The LAC definitively confirmed that, under the Labour Relations Act 66 of 1995 (LRA), no matter how gross, procedural unfairness cannot transform into substantive unfairness. An important qualification, however, is that in dismissals relating to operational requirements (retrenchments), issues of procedural unfairness may be inextricably intertwined with substantive unfairness to the point that a dismissal may be found to be substantively unfair.

The bifurcation of procedural and substantive fairness

Section 188(1)(a)(i) of the LRA provides that a dismissal is unfair if the employer fails to prove a fair reason. Section 188(1)(b) provides that a dismissal is unfair if not affected in accordance with a fair procedure. These are two separate enquiries.

Thus, no matter how gross a procedural defect, procedural unfairness cannot morph into substantive unfairness. As the LAC illustrated, if the contrary were true, a dismissal for theft without any hearing would become substantively unfair, even where the employer had a fair reason to dismiss. Such an outcome would be “unsustainable and inconsistent with the LRA”.

This bifurcation is reinforced by section 193(2)(d), which excludes reinstatement where a dismissal is unfair only because the employer did not follow a fair procedure. CCMA arbitration is a hearing de novo, thus defects in the internal disciplinary hearing are of no moment at arbitration. There is no room in the current statutory scheme for the concept of “gross” procedural unfairness.

The Labour Court relied on Yichiho Plastics (Pty) Ltd v Muller [1994] 15 ILJ 593 (LAC) and CVO School VIVO v Christoffel Daniel Pretorius and Others (JR1006/15; JR1004/15) [2017] ZALCJHB 412 as authority that gross procedural failures could vitiate the outcome and render a dismissal substantively unfair.

In 1994 (prior to the enactment of the LRA), the LAC in Yichiho Plastics, held that a dismissal will generally be fair only where a fair procedure was applied and the decision itself was a fair one. The court went on to find that procedural and substantive fairness are effectively “two elements of what is in truth a single enquiry”. The LAC in UPN distinguished this on the basis that it was decided under the old Labour Relations Act 28 of 1956, which knew of only an “unfair labour practice” and did not contain the substantive and procedural fairness bifurcation. Accordingly, it cannot be transposed into the current regime.

In CVO School, the Labour Court held that gross procedural irregularities could in themselves vitiate an outcome, relying on Yichiho Plastics. The LAC confined this principle to its proper scope: it is correct only insofar as it refers to a gross irregularity in arbitration proceedings that denies a party a fair hearing (rooted in Ellis v Morgan; Ellis v Desai [1909] TS 576). It is not authority for the proposition that gross procedural unfairness in an internal disciplinary enquiry renders a dismissal substantively unfair.

The exception: Operational requirements

The LAC recognised a limited exception for dismissals based on operational requirements, where procedural unfairness may be “inextricably intertwined” with substantive unfairness, in line with the authorities of Woolworths (Pty) Ltd v SACCAWU and Others [2018] 39 ILJ 222 (LAC) and Atlantis Diesel Engines (Pty) Ltd v NUMSA [1994] 15 ILJ 1247 (A).

In the retrenchment context, section 189 prescribes a mandatory consultation process directed at exploring whether dismissal can be avoided altogether and ensuring it is genuinely a measure of last resort. In Atlantis Diesel Engines, the Appellate Division held that consultation is “an integral part of the process leading to the final decision on whether or not retrenchment is unavoidable”. A failure to consult meaningfully may therefore demonstrate that the employer has not exhausted alternatives, which goes to the heart of substantive fairness.

Critically, however, the LAC circumscribed this exception: it “does not extinguish the bifurcation between substance and procedure as known in the current LRA”. An egregious departure from section 189 shall never turn a dismissal supported by genuine operational needs into a substantively unfair dismissal, unless the dismissal is not a measure of last resort.

Key takeaways

• Gross procedural unfairness cannot mutate into substantive unfairness.
• The bifurcation of procedural and substantive fairness is absolute for misconduct and incapacity dismissals.
• The narrow exception for operational requirements dismissals remains, but only where procedural failure shows dismissal was not a last resort.