The amount of compensation will depend on the degree of procedural unfairness – and the seriousness of the substantive reason for the dismissal.

This is what the Constitutional Court (CC) decided in a case involving Dr McGregor who worked at the George Hospital. He was dismissed from his job in 2016 after an enquiry found him guilty on four charges of sexual misconduct. The charges involved complaints by young medical interns, 30 years his junior.

The arbitrator found him guilty on three of the four charges but still decided the dismissal was substantively unfair. This was because McGregor had not been treated the same as other employees who faced similar charges. And his dismissal was procedurally unfair because relevant evidence was excluded from his disciplinary enquiry.

He was awarded 6 months’ compensation amounting to R924 679.92 instead of reinstatement because the working relationship had been damaged.

The Labour Court decided the dismissal was substantively fair – but procedurally unfair. But it did not change the arbitrator’s compensation award of 6 months’ pay. The Labour Appeal Court agreed with this decision.

The CC took a different view on the issue of compensation on the facts of this case. It held that the degree to which the employer deviated from the requirements of a fair procedure is an important factor in assessing compensation for procedural unfairness. In addition, the gravity of the misconduct and the attitude of the perpetrator must weigh heavily in determining the amount of compensation.

If the misconduct is serious, it may be just and equitable to grant no compensation even though there was some degree of procedural unfairness. The Court said the context of the dismissal must be also considered in determining the appropriateness of compensation – in this case, the serious nature of the sexual misconduct involving young interns by the Head of the Department. It found it –

“…difficult to comprehend that Dr McGregor could walk away with almost R1 000 000 to be paid from a barren public purse”.

The CC concluded that 6 months’ compensation, for minor procedural hiccups involving gross misconduct, was “entirely too generous”. It even thought of removing the compensation completely. But because employees are entitled to fair labour practices and procedurally fair dismissals, it reduced the compensation to 2 months’ remuneration.

It’s possible to infer from the tone of this judgement that the CC came close to removing the compensation entirely. This due to the seriousness of the substantive element vs the minor “hiccup” in the procedural element. It’s also possible to infer that it could have gone further by awarding costs against McGregor for overplaying the procedural card – especially in the context of his employment in a public institution.

TIP: Employees and their representatives frequently focus too much energy on procedural technicalities to try and side-step serious substantive charges. If there’re glaring procedural irregularities which could deprive an employee of the right to a fair hearing, they deserve attention. But if not, the enquiry should focus its energy on issues of substance. As the CC has indicated – substantive fairness is more important in assessing the fairness of a dismissal. And its more important when assessing whether compensation should be awarded for procedural unfairness. There may be no compensation at all if there was a strong reason for dismissal even though there was some degree of procedural unfairness.

McGregor v Public Health and Social Development Sectoral Bargaining Council and Others (CCT 270/20) [2021] ZACC 14 (17 June 2021)

Source: Worklaw Annual Review of Case Law 2022

Edited: Sarah Christie

 

PATRICK DEALE

labour lawyer & mediator

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