When dealing with a workplace issue, an employer should be careful to identify the problem in question correctly so that the appropriate steps are taken. Failing to do so could lead to unnecessary or incorrect processes being followed, which could expose the employer to claims of unlawful or unfair conduct.

In the recent South African decision of Zeda Car Leasing (Pty) Ltd t/a Avis Fleet v Susan Margaret Van Wyk, the Labour Appeal Court considered a situation where an employer dismissed an employee due to operational requirements (ie, retrenched the employee) where the primary problem was in fact a conflictual relationship that existed between the employee and another employee.

Retrenchments are viewed as “no-fault” dismissals, meaning that the reason for the dismissal is precipitated by some operational need of the employer, as opposed to the employee being responsible for the termination of the employment relationship. While it is not possible to list every scenario that may lead to a fair dismissal due to the operational requirements of the employer, the Labour Relations Act, 1995 (“LRA”) defines operational requirements as the financial, technological, structural and similar needs of the employer.

In the Zeda Car Leasing matter, an acrimonious discord had developed between Ms Van Dyk, the General Manager: Gauteng Key Accounts and her colleague, Ms Friebe, the General Manager: New Business Acquisitions, both of whom worked in the same department. Avis, the employer, initially sought to deal with the conflict by appointing an external facilitator to help the parties sort out their problems with one another. This was not successful and the animosity between the employees remained.

About a month after the failed facilitation, Avis sent both employees a letter expressing the view that their conflict was causing disharmony in the workplace and was negatively impacting business operations. It required both employees to give input on how the situation could be rectified. Both employees made representations. As a solution, Ms Friebe suggested that one of them be moved to a different role.

Having considered the representations, Avis decided to resolve the problem by restructuring the employees’ positions. In a letter sent to both employees, Avis stated that in light of the ongoing lack of cohesion and interpersonal communication between the two employees, it had come to the conclusion, in principle, that the two positions would be consolidated and integrated into one position. Avis requested that each employee apply for the new consolidated position if they were interested in being appointed to it and set a deadline for the receipt of the applications. The letter did not specify what criteria would be used to select who would be appointed to the new role.

By the deadline date, Ms Friebe had applied for the new position while Ms Van Dyk had not. Instead, Ms Van Dyk’s attorneys sent Avis a letter raising concerns about the fairness of the restructure and the failure to comply with the procedural requirements set out in the LRA relating to restructures. Following receipt of the attorney’s letter, Avis issued a notice to Ms Van Dyk purportedly in terms of section 189(3) of the LRA. In this notice, Avis stated that it was indisputable that Ms Friebe would be the only meaningful candidate for the new position given that Ms Van Dyk had refused to participate in the restructuring/application process. In a consultation that took place the next day, Avis stated that Ms Van Dyk had “deselected” herself from consideration for the position by failing to apply for the new position. For this reason, she was the one to be retrenched. A week later, Avis presented Ms Van Dyk with a severance proposal. Ms Van Dyk committed to revert on the proposal within four days. However, on the same day that the proposal was presented, Avis circulated a notice to all staff confirming the termination of Ms Van Dyk’s employment.

Ms Van Dyk challenged the fairness of her dismissal. The Labour Court found that her dismissal was substantively fair, but procedurally unfair. In the circumstances, it awarded her compensation in the amount of 10 months’ remuneration. Avis appealed against the decision of the Labour Court relating to the finding on procedural fairness and the compensation award. Ms Van Wyk did not cross-appeal against the Labour Court’s decision that the dismissal was substantively fair.

The Labour Appeal Court ultimately agreed that the dismissal was procedurally unfair, but found that the Labour Court had not considered various factors when it made its order for compensation. It accordingly varied the compensation order to seven months’ remuneration. The Labour Appeal Court, however, went further to make some important obiter comments about the substantive fairness of the dismissal.

It noted that, despite Avis having framed the problem it faced as an operational requirements issue, it, in truth, was an incompatibility issue. The court explained that incompatibility involves the inability on the part of an employee to work in harmony within the corporate culture of the business or with fellow employees. It is a species of incapacity and where an employee cannot maintain an appropriate standard of relationship with peers, subordinates and superiors, as may be reasonably required by the employer, such inability may constitute a substantively fair reason for dismissal.

This begs the question of whether the problem could have been more appropriately dealt with as an incompatibility issue and in terms of an incompatibility procedure. As the Labour Appeal Court noted, the incompatibility process had already been commenced when the external facilitator was appointed to mediate the conflict between the employees. Switching to a different process and attempting to frame the issue as an operational requirements dismissal necessitated following a more strenuous consultation procedure as required by section 189 of the LRA. Unfortunately, it was found that the employer fell short of this and was saddled with a compensation order.

This case demonstrates that, while the circumstances of a workplace issue can rarely be placed squarely into a box with clear labels on how to proceed, employers should nevertheless take care to determine the true nature of the issue before deciding how to proceed.

Reviewed by Peter le Roux, an Executive Consultant in ENSafrica’s Employment department.