Background facts

Ms More was formerly employed by the Public Investment Corporation (PIC) as its CFO. In 2014, VBS Mutual Bank (VBS) applied to the PIC for a R350 million revolving credit facility that was to be utilised solely for VBS’ contract finance scheme. Following a series of meetings and internal approval processes, More “recommended” that VBS be granted the relevant credit facility and on 30 June 2015, the facility agreements were entered into. Pursuant to an investigation into the VBS transaction and on 26 June 2020, More was charged with misconduct. The nub of the allegations against her was that she recommended that the PIC enter into the revolving credit facility agreement in breach of internal approval terms.

In a finding dated 16 June 2021, the chairperson of More’s hearing dismissed various objections that she had raised against the disciplinary proceedings (namely, prescription, waiver and undue delay), and found her guilty of misconduct. The chairperson’s recommended sanction was that More be issued with a final written warning, valid for a year. However, the PIC’s board rejected the recommended sanction. As a result, More was dismissed on 8 October 2021 and was paid in lieu of three months’ notice.

More than referred a dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). During the arbitration, More challenged her dismissal on several grounds, including that the charges had “prescribed” under the Prescription Act 68 of 1969 (Act). The CCMA agreed, finding the disciplinary charges and subsequent dismissal “incompetent” due to prescription, and ordered reinstatement with backpay.

The PIC took the arbitration award on review to the Labour Court. The legal issue was whether the Act, which sets time limits for the enforcement of debts, applies to an employer’s right to discipline employees for misconduct. The CCMA reasoned that More’s duty to render services was a “debt” under the Act, and that the PIC’s delay in instituting disciplinary action (more than three years after the alleged misconduct took place) meant that the claim had prescribed.

The Labour Court’s finding

The PIC correctly argued that disciplinary action is not a claim for a “debt” as contemplated by the Act, and that the Act is intended for civil litigation, not internal employment processes.

The Labour Court found that while the Act has been found to apply to certain claims under the Labour Relations Act 66 of 1995 (for example, claims for reinstatement, re-employment, or compensation after unfair dismissal), these are claims which arise after dismissal through formal legal processes. Crucially, the Labour Court found that because internal disciplinary hearings do not constitute litigation and do not involve the enforcement of a “debt” as contemplated by the Act, a disciplinary hearing cannot be subject to the Act’s time limits for prescription of a claim. A disciplinary hearing is an exercise of the employer’s prerogative to manage workplace conduct and does not constitute a claim for payment, delivery of goods, or services (i.e. a debt).

Importantly, while the Labour Court confirmed that the Act does not bar employers from instituting disciplinary action after three years, it cautioned that an excessive delay can still render a dismissal procedurally unfair, or in some cases, amount to a waiver of the right to discipline. This is consistent with the existing line of cases on delays in instituting disciplinary action. So, employers must ensure that disciplinary action is taken as soon as possible after an incident of misconduct takes place or once the relevant misconduct comes to their attention (whichever takes place first).

Ultimately the CCMA award was set aside.