The contract of employment is a reciprocal contract. This means that one promise is made in exchange for another, and one obligation is incurred in exchange for the other. The employee works in exchange for remuneration; the employer remunerates the employee in exchange for the employee offering to place his labour potential at the disposal and under the control of the employer.
A clarifying case:
This was the underlying principle in the Labour Appeal Court (LAC) matter between Barry Jorgensen and I Kat Computing (Pty) Ltd and Others  3 BLLR 254 (LAC). Barry Jorgensen was the manager at I Kat Computing (Pty) Ltd’s Durban branch. The business was not a success. The expenses of the business exceeded the income earned by the branch. I Kat Computing (Pty) Ltd’s Managing Director, Mr Smith, was unhappy about the situation. In January 2013 Mr. Smith instructed Mr. Jorgensen to send him monthly reports. Mr. Smith did not receive any reports in respect of February and March and on 6 April 2013, Mr. Smith and others went to Umhlanga and spoke to the staff. He told them he would not pay them until they began to make a profit. However, he later relented and paid them half their salaries.
In May, Mr. Smith sent a letter to Mr. Jorgensen explaining why he had halved their salaries and stated that he had not complied with any of his performance targets. Mr. Jorgensen was requested to fly to Johannesburg to attend a disciplinary enquiry on 4 June 2013. After obtaining legal advice, he elected not to attend the disciplinary enquiry, as requested by Mr. Smith. Mr. Jorgensen’s failure resulted in 2 disciplinary enquiries being convened in Durban, chaired by an independent chairperson.
The first enquiry was to consider a charge of misconduct being gross insubordination. The second was to consider Mr. Jorgensen’s alleged poor work performance.
The chairperson found Mr. Jorgensen guilty of gross insubordination for failing to attend a disciplinary hearing on 4 June 2013 and recommended his dismissal. The chairperson did not recommend his dismissal for poor work performance because his performance could not be satisfactorily evaluated. Nevertheless, the company dismissed him, inter alia, for poor work performance. The poor work performance dispute does not fall within the ambit of this article and as such will not be discussed in detail.
During the arbitration hearing at the CCMA, Mr. Jorgensen testified that he did not attend the disciplinary enquiry set for 4 June 2013 as he believed he was being set up for dismissal and his employer, had not performed its contractual obligations towards him. He acknowledged that he had seen the letter of 3 June 2013, which explained that the enquiry was to be an informal meeting and that if he failed to attend it would be regarded as gross insubordination. Mr. Jorgensen received a commission from I Kat Computing (Pty) Ltd for work done by the Johannesburg office, whilst he was already managing the Durban office. The payment of the commission was halted at a certain stage.
The CCMA commissioner considered the findings by the chairperson and did not make a finding on the poor work performance, therefore the commissioner was not competent to arbitrate this aspect of the dispute. The commissioner restricted himself to the question whether the appellant committed misconduct, i.e. gross insubordination and, if so, whether a dismissal was an appropriate sanction.
The commissioner was satisfied that the failure by the company to fulfill its contractual obligations meant that Mr. Jorgensen was not obliged to attend the disciplinary enquiry. The commissioner found that the dismissal was substantively unfair.
I Kat Computing (Pty) Ltd sought to review and set aside the arbitration award. The Labour Court upheld the findings of the CCMA in relation to all the charges pertaining to insubordination or gross insubordination and the charges related thereto.
All 3 judges of the LAC agreed that the dismissal for gross insubordination was substantively unfair and that I Kat Computing (Pty) Ltd was not in law obliged to obey instructions from the respondent until such time that the employer performs his obligations under the employment contract.
With regards to compensation, the CCMA awarded Mr. Jorgensen compensation to the sum of R 165 735. The LAC found that the commissioner did not consider the fact that Mr. Jorgensen was engaged on a fixed term contract, the balance of which was 5 months at the time of his dismissal. It was found that there was no cause to award compensation more than his actual loss of income and thus the award of compensation was not one that a reasonable commissioner would have made and the amount should be reduced. The order of the Labour Court was accordingly set aside and replaced with an order that the dismissal was substantively unfair and I Kat Computing (Pty) Ltd was to pay the Mr. Jorgensen the difference between what he had earned and what he would have earned had he worked the balance of the contract term of 5 months.
ABOUT THE AUTHOR:
Nadia Brits obtained her BCom Law and LLB degrees from the University of Pretoria in 2007 and 2009 respectively. She completed her articles at the Legal Aid Board and joined the Cape Town SEESA Labour office in March 2014 as a Legal Advisor.