Aadil Patel CLIFFE DEKKER HOFMEYR “Managing Senior Employees”

1. Aadil Patel CLIFFE DEKKER HOFMEYR “Managing Senior Employees”

2. “Local firms drag feet over outsize CEO pay packages” -PWC 11 June 2012 • “SARU bosses awarded 107% bonus hike” -fin24.com 2 May 2013 • “Old Mutual CEO paid R33m in 2012” -fin24.com 5 April 2013 • “Executives paid too much – survey” -fin24.com 13 August 2012

3. CCMA warns of tough times ahead - Nerine Kahn • “For the first time in its 17-year history, skilled professionals are referring cases to the CCMA” • “The new trend developing in the labour market is the increasing number of cases being referred to the CCMA by professionals in the IT sector, banks and consultancies”

4. INTRODUCTION • Senior Managerial Employees in a unique position • High earners • Specialist skill • Position of power • Question: does the law cater for this uniqueness? • Less formal procedure • Misconduct, poor performance, operational requirements • Amendments to the LRA

5. LESS FORMAL PROCEDURE • Avril Elizabeth Home for the Mentally Handicapped v CCMA • LC rejected the “criminal justice model” of procedural fairness • National Bioinformatics Network Trust v Jacobson • Informal workplace procedures • Nitrophoska (Pty) Ltd v CCMA • Applies even more strongly where senior managerial employees are involved

6. ABRIDGED PROCESS • Ngutshane v Ariviakom (Pty) Ltd • where an employee’s misconduct is manifest, common cause or not in dispute, a less formal process will suffice • Young v Coega Development Corporation (Pty) Ltd • more flexible procedure acceptable in certain circumstances

7. MISCONDUCT • Does one have to adhere to the requirements of the CGP: Dismissal meticulously? • If not, why not? • Is the seniority of an employee mitigating or aggravating in the determination of the appropriate sanction?

8. MISCONDUCT • J D Group Ltd v De Beer • “A greater degree of trustworthiness is to be expected from a more senior employee particularly if a greater measure of responsibility, such as the power to discipline, is entrusted to that position. The respondent's senior position must therefore be regarded as having aggravated his conduct” • Palaborwa Mining Company Ltd v Cheetham & others • senior position and status is an aggravating factor insofar as the determination of the appropriate sanction is concerned

9. POOR PERFORMANCE • Can the employer set performance standards (and adjudicate attainment of those standards) within its discretion? • Do the requirements for the assessment of poor performance apply to senior employees? • If not, under what circumstances?

10. POOR PERFORMANCE • Eskom v Mokoena • employer entitled to set standards and within employer’s discretion to assess whether standards have been met • New Forest Farming CC v Cachalia & others and Somyo v Ross Poultry Breeders (Pty) Ltd • requirements do not apply to senior employees who can “ judge for themselves” or where smallest departure from degree of professional skill required could be catastrophic

11. POOR PERFORMANCE • Unilong Freight Distributors (Pty) Ltd v Muller • more flexible and lenient approach to application of dismissal guidelines • Boss Logistics v Phopi & Others • appointed on the basis of misrepresentations = no duty to counsel or assist • measure of instruction, counseling and guidance dependent on the level of seniority as well as qualifications and experience

12. POOR PERFORMANCE • Brodie v CCMA and others • Employee contended that failure to perform was as a result of lack of job description and not being given any training, guidance or counseling • LC = job description not required for senior employee • LC = employer is unable to provide training, guidance or counseling where employee is the expert and employed on the basis of those expertise • LC = employee failed to fulfill the very purpose for which she was employed • LC = this constitutes incapacity to fulfill obligations and duties that formed the basis of the employment relationship

13. INCOMPATIBILITY • How do we deal with cases where a manager or senior employee is simply incompatible with the employer’s organisation?

14. INCOMPATIBILITY • Jabariv Telkom SA (Pty) Ltd • incompatibility = “a species of incapacity” relating to “employee’s inability to maintain cordial and harmonious relationships with his peers” • JDG Trading (Pty) Ltd t/a Price ’n Pride v Brunsdon • “in the interests of efficiency employer entitled to choose with as much freedom as is compatible with the honest exercise of a discretion, who it wants at or near the helm of its enterprise”

15. OPERATIONAL REQUIREMENTS • Does the law allow for a departure from strict adherence to the requirements of section 189 of the LRA insofar as senior employees are concerned?

16. OPERATIONAL REQUIREMENTS • O'Doyle v All Circle ScreenprintCC • Watts v Fidelity Corporate Services (Pty) Ltd • managerial employee not an ordinary employee - has knowledge of employer's business and often involved in attempts to save business • Therefore no strict compliance with disclosure obligations necessary

17. PROPOSED AMENDMENTS TO THE LRA • Section 188B LRA Bill 2012 • Dismissal of employees earning above threshold deemed fair provided they are given three months' notice and dismissal not automatically unfair • Explanatory Memorandum • Problems