2 March 2010 by

Employers to play nice or pay up

"It is a pity to shoot the piano player when the piano is out of tune." - French saying.

A recent judgment by the Labour Appeal Court (LAC) again confirmed that employers must exercise caution when dealing with employees who suffer from mental health problems. If not, they may face a compensation order of up to 24 months.

In New Way Motors & Diesel Engineering (Pty) Limited v Marsland [2009] 12 BLLR 1181, the LAC handed down a damning judgment in which it found that the employer's treatment of an employee was "cruel, inhuman and arbitrary". The LAC upheld the finding of the Labour Court (Court) in terms of which the employee was awarded the maximum compensation equivalent to 24 months salary.

Mr Marsland was employed as marketing manager by New Ways Motor & Diesel Engineering. He formed part of the management team and attended regular management meetings along with his senior colleagues.

He suffered a nervous breakdown after his wife of 24 years unexpectedly left him. On his return to work (following a month's hospitalisation) he observed a marked change in the way in which his colleagues and superiors interacted with him, so much so that he felt as if he had a contagious disease. His duties were also significantly reduced. His involvement in marketing exhibitions was terminated without explanation, he was denied access to information pivotal to the performance of his duties and excluded from meetings which he had previously attended. He was also verbally abused and threatened by the managing director.

A month after his return to work, Marsland suffered a relapse. Despite providing his employer with medical reports, its managing director showed him little sympathy. Marsland was summonsed to a disciplinary hearing for alleged poor work performance. He was found guilty and issued with a final written warning. Marsland appealed the decision.

Marsland's work station was emptied of his personal belongings without notice, his computer was removed, he was moved to a position sitting directly across from the managing director and he was denied access to a filing cabinet. He was also issued with a memo informing him of the removal of certain of his critical functions. During their final altercation, the managing director physically threatened Marsland who then resigned with immediate effect.

At the Court, Marsland claimed that his dismissal was automatically unfair in that he was arbitrarily discriminated against due to his depression. This was aggravated when he attempted to exercise his rights in terms of the Labour Relations Act (LRA) in respect of the issuing of the final written warning and the procedure followed during the disciplinary hearing. Alternatively, Marsland claimed, his dismissal constituted an automatically unfair constructive dismissal as the employer's conduct had made it intolerable for him to continue the employment relationship.

The employer led no evidence at the Court. Based on Marsland's evidence, the Court found that he had been constructively dismissed. The Court then examined whether his dismissal was automatically unfair. The key question was whether Marsland's mental health problems and his subsequent exercising of his rights in terms of the LRA were the dominant reason for Appellant to discriminate against him, causing an intolerable working environment and forcing him to terminate his employment.

The Court concurred that there appeared to be a deliberate strategy to exclude Marsland from work that he was previously involved in and he was ostracised and abused by members of senior management. The Court held that the conduct of the employer not only rendered the working environment intolerable, but also amounted to unfair discrimination against the employee on the grounds of mental illness, which had played a significant role in the dismissal.

At the LAC, the employer did not dispute that (1) the employee had been constructively dismissed and that (2) "without reasonable or proper cause, [the employer] had conducted itself in a manner which was calculated or likely to destroy or seriously damage the relation of confidence and trust" between the parties. However, the employer persisted in its defence that the reason for the employee's dismissal was that he was useless in his employment after his illness and that the reason for his dismissal was not a prohibited ground. The LAC rejected this. In considering whether the facts supported a finding of automatically unfair dismissal, the LAC thought it unnecessary to consider whether the mental illness suffered by Marsland fell within the ambit of the concept of a "disability", but focused rather on whether the employer's conduct impaired the employee's dignity.

The LAC confirmed that the employer conduct resulted in a derogation of the employee's right to dignity. The LAC upheld the finding of an automatically unfair dismissal.

The employer argued that the award of maximum compensation was unreasonable given that it had offered to restore the employment relationship, which offer had been declined. The LAC rejected this argument. It found that maximum compensation was appropriate. When making this decision, the Court took into account the fact that following his dismissal, the employer's appalling treatment of the employee had continued.

The judgment sends a strong message to employers faced with employees suffering from mental illness: treat them like you would treat all your employees - with dignity.

Gillian Lumb, Director, Employment
Pranisha Maharaj, Associate, Employment

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