In the recent judgment handed down in Maleka v Boyce N.O. and Others, the Constitutional Court was confronted with the issue of whether a unilateral change to an employee’s conditions of employment rendered his continued employment intolerable to the extent that it induced him to resign.
In addition to this issue, the Court also had to deal with the question of whether an employee who claims that they have been constructively dismissed by the employer is always required to exhaust the employer’s internal grievance procedures before resigning and whether an employee is entitled to invoke the provisions of section 186(1)(e) of the Labour Relations Act (LRA) based on future or anticipated intolerability.
In the Commission for Conciliation, Mediation and Arbitration, the Labour Court and the Labour Appeal Court
In late 2016, negotiations were held between Tyco International and Fidelity Security Group for Fidelity to acquire ADT Security (Pty) Ltd from Tyco. At an exco strategic planning meeting held in December 2016, Mr Clarkson, the chief executive officer, announced that ADT had appointed Mr Allan Quinn as its new financial director and that Mr Quinn would oversee the IT portfolio, with the applicant, Mr Maleka, reporting to Mr Quinn rather than directly to Mr Clarkson. Mr Maleka was not consulted about this change prior to the announcement.
Mr Maleka immediately raised his concerns with Mr Clarkson, informing him that he would not accept the change. He viewed the change as a demotion, arguing that he would now be reporting to a peer at the same management level as himself, without any prior consultation. Despite the reassurances from Mr Clarkson that Mr Maleka’s duties, responsibilities, status and salary would remain unchanged, Mr Maleka resigned on 23 March 2017. In his resignation letter, Mr Maleka stated that the change was unacceptable and amounted to a demotion from an executive role to a managerial one.
At the Commission for Conciliation, Mediation and Arbitration (CCMA) arbitration hearing, Mr Maleka testified that his responsibilities and status were affected by the change in his reporting line. When he was asked by the Commissioner how his working conditions would have become intolerable, Mr Maleka said, ’having refused to accept the change, the behaviour I had been dealing with from Clarkson and Quinn made life intolerable’. The Commissioner held that Mr Maleka’s resignation did not pass the test for constructive dismissal and that he failed to establish the existence of a dismissal, finding instead that the dispute was an ’ego thing’.
Mr Maleka thereafter sought to review the award in the Labour Court. His contentions were that the Commissioner had overlooked material facts in the matter and as a result, had reached an unreasonable and unjust conclusion. He argued that the Commissioner misconstrued the facts and the evidence insofar as he deemed the complaint to be an ’ego thing’ and when he concluded that the resignation had more to do with Mr Maleka’s discussion of the terms and conditions of his exit rather than his genuine desire to voice his grievances. The Labour Court reasoned that the change to Mr Maleka’s reporting line, from the chief executive officer to an executive on the same level of management as himself, did not render his continued employment intolerable.
Before the Labour Appeal Court (LAC), Mr Maleka contended that the Labour Court erred in its finding that he did not establish a dismissal on grounds that he did not exhaust ADT’s grievance procedure. In its judgment, the LAC took issue with Mr Maleka’s failure to refer an unfair labour practice dispute to the CCMA on grounds of a demotion or unfair discrimination which, it held, could have averted his resignation and properly resolved the dispute.
The Constitutional Court’s approach to constructive dismissal
Mr Maleka then sought leave to appeal to the Constitutional Court. As his application was filed 32 days late, Mr Maleka had to apply for condonation, which required the Court to determine whether he had reasonable prospects of success on consideration of the merits.
The majority judgment in the Constitutional Court reiterated that the review test to be applied by the Labour Court in these circumstances is a correctness test. This test determines whether, by virtue of there being a constructive dismissal, the CCMA had jurisdiction to hear the matter. If the correctness test is answered in the affirmative, then the reasonableness test, that was first applied in Sidumo, is applied to determine whether the decision is capable of reasonable justification on all the material that was before the commissioner at the time.
The Constitutional Court reaffirmed that the threshold to establish intolerability is high. The word ‘intolerable’ means a situation which is beyond that which can be tolerated or endured. It is ’something which is simply too great to bear, not to be put up with or beyond the limits of tolerance’. The term “intolerable” implies a level of unbearability and must surely require more than the suggestion that the relationship is difficult, fraught or even sour’. Therefore, termination in these circumstances must be a measure of last resort.
The Constitutional Court maintained that the threshold for intolerability is and should be high to avoid an unhealthy situation in a workplace where employees, who have become disgruntled and dissatisfied for flimsy reasons, would simply walk out and thereafter claim a constructive dismissal. Such a situation would be at odds with the prescripts of fairness in labour practices, which requires that ’an employee who is dissatisfied with his employer’s conduct, at first, offers the employer an opportunity to redress the dissatisfaction’.
The Constitutional Court found that Mr Maleka’s resignation letter indicated that his dissatisfaction stemmed from an unexpected change in his reporting line, which he believed materially altered his conditions of employment and placed him in less favourable circumstances, without consultation. If this had been his argument from the beginning, his challenge would have fallen under section 187 read with section 197 of the LRA. However, before the CCMA, he advanced a different case, one based solely on constructive dismissal.
The Constitutional Court found that Mr Maleka’s resignation appeared to be based on anticipated, rather than existing, intolerable working conditions, specifically the new reporting lines that would take effect after the Fidelity takeover. Section 186(1)(e) of the LRA does not cover future or speculative circumstances that might become intolerable. His resignation letter reflected concerns about events that had not yet occurred, which fell outside the scope of constructive dismissal.
The Constitutional Court concluded that, based on the full body of evidence, the Labour Court had correctly found that no constructive dismissal had occurred. As a result, the Commissioner’s decision was sound and could not be faulted. As constructive dismissal was not established, neither the Labour Court nor the LAC was required to proceed to the second stage of the Sidumo enquiry.
The Constitutional Court noted that an employee who chooses not to use the employer’s internal grievance procedures generally cannot claim constructive dismissal, unless they can demonstrate exceptional circumstances justifying their failure to do so. Simply alleging a lack of confidence in the grievance process or doubting that the employer would change is not sufficient. Since Mr Maleka knew about the grievance procedure but did not lodge a grievance or follow any of its steps, the Constitutional Court held that this failure weighed against his claim.
Key takeaways
Employees may not rely on a future or anticipated state of intolerability that has not yet materialised to claim a constructive dismissal, especially where there is no evidence to demonstrate that working conditions would, in fact, have become intolerable.
Employees are generally required to exhaust internal grievance mechanisms before resigning and claiming a constructive dismissal. A mere lack of confidence in the grievance process is insufficient to bypass it.
If an employee believes a change to employment conditions (eg a demotion) is unlawful, this must be challenged under the correct sections of the LRA.
