The pre-dismissal arbitration

Better than a disciplinary hearing?

The amendments to the Labour Relations Act (LRA) in 2002 discreetly slipped in section 188A .— titled agreement for pre-dismissal arbitration. In essence, the pre-dismissal arbitration takes the place of an internal hearing: the arbitrator may conduct an arbitration on the allegations of misconduct or incapacity made against the employee. It is an entirely voluntary procedure and it relies on the consent of the employee. The employer may not unilaterally head for a pre-dismissal arbitration, but, of course, may try its best to persuade an employee that a pre-dismissal arbitration is the best way to go.

The employee may also see some benefit to a pre-dismissal arbitration: under the impression that he or she would not get a fair hearing if the internal hearing is chaired by a manager in the company or organisation, the employee may opt for a neutral, objective outsider to hear the merits of the case. From the employee’s perspective, the advantage would be that he or she can try to persuade someone who knows nothing of the case or the allegations in advance and who does not carry the burden of organisational bias that a manager of the company may bear.

From the employer’s perspective, of course, this procedure looks even better: the pre-dismissal arbitration carries considerably more weight than an internal disciplinary hearing, especially if the arbitration is conducted by a well-respected and trusted arbitrator. There is some security in having an arbitrator recommend or decide on dismissal — the responsibility for that decision is lifted from the employer (and its managers). Employers may feel that an award issued in the context of a pre-dismissal arbitration carries more weight, and, armed with this award, it would be easier to counter allegations of unfair dismissal. Another pivotally important consideration for the employer is to try and avoid being dragged to either a bargaining council or the CCMA.

But there is a price to pay: the employer, to a large extent, loses control of the process. There is no telling what the arbitrator can and will do, and there is no guarantee that the arbitrator’s decision will be to the liking of the employer.

The jurisdictional twist

Even if the employer succeeds in obtaining the employee’s consent to the pre-dismissal arbitration, section 188A contains a jurisdictional sting in the tail. Section 188A(1) provides that the employer may request a bargaining council, an accredited agency or the CCMA to conduct the pre-dismissal arbitration. As mentioned above, it may well be one of the employer’s objectives to avoid going to the council or the CCMA; the employer may therefore be reluctant to approach the bargaining council or the CCMA for the pre-dismissal arbitration.

That leaves the possibility of requesting an accredited agency to conduct the pre-dismissal arbitration. In principle, this is fine; in practice, the problem is that, after almost ten years of the LRA being in force, we still don’t have a single accredited agency. Employers and employees who consider pre-dismissal arbitration should bear this in mind — they may be forced to go to the forum they wanted to avoid in the first place: the bargaining council or the CCMA. Please note, incidentally, that Tokiso Dispute Settlement (Pty) Ltd is not an accredited agency at this point in time. In other words, it is back to the CCMA or the bargaining council — the very institutions the parties wanted to avoid in the first place.

Another jurisdictional question: what happens if there is a bargaining council with jurisdiction over the dispute? Does this mean that the employer and employee have a choice to request the pre-dismissal arbitration from the CCMA or an accredited agency instead? The wording of section 188A seems to give the parties a choice in this regard.

But there is one way out of this jurisdictional problem: concluding a private arbitration agreement. This would mean that the arbitration would be conducted in the context of the Arbitration Act, and that the parties enjoy considerable freedom in selecting the arbitrator, agreeing on the issues to be arbitrated and the arbitrator’s terms of reference. Whereas the statutory pre-dismissal arbitration may entail the parties no longer having the power to choose an arbitrator, the private arbitration route overcomes this problem.

Naturally, here is another possible twist: the private arbitration agreement sets out the scope of the arbitrator’s powers, usually indicating what the arbitrator must decide and even perhaps some possible remedies the arbitrator can suggest or decide on. Once this agreement has been finalised, the parties can only deal with issues falling within the scope of the private arbitration agreement. If they agreed that the arbitrator will consider allegations of misconduct and an appropriate sanction if those allegations are proven, the employer is precluded from arguing, for instance, that the employee’s work performance is also poor. If the employer wants to deal with both misconduct and poor performance, the agreement must say so. Otherwise the arbitrator, if he or she considers issues falling outside the scope of the private arbitration agreement, may be acting in an irregular manner and setting the stage for review.

Other important bits and pieces of section 188A

Three other aspects are worth mentioning. In the first place, pre-dismissal arbitrations are not free. Section 188A provides that the council, the CCMA or the accredited agency will appoint an arbitrator only once the employer has paid a fee. The arbitrator will also be appointed only if the employee’s written consent is received by the CCMA or the council. Note that it is the employer who must pay — not the employee (in the case of private arbitrations, the parties may agree to share the costs).

The second potential pitfall is in section 188A(4) — it provides that an employee can consent to a pre-dismissal arbitration only once the employee has been informed of the allegations against him or her. In order to enable the employee to decide whether to agree to the pre-dismissal arbitration, the employee must know the seriousness of the allegations against him or her. In some cases, consent to pre-dismissal arbitration can be included in a contract of employer (now watch everyone heading to the HR manual to change the employment contracts) — but there is a catch: “an employee earning more than the amount determined by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act, may consent to the holding of a pre-dismissal arbitration in a contract of employment”. An interesting question: what would happen if the employee consents to the pre-dismissal arbitration, but, during the arbitration, it turns out that the employee did not receive any prior information about the allegation. It could be argued that in such a case, the employee did not “consent” at all.

Powers of the arbitrator and the effect of the award

There is also a misconception that the arbitrator makes a decision on guilt only and that it is then up to the employer to decide the appropriate sanction based on the arbitrator’s finding. That may be the case in a private arbitration, but section 188A(9) provides that the arbitrator, after considering the evidence and the fairness-criteria of the LRA, must direct what action should be taken against the employee. The arbitrator “must” — not “may”. The decision as regards sanction therefore lies with the arbitrator and in terms of this provision the employer has no discretion to follow or to ignore the arbitrator’s decision.

A related point is that a pre-dismissal arbitration is final and binding on the parties. Sections 143 – 146 of the LRA apply to awards in this case as well, meaning that they can be varied or rescinded and, importantly, that they can be reviewed in terms of section 145 of the LRA. In the case of statutory pre-dismissal arbitrations, conducted in terms of section 188A, the Arbitration Act does not apply. The effect of these provisions is that an employee who is not happy about the outcome of the pre-dismissal arbitration may not approach the CCMA or a bargaining council for a second bite: the award issued after the pre-dismissal arbitration binds the parties, unless and until it is set aside on review in the Labour Court.

So, is it really worth it?

Section 188A turns out to be rather complicated and, as it stands, is perhaps not the best route for employers and employees who want to escape the trip to the CCMA or the bargaining council. Employers (and, increasingly, some trade unions) may prefer to use an experienced private arbitrator to hear the matter, running straight into the problem of jurisdiction. While a private arbitration agreement remains a possibility, it may be hard to secure an agreement with an employee in the context of that employee’s dismissal — the employee may prefer to take his or her chances with the bargaining council or the CCMA.

At present, the statutory pre-dismissal arbitration presents no easy way out of the council or CCMA route. But this may (perhaps) change if there are accredited agencies.